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Sweet lovers are facing a concern in 2024: the price of cocoa has reached an all-time high, which could make chocolate more expensive.
The price of cocoa has doubled in the past year, with futures contracts reaching $5,600 per tonne on February 8th. This is the highest price in 65 years since experts began tracking cocoa prices. The most recent record high was recorded in 1977 when contracts reached $5,379 per tonne.
The reason for this price increase is due to extreme weather events devastating crops in West Africa, which supplies the majority of the world’s cocoa beans. After heavy rain causing the spread of diseases on the plants, the dry weather threatens to continue to hinder production.
Earlier this week, President of the European Cocoa Association, Paul Davis, said he would not rule out the possibility of prices surging to $6,000 per tonne.
He said, “Currently, we are facing headwinds everywhere. Fertilizers are very expensive, and there are challenging conditions for farmers, leading to difficulties for consumers as well.”
This could be damaging for chocolate makers like Hershey, who recently revealed in their 2023 financial report that historically high cocoa prices are expected to limit the company’s profit growth in 2024.
And that’s not a shortfall that can be addressed immediately. While some growers have expanded production in the face of severe shortages, new trees take several years to produce cocoa beans.
Davis said, “We are in a very difficult situation and it could possibly last for another 18 months to three years. There is no cavalry coming to the rescue.”
Crops around the world are experiencing increasingly extreme weather events. Last year, crop damages also pushed sugar, orange juice, and olive oil prices to multi-year highs.
In Vietnam, annual cocoa bean production reaches around 5,500 tonnes, while the world’s production is about 4.8 million tonnes. Cocoa is grown interspersed with other crops such as cashews, coconuts, fruit trees, etc. This is completely different from the monoculture farming methods in other major cocoa-exporting countries worldwide. In the Mekong Delta region, cocoa is mainly grown in a number of localities such as Ben Tre, Tien Giang, Hau Giang, Vinh Long, Soc Trang, and Tra Vinh. In the Central Highlands, cocoa is mainly grown in Lam Dong, Dak Lak, and Dak Nong. In the Southeast, cocoa is mainly grown in Dong Nai, Binh Phuoc, and Ba Ria – Vung Tau.
According to BI
