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Major African cocoa plants in Ivory Coast and Ghana have reduced processing chocolate due to inability to purchase beans. These two countries together contribute nearly 60% of the world's cocoa production. Rising temperatures and weather conditions have stressed and damaged these crops in West Africa, and this halt is anticipated to lead to a surge in chocolate prices globally. Following three years of little cocoa harvests- and another three anticipated- chocolate manufacturers have already raised prices for consumers, with chocolate prices doubling over the last year and rising to all-time highs.
Chocolate manufacturers are unable to make chocolate directly from raw cocoa. Instead, they depend on processors to transform cocoa beans into cocoa butter and liquor, which are essential ingredients for making chocolate. However, the processors are facing difficulties because they claim they cannot afford to purchase the cocoa beans. For example, Transcao, a major cocoa bean processor in Ivory Coast that is controlled by the government, has halted its purchase of beans due to their high prices.
In Ghana, almost all of the eight cocoa bean plants have suspended work since the start of October due to the shortage of beans. The price rally has derailed a long-established mechanism for global cocoa trade, through which farmers sell beans to local dealers who sell them on to processing plants or global traders. These traders sell their cocoa products to major global chocolate chains such as Hershey, Nestle, and Mondelez. Normally, the chocolate purchasing process is heavily regulated and traders and processors buy cocoa beans from local farmers up to a year in advance. Local regulators then set lower prices that these farmers charge for cocoa beans. However, since the start of the cocoa bean shortage these farmers sell their cocoa beans on the spot, marketed at a much higher price. As such, major chocolate plants are not getting the cocoa beans that they have pre-ordered.
Chocolate manufacturers have increased their prices and retail stores in the U.S. charged 11.6% more for chocolate products last year compared to 2022. The International Cocoa Organization predicts that global cocoa production will decrease by 10.9% to 4.45 million metric tons this season. Grindings are expected to decrease by 4.8% to 4.78 million as processors face challenges in purchasing beans and supply less cocoa butter at higher prices to chocolate-makers. Consequently, chocolate prices are raised as a result of this chain of events.
In February 2022, when Russia invaded Ukraine, the prices of oil, coal, and gas shot up because traders feared that Europe wouldn't have enough energy without Russian supplies. Analysts foresaw shortages, rising energy costs, and potential work stoppages during the winter of 2022-2023. As a result, European chocolate manufacturers placed fewer orders for cocoa, anticipating that they wouldn’t even be able to run their factories. The price of cocoa has an effect on the price of the chocolate you buy at the grocery store; even in normal times, cocoa is one of the highest-cost ingredients. And with the inflation of the last two years, chocolate makers have not been shy about raising prices to cover their costs.
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