Local farmers gather dried cocoa beans to be weighed before selling them to merchants in a village outside of Kumasi, Ghana.
(Photo by Jane Hahn/Bloomberg via Getty Images)
The price of cocoa is on the rise, making sweet treats more expensive over the Easter period.
According to Trading Economics, which tracks the movement of commodities and other indicators, the cocoa price hit a record high this month, hovering at about $8 500 a tonne, from about $6 030 last month.
It has increased 98.36% since the beginning of the year, data from Trading Economics shows.
Concerns are mounting over the effect of the unfavourable weather conditions on cocoa production in Côte d’Ivoire and Ghana, the top producers of the commodity.
“The major factor behind the increase in chocolate product prices is the soaring cocoa prices that are underpinned by adverse weather conditions in West Africa.
“There is a poor harvest and that is pushing up cocoa prices and, in turn, driving up chocolate products prices,” chief economist of the Agricultural Business Chamber of South Africa, Wandile Sihlobo, said.
Cocoa trees flourish in hot, humid conditions and require a lot of water.
Côte d’Ivoire is in its dry season, which runs from November to May, while the rainy season starts in June. The rainy season in Ghana is likely to start in May.
From 1 October to 10 March, cocoa imports from Côte d’Ivoire fell 29% compared with the same time period last year.
The Côte d’Ivoire cocoa regulator expects next month’s harvest to fall 33% to 400 000 tonnes from 600 000 tonnes last year, according to Trading Economics.
In its prediction last month, the International Cocoa Organisation said it expected a significant fall in cocoa production from the top-producing countries.
“Compared to the 2022-23 season, global cocoa supply is anticipated to decline by almost 11% to 4.449 million tonnes.
“Global cocoa demand is projected to decrease by almost 5% to 4.779 million tonnes.”
Shelves at retailers such as Woolworths, Checkers, Pick n Pay and Spar are packed with chocolate bunnies and eggs for Easter and, thankfully, there is no real concern about a chocolate shortage — yet.
However, the increase in price will affect consumers.
“In an environment where the consumer is already under pressure, this means we could see slower demand for chocolate products in the near to medium term, domestically.
“Still, the demand could differ among various product categories. Broadly, there should be a decline in sales,” Sihlobo said.
Chocolate manufacturer Nestlé acknowledged the effect of the rising price of cocoa on the industry.
“With cocoa prices hitting record highs, chocolate manufacturers are facing significant cost pressures which will result in price increases as we look to offset other input costs.
“Ultimately, however, retailers decide on the final prices to consumers,” said Zumi Njongwe, the business executive officer for confectionery for Nestlé’s East and Southern Africa region.
The second-largest chocolate manufacturer in South Africa said it foresaw the cocoa price increasing between 60% and 200% and a cocoa deficit this year that it would need to manage in the future.
Tiger Brands, which owns sweet-maker Beacon, said the supply of cocoa products and the upward pressure of cocoa prices had an effect on the cost of producing chocolate.
“Ongoing efforts to improve cost leadership and drive efficiencies have allowed us to absorb some of the cost pressure to drive value and affordability for South African consumers, however, the company has had to pass some price increases on to retailers,” tiger Brands said.
The price rise is compounded by another factor — some cocoa producers don’t have sufficient funds to buy beans.
According to Reuters, processing plants in Côte d’Ivoire have halted production of the butter and liquor that can be made into chocolate, because they cannot afford to buy cocoa beans and “more major state-run plants could shut soon”.
Cocoa prices in the coming year will depend on whether West Africa’s harvest recovers and there remains uncertainty about that, Sihlobo said.
Although supplies might be tight and prices high, we’re unlikely to see a chocolate shortage, he added.