The price of cocoa has been rising for months due to fears of shortages, and the boom has only accelerated in recent weeks. The New York futures market paid $10,047 for a tonne of the commodity on Tuesday.
There is panic in the cocoa market. A combination of either too dry or too wet weather and structural problems – such as older and diseased trees – is leading to smaller harvests in West Africa, where most of the cocoa comes from.
A year ago, less than $3,000 was paid for a ton. This year alone, the cocoa price doubled. Not only the poorer harvest conditions, but also stricter environmental regulations in the European Union, for example, are pushing up prices. Other countries that grow cocoa beans, such as Brazil and Ecuador, are trying to increase their production. However, it takes several years before newly planted trees bear beans.
Chocolate in the store will automatically become more expensive. The expectation is that the biggest price shock for consumers is yet to come.
Choprabisco, the federation representing Belgian chocolate producers, says the price increase poses major challenges for the Belgian chocolate sector. “An unprecedented situation”, it sounds, which the companies are each trying to deal with in their own way.
“Real price for chocolate?”
The impact of the explosive price increase would mainly be felt by smaller players in the market. “The large companies have sufficiently hedged themselves. The small ones less so. At the end of last year, the price already rose 10 to 15 percent, and many chocolatiers decided to hedge less. Now there is of course panic,” says Thierry Noesen, CEO of the Belgian chocolate company Belvas, mainly specialized in organic and fair trade chocolate. The self-described small company needs 600 tons of cocoa annually. “Since January 1, the price of cocoa has doubled. So do the math.”
The producers have no choice but to pass on the prices, but that is bad for business, he says. “It is still difficult for us to realize new projects. On the other hand, we may now also be paying the real price for chocolate.”
He does not expect any shortages. Speculators will take advantage of the record prices to bring supplies to the market. “There is enough cocoa, but we pay too much.” The cocoa farmers themselves will not benefit. “On the contrary, they will become poorer. They may be able to sell at ten percent higher prices, but their harvests will be 30 percent lower.”
CEO Noesen’s company has an annual turnover of 11 million euros, with two factories in Duffel and Gellingen.
