Effects of Drought on Cocoa Production

If you haven't been watching what's happening with cocoa… start. 📈 Prices are up 4x-6x vs. baseline. “Cocoa prices began the week at their highest ever recorded – more than $12,500 per ton, the cost to buy about 150 barrels of oil. And it's unclear to analysts if they're even ready to level off yet. For the past decade, cocoa prices have traded at around a fourth or fifth of the current rate—between 2016 and 2023, they ranged from $1,900 to $2,700, before beginning their climb last fall. But now that they’re up, talk in certain industry corners is focusing on the need for them to stay there.” 🤑 Billionaires are benefitting – at the expense of everyone else. “Chocolate brands have already responded with two of their favorite tools to blunt the impact of climbing supply costs: hiking prices and shrinking the product size…As chocolate prices climb…Lindt, Mondelēz, Hershey, and Nestlé (made) almost $6 billion in profits last year…(And the) Mars and Ferrero families (are) now wealthier than two (of the) largest cocoa producing countries…(Meanwhile) farmers in Ghana and Ivory Coast have seen double-digit drops in their incomes over the past few years.” 🌧️ Inequitable profit-taking aside, there are other short-term cost drivers at play. “The shortage is a result of ongoing bad weather in West Africa, which produces around 80% of the world’s crop, immediately followed by bad drought. Cocoa is susceptible to extremes and in Ghana and Ivory Coast, the world’s two leading cocoa producers, rains have led to crop diseases, and then drought and heat have pelted what’s left. Some farms’ 6,000 trees have dwindled to fewer than a dozen. The International Cocoa Organization estimates that global cocoa supply will sink by at least 10% this season…(and) expects a global shortfall of about 374,000 tonnes for the 2023-2024 season compared to 74,000 tonnes last season.” 🌍 And this doesn't even begin to take into account the longer-term supply risks from climate change – risks that are amplified by the vast majority of the world's cocoa crop coming from just a few countries in West Africa – a region expected to be hit especially hard by climate change in the years to come. Watch this space. Even if you don't have a vested interest in cocoa. Because the way the industry responds to this one might just suggest a pattern that will play out again and again and again over the next few decades. #food #sustainability #supply #socialentrepreneurship

Cocoa futures have more than doubled to records since the beginning of the year, with prices now approaching $9,000 per metric ton. On Friday, they hit a fresh all-time high, last up 4.4% at $8,940 per ton. Prices are also up more than 10% for the week.The reason for this massive surge in price goes back to disruptions on both supply and demand. Severe El Niño-induced dry weather conditions, reported wildfires and an outbreak of the cacao swollen shoot virus have cut down cocoa supply. Demand has also remained strong in countries such as the U.S., helping companies such as Hershey’s and Mondelez better offload rising prices onto consumers. It appears that these dry weather conditions won’t be letting up anytime soon. Rainy season in the Ivory Coast typically runs from April to October, but the region is currently facing hotter-than-usual temperatures, which could extend its lack of abundant rainfall, Reuters reported. A lack of rain could lead to subpar beans in size and quality, further limiting cocoa supply moving forward. #commodities #cocoa Lisa Kailai Han Jeff Kilburg

#chocolate....some bad news. Chocolate isn’t as economical as it once was. By one estimate, retail prices for chocolate rose by 10 percent just last year. And now this is the third year in a row of poor cocoa harvests in West Africa, where most of the world’s cocoa is grown. Late last month, amid fears of a worsening shortage, cocoa prices soared past $10,000 per metric ton, up from about $4,000 in January. To shoulder the costs, chocolate companies are gearing up to further hike the price of their treats in the coming months. Prices might not fall back down from there. Chocolate as we know it may never be the same. Chocolate has had “mounting problems for years,” Sophia Carodenuto, an environmental scientist at the University of Victoria, in Canada, told me. The farmers who grow them are chronically underpaid. And cocoa trees—the fruits of which contain beans that are fermented and roasted to create chocolate—are tough to grow, and thrive only in certain conditions. A decade ago, chocolate giants warned that the cocoa supply, already facing environmental challenges, would soon be unable to keep up with rising demand. “But what we’re seeing now is a little bit of an explosion” in the crop’s struggles, Carodenuto said. The simplest explanation for the ongoing cocoa shortage is extreme weather, heightened by climate change. Exceptionally hot and dry conditions in West Africa, partly driven by the current El Niño event, have led to reduced yields. Heavier-than-usual rains have created ideal conditions for black pod disease, which causes cocoa pods to rot on the branch. All of this has taken place while swollen shoot, a virus fatal to cocoa plants, is spreading more rapidly in cocoa-growing regions. Global cocoa production is expected to fall by nearly 11 percent this season, Reuters reported. In the past, when supply fell and prices rose, farmers were motivated to plant more cocoa, which led to a boost in supply five years later, when the new trees began to bear fruit, says Nicko Debenham, the former head of sustainability at the chocolate giant Barry Callebaut. Already, some West African farmers are racing to plant new trees. But they may not be able to plant their way out of future cocoa shortages. “Climate change is definitely a challenge” because it will make rainfall less predictable, which is a problem for moisture-sensitive cocoa trees, Debenham told me. Furthermore, rising temperatures and more frequent droughts will render some cocoa-growing regions unusable. A world without chocolate? https://lnkd.in/gWMvsEkM