29/04/2024
Cocoa price rises - what's going on?
The cocoa price has been a topic of discussion for some time. As of September 2023, the cocoa price is rising sharply. Recently, 1 ton of cocoa traded for USD 10,000 on the New York and London stock exchanges. Cocoa prices have not been this high in nearly 50 years. A mix of climate change and years of undermining cocoa plantations in West Africa are the problem. You can read exactly what's going on in this blog.
Cocoa is scarce
The reason cocoa prices are going through the roof is scarcity. Three-quarters of the world's cocoa beans come from West Africa (Ghana, Ivory Coast, Nigeria and Cameroon). Just in those countries, many harvests have failed, so fewer cocoa beans are available. This is driving up the price. The underlying causes are various.
Climate change
Due to climate change, periods of extreme rainfall and drought alternate in West Africa. This while the cocoa tree thrives best in a constant climate with temperatures averaging 25°C with regular rainfall. Climate change promotes plant diseases. Ghanaian regulator Cocobod estimates that over 40% of the cocoa trees in Ghana are infected with the "swollen shoot virus. This virus reduces cocoa yields in the first year and within a few years the tree even dies. Because major chocolate manufacturers have refused to pay a fair price for cocoa beans for years, cocoa farmers have no money to invest in plantations that are resilient to climate change. Moreover, it takes 5 years for a newly planted cacao tree to bear fruit.
Gold mining
In addition to climate change, (illegal) gold miners are also doing their bit. In Ghana, for example, the soil under cocoa plantations often contains gold. Under duress or not, gold seekers take over cacao plantations. They cut down all the cacao trees and use chemicals to search for gold. When they have extracted the precious metal from the ground, a havoc is left behind. Not only has a piece of nature been destroyed. The soil is also heavily polluted, so that nature restoration is not possible for years and the cocoa farmer is literally left empty-handed.
Speculation
Besides climate change and the disappearance of cocoa plantations due to gold mining, speculation on the stock market also plays an important role in the price of cocoa. Traders buy cocoa from farmers and then hold on to it for a while. This creates even more scarcity, which causes an additional price increase. Then traders can make even more profit when selling cocoa to chocolate manufacturers. Unfortunately, the cocoa farmer doesn't notice any of this.