What could happen to your chocolate?

The global cocoa industry faces multifaceted challenges, impacting chocolate manufacturers and consumers worldwide. Recent data indicates a substantial decline in cocoa bean production projections for the 2023/24 crop season in Ghana and Côte d’Ivoire, the world’s largest cocoa producers. The decrease is attributed to adverse weather conditions, the rapid spread of swollen shoot disease, illegal mining activities, geopolitical tensions and political influences.

According to an Oxfam report, the chocolate industry saw immense profits at the start of the COVID-19 pandemic, with major corporations like Hershey, Lindt, Mondelēz and Nestlé collectively amassing nearly $15 billion in profits from their confectionery divisions. However, this prosperity has been short-lived as the companies are now struggling to buy beans for production due to the cocoa bean shortage and high prices.

Production data from the International Cocoa Organisation (ICCO) showed a significant decrease of 550,000 tonnes compared to the 2022-23 production. Consequently, the ICCO has expressed concerns about the 2024-25 crops in West Africa, highlighting the potential for a fourth consecutive global deficit in the upcoming season. Aside from the decline in Ghana and Côte d’Ivoire’s bean production, factors such as increased freight rates resulting from Houthi terrorist attacks in the Red Sea and export disruptions in Ecuador, the third-largest cocoa exporter, due to drug-related gang violence, have raised cocoa prices.

In Ghana, a trader noted that the current shortage is unusually severe and that Ghanaian authorities have been deprioritising cocoa since the discovery of oil. Farmers also complain about their inability to access fertilisers and the poor conditions of roads in cocoa-growing communities, making it difficult for them to transport harvested cocoa pods from their farms and leading to increased haulage costs. The production shortage, added to the increased transport costs, has raised cocoa prices, causing major cocoa processing plants in Ghana and Côte d’Ivoire to either cease operations or reduce processing as they cannot afford beans at current prices. This has prompted chocolate makers to increase prices for consumers globally.

Given that Ghana and Côte d’Ivoire supply approximately 60% of the world’s cocoa beans, the countries must urgently prioritise increasing cocoa output. Also, with more Ghanaian farmers looking to abandon cocoa farming, the government must ensure that farmers get fair prices for their produce. Neglecting this could lead Ghana to follow Nigeria’s path in the 1960s, where dwindling government support for farmers caused Nigeria to drop as a top cocoa producer.

Overall, cocoa-producing countries must strike a delicate balance between meeting global demand, protecting the interests of local farmers, ensuring their security, and ensuring the industry’s long-term sustainability.

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