Chocalypse! #1

With the Easter chocolate fest just passed, you’ve probably noticed that your chocolate basket was noticeably more expensive than last year. Here’s a look at the reasons behind the chocolate price hike….

Chocolate has always been an indulgence. But it’s fast becoming a luxury.

A box of six white chocolate egg cost R65 this Easter, which is R10 more than last year, while a mid-sized golden Lindt chocolate bunny jumped to R60 from R45 last year. Even a simple bar of chocolate is going to cost you more, with an 80g bar now over the R20 mark.

Given that these increases are well above the inflation rate, what is going on?  

A major reason for the price increase is that most of the world’s cocoa is grown in just a handful of countries in West Africa. Côte d’Ivoire and Ghana, which account for more than 60% of global cocoa production, have been hit by bad weather related to the El Niño weather phenomenon resulting in hundreds of thousands of hectares in lost production.

There are other confounding factors, such as illegal mining which has overtaken many farms in Ghana and degraded the land, making it unsuitable for cocoa production. As a result, cocoa bean production has dropped and the price of cocoa on global markets has increased dramatically.

In New York, cocoa futures prices have more than doubled since January from just over $4,000 per tonne to more than $9,000/tonne recently.

Adding to the cost pressure for South Africans is a recent increase in the price of sugar, imposed by the SA Sugar Association. Globally, the industry is also under pressure with droughts in sugar-producing countries such as India and Thailand compounding pricing challenges.

Globalised food production

Cocoa is just one of many food crops that are globally consumed but regionally produced. Cocoa trees grow best in countries that lie in a belt between 10° north and south of the equator. The trees’ natural habitat is in the lower storey of rainforests where rainfall is high throughout the year, and the temperature is relatively uniform.

Another is sunflower oil which is produced primarily in the Ukraine and Russia. Most of us know this now because prices spiked shortly after the outbreak of the Ukraine-Russia conflict.

China is the dominant producer of many of the world’s table regulars including mushrooms and spinach. More than 90% of these are grown in China.

Similarly, half the world’s coconuts are grown in Indonesia and the Philippines, hazelnuts come mostly from Turkey, and olives from Spain, Italy and parts of North Africa. In the southern hemisphere, a third of vanilla originates in Madagascar, quinoa is almost exclusively from Peru and Bolivia, and Brazil nuts come from, well, Brazil and Bolivia.

Source: The Outlier

Where do cocoa beans come from?

The global cocoa trade is a sensitive business. More than half of the world’s harvest comes from the Ivory Coast and Ghana. This Statista graphic shows just how dependent the cocoa market is on Africa.

Around three quarters of the global cocoa harvest comes from African countries – primarily from the West Africa region. According to estimates by the International Cocoa Organization from February 2024, the global harvest season 2023/24 will be significantly below the level of previous years at around 4.5 million tons. This is mainly due to the significant drop in the harvest volume from Africa, which will fall by around 0.4 million tons to 3.2 million.

Source: Statista