The "Big Chocolate" Industry is in Chaos

(Published 4/8/2024)

You may have heard that chocolate prices are going up... but what does that actually mean?

As Reuters reports, climate change and disease are two of the main factors causing low harvest yields in West Africa. The main places in question are the Ivory Coast and Ghana, which together produce more than 60% of the world's cacao. Basically, supply has gone down, so prices (i.e. demand) are going up.

When we hear that chocolate or cocoa prices are rising, it also refers to the stock market where "cocoa futures" are traded as a commodity. (Cocoa is the same as cacao.) Apparently this already led to a 10% rise in chocolate candy prices around the Easter holiday this year, and it's expected to get a lot worse for candy buyers.

But there's no guarantee that the farmers will make more. They earn by the weight of cacao that they sell. Ivory Coast did just raise the "farmgate" price (the amount farmers can sell for), and Ghana is trying to do the same. But most of the price increase will go to middle men and "Big Chocolate" corporations. Even with Ivory Coast's boost, they're still at $1.12 USD per lb of dried cacao seeds.

So how does this apply to Soul Lift Cacao? We only source from Latin America, and only through direct trade with collectives who themselves have a direct relationship with a cacao farm. The average going to the farmer in our supply chain is more like $2.75-2.80 per lb. That's more than double of even the improved farmgate price in the Ivory Coast. (Learn more about our supply model here.)

Unfortunately, some of our sources are experiencing similar problems of climate change and disease. The difference is that the particular virus affecting West African cacao trees is probably going to kill the trees. Whereas the most common disease in Central America is fungus that affects cacao pods. It can be contained... but it takes a lot of work and it still reduces the harvest considerably because only uninfected pods can be harvested. That has happened to some of our Guatemalan sources over the past two years.

But the point is that our supply chain is completely independent from the "cocoa futures" trade and, for now, is separate from what's going on in the Big Chocolate industry.

We have our own issues to contend with, but any price increases we've experienced in the last four years were more due to the inflation that started during the pandemic. And inflation has cooled over the last year, so we haven't raised our prices in a while.

This can be a lot to digest, but it's important to consider for anyone who has a relationship with cacao. It's hard to know what's true out there and what claims to believe.

One thing to look out for is that if a brand claims to source through direct trade with farmers but has just raised their prices due to what's going on in West Africa, they're either not being totally honest or they're flat-out lying.

The ceremonial movement is so complex and ever-changing that it's really easy to share half-truths and make people believe them. We'll never be content to take that approach.