Why are cocoa prices going through the roof?

In recent months, the global cocoa industry has faced significant upheaval, marked by notable price increases. In this year alone, the cost of couverture that I source and turn into my range of products has increased by over 120%. Several factors contribute to this trend, creating a complex landscape for cocoa producers, chocolate makers and consumers alike.

Climate

Not surprisingly, climate change has been a primary driver of the fluctuations in cocoa prices. Unpredictable weather patterns, including extended periods of drought and excessive rainfall, have severely impacted cocoa producing regions, particularly in West Africa, which accounts for over 70% of the world’s cocoa supply. These climatic anomalies result in lower yields, thereby reducing the overall supply of cocoa beans and driving up prices.

World Factors

The global economic environment, influenced by post-pandemic recovery efforts, political tensions, and inflationary pressures, has disrupted supply chains across various industries, including cocoa. Rising transportation costs, coupled with logistical challenges such as port congestion and delays, have exacerbated the situation. These disruptions increase the cost of bringing cocoa to the market, contributing to higher prices across the board.

Labour

The cocoa industry continues to grapple with significant labour issues, including child labour and unfair working conditions. Efforts to address these ethical concerns often lead to increased production costs. Initiatives aimed at improving wages and working conditions for farmers, while essential, result in higher operational expenses that are eventually passed on to consumers through increased cocoa prices.

Growing Demand

On the demand side, there is a growing appetite for chocolate and cocoa products worldwide. Emerging markets, particularly in Asia, are witnessing increased consumption of chocolate, adding pressure on the already strained supply chain. This growing demand, coupled with limited supply, creates a classic economic scenario of rising prices.

Industry Challenges

The cocoa industry is at a critical juncture, facing numerous challenges that require coordinated efforts and innovative solutions. Sustainable farming practices are essential to mitigate the effects of climate change and ensure long-term cocoa production. Investment in agricultural technology and research can help improve crop yields and resilience.

Addressing labour issues through fair trade practices and ethical sourcing is crucial not only for the well-being of farmers but also for maintaining consumer trust and ensuring a sustainable supply chain. Companies and governments must work together to create robust frameworks that support farmers and promote transparency within the industry.

Lastly, adapting to changing market dynamics involves diversifying supply sources and investing in local processing capabilities. This approach can reduce dependency on traditional cocoa-producing regions and minimize the impact of regional disruptions on global cocoa prices.

The current rise in cocoa prices definitely presents significant challenges to anyone working with chocolate. Personally it's extremely difficult to pass on price increases of this level, so I'm left to absorb much of it and try to work out how savings can be made elsewhere.

But the situation also offers an opportunity for the industry to adopt more sustainable and ethical practices. By addressing the root causes of these price increases and implementing strategic solutions, the cocoa industry can navigate these turbulent times and emerge stronger and more resilient.