Global chocolate shortage looms as cocoa farmers abandon crops in favour of rubber
Tuesday, June 24, 2014, 2:59 PM - Demand for chocolate is rising in emerging markets, but some cocoa farmers say that prices haven't risen enough to make the crops profitable.
As a result, many farmers are abandoning their cocoa plants in favour of more lucrative crops, according to Bloomberg.
Gerard Manley of Olam International Ltd., a company supplies about 10% of the world's cocoa beans, told Bloomberg that “cocoa prices need to go higher to stimulate production" in the face of rising demand.
“The price to the farmer can be a real problem because they have to compete with other crops. It has been a poor man’s crop.”
According to the news agency, cocoa is headed into its third shortage in a row, the longest stretch in nearly half a century. Meanwhile, demand for the sweet treat has tripled in China since 2010.
The shortage is expected to persist into the next decade with numerous West African farmers tearing up their cocoa fields in favour of more profitable crops, like rubber.
“Cocoa farmers are becoming more aware of the bad deal they’re getting on the cocoa value chain,” Edward George of Ecobank Group told Bloomberg.
“It takes something quite dramatic to get a farmer who has been cultivating cocoa his entire life to tear up his cocoa plantation and switch to rubber. But you can see a trend is under way.”
The global demand for cocoa is expected to exceed production throughout the next growing season, which begins at the start of October.
Analysts say this deficit could grow nine-fold by 2020.
Officials addressed the issue at the World Cocoa Conference, which ran from June 9-13 in Amsterdam.
Some analysts say that production houses are planning ahead for the rising demand, arguing that cocoa growth is "booming" in some areas -- particularly the Ivory Coast -- which is forecasting record yield for the second year in a row.
In spite of this, rising consumption in developing nations and the threat of El Niño is likely to push chocolate prices higher this year, regardless of the anticipated success of the growing season.