In recent months, you may have come across numerous news articles highlighting the surge in cocoa bean prices globally. According to the Financial Times, as of 28th March 2024, cocoa futures traded at £8,270.00, which has increased by 285.55% since last year.
This significant uptick in prices is attributed to various factors, all of which inevitably affect the availability of cocoa beans. Here, we’re going to unpack those factors and how they have affected our Colombian cocoa bean supplier Luker Chocolate. We will also describe any impact on our valued trade partners as a result.
A snapshot of the current global cocoa bean market
70% of the world’s cocoa beans hail from just four West African countries, with Ivory Coast and Ghana leading the group as the largest producers. However, projections for the 2023/24 season indicate that Ghana’s output alone is expected to fall nearly 40% short of its seasonal target.
This substantial shortfall, coupled with sustained global demand for chocolate, has begun to reverberate across the international cocoa bean market, impacting both availability and prices. Cocoa, much like fuel and gold, is a globally traded commodity. Major players in the cocoa bean market, such as Hershey’s and Mondelez, the maker of Cadbury, typically negotiate contracts with cocoa farmers a year in advance to secure their supply. However, if these quotas are not met, these large brands must seek alternative sources to fulfil their demand.
As production levels decline in West Africa, pressure mounts on Central and South American farmers to ramp up cocoa bean production. However, meeting this immediate deficit comes at a cost – rising prices.
Factors contributing to rising prices
Historically, numerous factors have conspired to adversely affect the production and sales of cocoa beans in West Africa. These include climate change, economic and political instability, decades of underinvestment in cocoa tree planting, and a continual upward trend in demand for cocoa beans.
However, the rising prices of cocoa in more recent months are due to:
- Poor weather conditions – The El Niño weather phenomenon has brought strong seasonal winds and resulted in a lack of rainfall, leading to smaller harvests and typically smaller beans.
Swollen shoot disease – according to local Ghanese regulatory authority COCOBOD, the virus has wiped out 500,000 hectares of farmlands.
- Smuggling – Ghana has raised its state guaranteed cocoa price – known as the ‘farmgate price’ – paid to farmers by 63% to deter beans being smuggled to neighbouring countries where they almost guarantee higher prices as supply is squeezed. The Ivory Coast farmgate price has increased by 11%.
- Availability and rising cost of fertiliser – the ongoing conflict in Ukraine has impacted the steady supply of fertilisers globally.
Choc Affair strategies to date
Committed to fostering sustainable cocoa farming practices and ethical sourcing, we have cultivated a longstanding partnership with Luker Chocolate, a family-owned business based in Bogota, Colombia, which serves as our exclusive source of cocoa beans. For over 5 years, we have relied on Luker’s expertise to carefully select cocoa beans from specific origins, ensuring a consistent and stable supply at fair prices to maintain the quality of our chocolate production for our valued trade partners.
We also remain committed to voluntarily contributing an extra 5% per kilo of cocoa beans to support Luker’s initiative, The Chocolate Dream, with a special focus on ‘Chocokids’ and local reforestation. While this additional financial contribution increases our price per kilo, we firmly believe that the long-term benefits to the industry and the community far outweigh this expense.
The inevitable impact on our trade partners
As our longstanding supplier faces mounting pressure to meet demand without compromising the quality of their cocoa production, Luker has found it necessary to adjust the price per kilo of beans. Regrettably, in order to sustain our relationship with this trusted supplier, we must renegotiate the prices of our cocoa, which will likely lead to a price increase this summer. We will keep you informed as and when we have more information to share to ensure you are as prepared as possible for any price increase.
At Choc Affair, our mission is rooted in creating opportunities for all stakeholders, including our trade partners who rely on us to deliver delectable chocolate bars that captivate consumers. Understanding the potential impact of a price increase, we are committed to carefully evaluating and setting new prices at the minimum necessary to sustain operations and continue creating opportunities in our surrounding communities in York and Colombia.
Our strategy entails building long-term resilience through meticulous planning. Despite the challenges posed by fluctuating market conditions, we remain steadfast in our commitment to supplying high-quality chocolate to our trade partners. We are dedicated to weathering the current storm and maintaining our presence as a reliable supplier in the industry.
Learn more about our commitment to sustainable cocoa bean farming
Our relationships with our trade partners hold a special place in our hearts. We deeply understand the importance of partnering with a reliable chocolate supplier who consistently delivers high-quality products for retail, ensuring customer satisfaction.
By standing by our cocoa farmers and making the decision to adjust prices in response to the dynamics of the global marketplace, we are demonstrating our unwavering commitment to you and to the future of chocolate making. This step allows us to uphold our promise to provide you with the best products while also supporting the sustainability of cocoa farming communities.
Learn more about The Chocolate Dream and our initiatives, including Chocokids.
Further reading
Statistica, Agriculture, Farming:
Reuters,World News, February 2024
BBC Business News, February 2024
https://www.bbc.co.uk/news/business-68248145
Japan Times, March 2024
https://www.japantimes.co.jp/commentary/2024/03/13/world/chocolate-meltdown/