(NewsNation) — As people prepare for the Easter holiday, a global cocoa bean shortage may increase the price of chocolate.
Major African cocoa plants in Ivory Coast and Ghana have stopped or cut processing because they cannot afford to buy beans, and chocolate prices worldwide are likely to soar, according to trading sources, Reuters reports.
After three years of poor cocoa harvests, chocolate makers have already increased consumer prices, with a fourth expected, in the two countries that produce nearly 60% of the world’s cocoa.
U.S. retail stores charged 11.6% more for chocolate products last year compared with 2022, data from market research firm Circana shows.
The price rally has derailed a long-established mechanism for global cocoa trade, through which farmers sell beans to local dealers who sell them on to processing plants or global traders. Beans and cocoa products — butter, powder and cocoa liquor — are then sold to global chocolate giants such as Nestle, Hershey and Mondelez.
In normal times, the market is heavily regulated and traders and processors purchase beans from local dealers up to a year in advance at pre-agreed prices. Local regulators then set lower farmgate prices that farmers can charge for beans.
However, in times of shortage like this year, the system breaks down; local dealers often pay farmers a premium to the farmgate price to secure beans.
The dealers then sell the beans on the spot market at higher prices instead of delivering them at pre-agreed prices. As global traders rush to purchase those beans at any price to meet their obligations with the chocolate firms, local processors are often left short of beans.
This year, however, plants are not getting the cocoa they pre-ordered and cannot afford to buy at higher spot prices.
State-controlled Ivorian bean processor Transcao, one of the country’s nine major plants, said it had stopped buying beans because of their price. Additionally, it’s still processing from stock, but did not say what capacity it was running at.
Two industry sources, who asked not to be named because they weren’t authorized to speak publicly on the issue, told Reuters the plant was almost idle. One of the two sources said more major state-run plants could shut soon in top grower Ivory Coast, which produces nearly half the world’s cocoa.
Reuters contributed to this story.
Reuters contributed to this story.
