We assume you've already seen some news reports about the historic rise in the price of cacao , but we wanted to share with you what we're experiencing from our own perspective.
Cocoa Prices Over the Past 5 Years (Futures Market in Dollars)
Source: Nasdaq.com
In recent months, we have been experiencing a sharp rise in prices—the largest increase in nearly 50 years. Economists have dubbed it “the cacaocrisis.” The reasons behind the price behavior of cacao are related to climate change and crop diseases, insufficient investment in farms, price speculation on the stock market, global market demand for the product, and political conflicts and instability.
As in other agricultural sectors, climate change affects crops and, as a result, the final harvest. Rainfall associated with the El Niño phenomenon in West Africa has almost completely destroyed cacao crops. Already last year, these trees were stressed by extreme temperature fluctuations, which are uncommon in these countries.
Another significant factor has been the disease affecting the plant known as “ cacao ,” called “black pod.” It is caused by fungus-like parasites, leading to the loss of the cacao ’s fruit and the complete loss of the tree.
These losses lead farmers to refrain from reinvesting in their crops or planting new trees. They opt instead for other crops that are less labor-intensive and more productive.
We must also take into account the significant political instability in the major producers of cacao (Ghana, Cameroon, Nigeria, and, above all, Ivory Coast (60% of global production)).
In addition, the high demand for " cacao " has contributed to a rise in the price of " cacao," "manteca," and the final product (chocolate "Bar ").
On the London Stock Exchange (where fluctuations in the price of any commodity are tracked), the price of cacao has surged by more than 230% over the past year and doubled its all-time high, reaching $10,000 (9,214 euros) per metric ton last week. Twelve months earlier, it was trading at $2,900 (€2,672).
Normally, fluctuations in coffee prices—or “ cacao ”—on the futures market don’t usually affect us, since we buy from small farms or cooperatives where quality is the top priority and where, from the very beginning, we pay a fair price for the product; however, this price increase is so exceptional and historic that it is affecting us.
We hope that at some point this situation will stabilize and that the " cacao " will be appreciated more than ever and take its rightful place.
Here are a few articles on this topic so you can continue to soak up information.
Cocoa Runners – The Rising Price of Cocoa
Bloomberg – Africa's grain harvest cacao falls short just when it's needed most
DW.com – Who Benefits from Record-High Prices at the “ cacao ”?
If you have any questions or would like to know more, we're always here for you.
Thank you very much for placing your trust in us.
The team at Puchero