The incoming chocolate shortage is not surprise news. It was expected. I believe it was even a thread about it last summer here on sherdog.
Catastrophic low supply after very large part of the 2023 crops yield for the worlds largest producers either was drowned in rain or dried away after lack of rain.
It sucks, but dwindling supply and skyrocketing demands lead to record high prices. That should not surprise anyone.
- I did a thread last year!
Understanding the Global Chocolate Shortage:
Chocolate, a delicacy enjoyed by millions worldwide, is facing unprecedented challenges, primarily stemming from the cocoa industry. The global chocolate shortage is a multifaceted issue, encompassing factors such as climate change, economic disparities, and environmental concerns.
1. Climate Change Impact on Cocoa Farms:
The cocoa plant, from which chocolate is derived, thrives in specific climatic conditions. However, rising temperatures, erratic rainfall, and changing weather patterns due to climate change have adversely affected cocoa plantations. This has led to a decline in cocoa yields, impacting the global supply chain.
2. Economic Challenges for Cocoa Farmers:
Small-scale cocoa farmers, predominantly in West Africa, face economic hardships. Many live below the poverty line, struggling with issues like child labor, lack of access to education, and inadequate healthcare. These challenges contribute to an unstable cocoa supply chain, further intensifying the global chocolate shortage.
3. Environmental Concerns in Cocoa Production:
Traditional cocoa farming practices often involve deforestation and excessive use of pesticides. This not only harms biodiversity but also results in degraded soil quality. Sustainable and ethical farming practices are crucial to mitigating these environmental concerns and ensuring the longevity of cocoa production.
https://mauichocolatecoffeetours.com/2024/02/05/chocolate-shortage/
Rising Cocoa Prices and the Impact on the Chocolate Industry: A Confluence of Weather, Inflation, and Consumer Behavior
Mzingaye Ndubiwa
Published Nov 15, 2023
Cocoa production, vital for chocolate manufacturing, is facing challenges due to adverse weather conditions in key regions like Côte d'Ivoire and Ghana, caused by the El Niño weather phenomenon. This has led to a significant decline in production, resulting in a surge in cocoa prices. ICE Cocoa futures reached a record high since 1979. The concentration of chocolate production among a few major companies, including Mars, Hershey, and Nestlé, has amplified the impact, with elevated costs passed on to consumers, leading to higher chocolate prices. This situation has been evident during festive seasons, like Halloween, where spending on chocolate in 2023 saw a notable increase, driven by inflation and cocoa scarcity. The continuation of rising chocolate prices due to El Niño, expected to persist through the first half of 2024, poses challenges to the cocoa industry. Climate change projections raise concerns about the long-term sustainability of chocolate production, emphasizing the need for proactive measures to address challenges in cocoa production.
Cocoa, derived from cacao beans, plays a vital role in the production of chocolate. However, the regions that are suitable for its cultivation are limited, with countries like Côte d’Ivoire and Ghana contributing significantly to global production.
These areas are experiencing adverse weather conditions attributed to the El Niño weather phenomenon, characterized by elevated temperatures and reduced rainfall. These conditions are detrimental to the growth of cacao beans, leading to a decline in production.
This unfavorable situation has translated into a surge in cocoa prices. The ICE Cocoa futures, a benchmark for cocoa prices, reached USD 4,386.82/mt on November 13. This represents a substantial increase of 16.7% from the October 13 price and is the highest recorded since 1979. The consequences of this price hike are felt throughout the supply chain, impacting the cost of value-added products like chocolate and various forms of candy.
The concentration of chocolate production within a few major companies in the US, such as Mars, Hershey, and Nestlé, has amplified the effects of this cocoa crisis. With limited competition in the market, these companies have passed on the increased costs to consumers, resulting in elevated chocolate prices. The tight grip of a few firms on the chocolate industry has made it challenging for consumers to avoid the impact of rising cocoa prices.
The implications of this situation extend to consumer behavior, particularly during festive seasons. Halloween spending on chocolate in the US in 2023 reached an unprecedented USD 3.6 billion, marking a substantial increase of 16.1% compared to the previous year, according to the National Retail Federation.
This surge in spending is not driven by a higher volume of chocolate sold but rather by the combination of inflation and the scarcity of cocoa.
The anticipated continuation of rising chocolate prices due to El Niño, which is expected to persist through the first half of 2024, poses significant challenges to the cocoa industry. According to research from the University of South Carolina (USC) Marshall, the unfavorable weather conditions caused by El Niño will likely make cocoa bean crop growth difficult in key producing regions such as Côte d’Ivoire and Ghana. This scarcity of cocoa has already driven cocoa prices to historic levels, impacting the entire supply chain.
The issues faced by the cocoa industry extend beyond short-term weather patterns. A 2013 study by climate change researcher Peter Läderach revealed that nearly 90% of cacao production locations are projected to become unsuitable for harvest by 2050, primarily due to climate change.. This alarming projection raises concerns about the long-term sustainability of chocolate production.
This scenario underscores the vulnerability of the chocolate industry to climate-related disruptions and the far-reaching consequences for both producers and consumers. As weather patterns continue to shift, businesses in the chocolate sector may need to navigate challenges in maintaining stable prices and meeting consumer demand. In the meantime, consumers may face the impact through higher prices and potentially altered consumption patterns.
The cocoa shortage serves as a stark reminder of the intricate connection between climate conditions, agricultural production, and global supply chains, with repercussions felt across industries and markets. Tridge anticipates that the current and future challenges in cocoa production highlight the urgency for proactive measures, such as the development of drought-resistant seeds, to ensure the sustainability of the chocolate industry.
https://www.tridge.com/stories/risi...he-chocolate-industry-a-confluence-of-weather
https://www.bloomberg.com/news/news...-beans-in-west-africa-rot-from-climate-crisis
www.cnbc.com
