By Cocoa prices have continued to climb amid supply woes from top producer Ivory Coast and regulatory uncertainties in Europe.
The shortfall in supply has led to skyrocketing global prices, putting pressure on the chocolate industry as well as consumers in wealthier countries.
Since the start of last year, cocoa prices have surged 400%, as yields have been hit by changing climate and extreme weather phenomena.
The global food import bill is expected to rise by 2.2% from the previous year to more than $2 trillion in 2024, according to a report by the Food and Agriculture Organization of the United Nations.
The increase in the import bill is specifically because of rising prices of cocoa, tea, and coffee, the report claimed.
Import expenditures on cocoa, coffee, and tea are anticipated to increase by 22.9%, accounting for more than half of the overall increase in value terms.
Cocoa supply woes
Weather forecasts in West Africa showed that Ghana and Nigeria, other top cocoa-producing nations were facing hot and humid weather.
This kind of weather is expected to affect the cocoa-mid crop, which starts in April.
Also, heavy rains in Ivory Coast recently flooded crop fields.
This increased risk of plant diseases and damaged the quality of cocoa.
The harvested beans in Ivory Coast recently indicated a drop in quality.
According to a Barchart.com report, the bean count from present harvests had a count of 105 beans per 100 grams.
The Ivory Coast cocoa regulator allows exporters to buy bean counts of 80 to 100 or slightly more for every 100 grams, according to the report.
The best quality cocoa has a lower count of beans.
Meanwhile, warehouse inventories for cocoa in the US have been falling constantly since October 9.
Inventories fell by 10,500 bags to 1.7 million bags as of November 15, the lowest since January 2015, according to ING Group.
“Along with that, potential supply concerns continue to linger as the European Parliament demands further changes to its deforestation regulations,” ING analysts said.
Rising challenges for the global chocolate industry
Global cocoa production has been plagued by climate change.
Farmers in West Africa have been facing challenges with their crop management as drastic weather patterns and a rise in plant diseases have damaged fields.
The market is expected to be in deficit this year as production is likely to fall 14.2% from last year to 4.332 million tons, according to the International Cocoa Organization.
“There are suggestions that the arrival of beans to Ivory Coast ports might drop over the coming days as unfavorable weather conditions at the start of the new season affected the bean quality while also impacting the overall production outlook,” ING Group analysts said in a note.
Adaptation remains key
Major chocolate makers have been trying to mitigate the adverse effects of climate change by altering industry processes.
Experts said that farmers have been adopting strategies such as planting improved cocoa varieties and using more fertilizers to meet global demand for chocolate, without contributing to the escalating climate crisis.
However, some farmers were still struggling with adequate knowledge or resources.
“Even if they can implement these strategies, the food and beverage industry is being compelled to embrace innovations to replace cocoa,” according to a report by the World Economic Forum.
“Many chocolate makers are now seeking alternative ingredients that can mimic the cherished flavors of chocolate — and some start-ups are stepping up to deliver key ingredients to the sector, in a sustainable way.”
Moving to alternatives
Some companies have been trying out different alternatives to cocoa to make chocolates.
These include the example of Nukoko, a UK-based startup. The company has been producing cocoa-free chocolates using fermentation technology, according to the World Economic Forum.
“The founders developed a way to create key chocolate flavor compounds from the fava bean, an abundant and cost-effective raw material typically grown in temperate regions,” the non-governmental organization said.
Additionally, The Supplant Company, a food company, that is involved in turning corn cobs, husks, and shells into sugar and flour, can effectively increase global output for the sweetener.
“The Supplant Company’s blend of sugars made from agricultural side-streams not only tastes like sugar but is lower in calories, prebiotic, low-glycemic and gluten-free,” the World Economic Forum added.
The upcycled method is being used to manufacture chocolate, which can replace sugarcane sugar.
According to the forum, if this method replaces cane sugar, it will offset the need for deforestation, which will result in 2 billion tons of water saved. This is equivalent to the total water consumed in New York City over 18 months.
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