Major cocoa plants in Ivory Coast and Ghana have either stopped or reduced processing due to the inability to afford cocoa beans, leading to potential worldwide chocolate price hikes. The two countries, which produce nearly 60 percent of the world's cocoa, have faced three years of poor harvests, with a fourth expected, Reuters reported.
Cocoa prices have more than doubled in the past year, hitting record highs. Steve Wateridge from Tropical Research Services noted, "We need massive demand destruction to catch up with the supply destruction."
Chocolate manufacturers rely on processors to turn raw cocoa beans into butter and liquor for chocolate production. However, processors are struggling to buy beans due to high prices.
In Ivory Coast, the state-controlled bean processor Transcao has ceased buying beans, while in Ghana, most plants, including the state-owned Cocoa Processing Company, have suspended operations for weeks. This has disrupted the long-established global cocoa trade mechanism.
Local dealers, who normally sell beans to processors or global traders, are now selling on the spot market at higher prices, leaving processors short of beans. This shortage is expected to lead to a deficit of 374,000 tons this season, the largest in years, according to the International Cocoa Organisation.
Chocolate prices have already risen, with US retail stores charging 11.6 percent more for chocolate products last year compared to 2022. The situation could worsen next season based on the severity of bean disease in West Africa, potentially leading to the market's first four-year deficit since the late 1960s.
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