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In a bitter turn of events for chocolate lovers worldwide, prices are poised to skyrocket as major cocoa processing plants in Africa struggle to secure beans. The situation, compounded by poor harvests and dwindling supplies, has sent shockwaves through the industry.
Cocoa Shortage Hits Africa’s Processing Plants
- Cocoa Crisis: Chocolate-makers have already hiked prices following three years of disappointing cocoa harvests, with a fourth year of poor harvests looming.
- Ivory Coast and Ghana Impact: These two countries, responsible for nearly 60% of the world’s cocoa production, are facing significant challenges. Plants in Ivory Coast and Ghana have either halted or reduced processing due to the scarcity of beans.
- Rising Prices: Cocoa prices have more than doubled over the past year, reaching record highs. Analysts warn of the urgent need for “massive demand destruction” to align with the dwindling supply.
Disrupted Supply Chain
- Processor Struggles: Chocolate-makers rely on processors to convert raw cocoa into butter and liquor for chocolate production. However, processors are finding it increasingly difficult to afford the high-priced beans.
- State-Controlled Plants Affected: Notably, Ivorian bean processor Transcao has ceased bean purchases due to soaring prices. The plant is reportedly running at minimal capacity, with predictions that more plants in Ivory Coast could follow suit.
- Global Trader Challenges: Even global giants like Cargill have faced bean sourcing issues, leading to operational halts in Ivory Coast.
- Ghana’s Struggles: In Ghana, a key cocoa producer, most processing plants have suspended operations for weeks, with the state-owned Cocoa Processing Company (CPC) operating at only 20% capacity due to bean shortages.
Disruption at the Farm Gate
- Market Instability: The cocoa price surge has disrupted the established global trade mechanism. Farmers are now selling beans to local dealers at premium prices, bypassing the usual pre-agreed rates.
- Impact on Chocolate Makers: This breakdown in the supply chain means chocolate firms are forced to pay higher prices for beans and cocoa products.
- Price Hikes: U.S. retail stores saw an 11.6% increase in chocolate product prices last year compared to 2022, indicating the ripple effect of the crisis.
Future Projections
- Production Decline: The International Cocoa Organisation (ICCO) expects a 10.9% drop in global cocoa production this season, with demand falling by 4.8% as processors struggle to secure beans.
- Market Deficit: The cocoa market is facing a deficit of 374,000 tons this season, significantly higher than the previous year’s 74,000 tons deficit.
- Lowest Stocks in Decades: Global cocoa stocks are projected to hit a 45-year low by the end of the season, leaving processors and chocolate firms scrambling to cover their needs.
- Future Uncertainty: Experts warn that the market could see another deficit next season due to severe bean diseases in West Africa, potentially marking the first four-year deficit period since the late 1960s.
As chocolate makers grapple with supply shortages and rising costs, consumers can expect to see further price hikes on their favorite treats. The sweet days of affordable chocolate may be coming to a bitter end. Stay tuned for more updates on this developing story.
