Cocoa prices continue to rise amid supply problems from the top producer Ivory Coast, and regulatory uncertainty in Europe.
Global prices have soared due to a shortage of supply, which has put pressure on both the chocolate industry and consumers in wealthy countries.
Cocoa prices have risen 400% since the beginning of last year as yields are being affected by extreme weather and changing climate.
According to a UN report, the global food import bill will rise by 2,2% over the past year and reach more than $2 trillion by 2024.
Reports claim that the increase in import bills is due to the rising prices of coffee, cocoa and tea.
The import expenditure on cocoa and coffee is expected to rise by 22.9%. This represents more than half the increase in terms of value.
Cocoa shortages
The weather forecasts for West Africa revealed that Ghana and Nigeria – two of the top cocoa producing nations – would be experiencing hot and humid conditions.
The cocoa mid-crop, which begins in April, is likely to be affected by this kind of weather.
In Ivory Coast, recent heavy rains have also flooded crops.
The quality of the cocoa was also affected by this.
Recently, the beans harvested in Ivory Coast showed a decline in quality.
A Barchart.com study found that the current harvest had 105 beans to 100 grams.
According to the report, exporters can buy beans weighing 80 to 100 grams or slightly more per 100 grams from the Ivory Coast cocoa regulatory authority.
The highest quality cocoa contains fewer beans.
Since October 9, the US warehouse stock of cocoa has been steadily declining.
According to ING Group, inventories fell by 10,500 to 1.7 millions bags on November 15, the lowest level since January 2015.
Analysts at ING said that “along with this, potential supply worries continue to linger” as the European Parliament continues to demand further changes to deforestation regulation.
Global chocolate industry faces new challenges
Climate change has affected cocoa production worldwide.
West African farmers have faced challenges in managing their crops due to the drastic weather patterns, and an increase in plant diseases.
According to the International Cocoa Organization, this market will be in deficit as production is expected to drop 14.2% compared to last year and reach 4.332 millions tons.
In a recent note, ING Group analysts stated that there are indications that arrivals of beans in Ivory Coast port could drop in the next few days due to unfavorable conditions during the beginning of the new crop season. This has affected both the quality of the beans and the production outlook.
Adaptation is key
Chocolate manufacturers have tried to reduce the negative effects of climate changes by changing industry processes.
Experts say that farmers are adopting strategies like planting improved cocoa and using more fertilisers to meet the global demand for chocolate without contributing to an escalating crisis.
Despite this, many farmers still lack the necessary knowledge or resources.
According to a World Economic Forum report, “even if they implement these strategies the food and beverage industries are being forced to embrace innovation to replace cocoa.”
Many chocolate makers are looking for alternative ingredients that mimic the beloved flavors of chocolate. Some start-ups have stepped up to provide key ingredients in a sustainable manner.
Alternatives to the current system
Chocolates made with cocoa alternatives are being tried by some companies.
Nukoko is one such startup based in the UK. According to the World Economic Forum, this company produces cocoa-free products using fermentation technology.
The founders created a way to create key flavor compounds for chocolate from the fava beans, a plentiful and cost-effective material that is typically grown in temperate areas,” said the non-governmental organisation.
The Supplant Company is a food company that converts corn cobs and husks and shells to sugar and flour. This can increase the global production of sweetener.
The World Economic Forum noted that “The Supplant Company’s blend of sugars produced from agricultural by-products is not only lower in calories but also prebiotic, low glycemic, and gluten-free.”
Chocolate made from upcycled materials can be used in place of sugarcane.
Forum members claim that if cane sugar is replaced by this method, the need for deforestation will be reduced, saving 2 billion tons. This is the equivalent of all water consumed by New York City in 18 months.
This post How does the chocolate industry deal with climate change and rising costs? This post may be updated as new information becomes available
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