The meltdown in chocolate is coming
economictimes.indiatimes.comcocoa market I was in Yamoussoukro, the colossal capital city of Ivory Coast.
“The problem with cocoa is that’s a poor man’s crop,” explained my dining companion, a government official-turned-businessman. “Do you see any commercial plantation around here? No,” he said. “And do you know why? Because prices aren’t high enough.”
Only because millions of West African farmers saw cocoa as their only way to escape abject poverty, the world had plentiful supply and low prices. As a result, you and I have been enjoying the pleasures of chocolate on the cheap for decades.
Unlike most other agricultural commodities, cocoa hasn’t developed into a plantation business. At the prevailing prices of the 1990s and 2000s, it simply didn’t make commercial sense. The money was made around trading the beans, and processing them into chocolate — not planting, growing and harvesting cocoa trees.
Today, the crop is still grown overwhelmingly by poor smallholders. Just making enough to subsist, most lack the means to re-invest in their plots. And finally, the decades of underinvestment have caught up with growing chocolate demand. For the third consecutive crop season, global consumption in 2023-24 will meaningfully surpass production – something unseen since the early 1960s.
We are all now confronting the inevitable chocolate crisis.
In the world of commodities, price records have fallen everywhere on the back of the industrialization of China. At the end of 2023, cocoa was one of only a four major commodities that still traded below
