In 2014 Barry Callebaut relased its annual report which predicted that by the year 2020 there could be a "global chocolate shortage".
Barry Callebaut is the world’s largest supplier of chocolate, so this is pretty serious. When the report says shortage it doesn’t mean the end of chocolate forever. Although it could mean the end of chocolate’s time as a household commodity. So how did this happen right under our noses?
More than 70% of the world supply is grown in West Africa. The Ivory Coast and Ghana are a big portion of that chunk. Starting around the year 2011 chocolate production started to drop rapidly and kept dropping till the year 2013 where it slowly started to recover.
Cocoa trees need humid environments to grow and produce beans. That's a basic fact. Which is why the top 10 countries that produce cocoa are within 20 degrees of the equator. The top ten countries that consume chocolate are well outside the humid environments. These countries are also often considered as first-world countries.
Here is the GDP of the world's largest consumer of chocolate per capita (Switzerland) compared to the world's largest cocoa farming country (Ivory Coast). The disparity between the two is evident. Even countries like New Zealand whose GDP is less than half of what Switzerland makes, there is still a gigantic disparity to the Ivory Coast's GDP.
The disparity between the economic performance of each country wasn't so great around 1965. However, by looking at the GDP of each country in the year 2013 we can see in the graph below that while Switzerland and New Zealand increased substantially, the Ivory Coast increased by $1,310.97 in the span of 48 years.
Cocoa farmers today receive about 6% while manufacturers like Mars, Mondelez and Nestle receive up to 35% of the market price. Part of the problem is that cocoa farmers receive only a part of the world market price for beans, due to local trading structures, taxes and also the quality of the beans.
Farmers are under-invested and lack insight into market trends for cocoa prices. They have to sell their cocoa at prices dictated by middle-men for manufacturers. Because of the poor returns younger generations are moving away from cocoa farming and into more stable industries. The average age of a cocoa farmer in west Africa is now 50 years old.
The law of demand and supply states that is demand is high but supply is low then the price of the commodity will rise. Until the demand for chocolate decreases, manufacturers could reposition it as a premium item. Despite the fact that chocolate is actually getting more expensive or smaller through the years, demand seems to be steadily growing.
While supply is increasing, the demand for chocolate has increased at an even greater rate making it harder for the supply to keep up. To save money, manufacturers use ploys such as 'stealth price rises' to make subtle reductions in the shape and size of packs to cope with commodity costs.
As consumers the extent of an how an upcoming chocolate shortage will affect us on a day to day basis is relatively small. But what about the farmers?
Farmers drew the short end of the straw. Manufacturers under pay farmers for their cocoa beans and take advantage of a system that lets them profit at a higher disparity compared to what farmers earn.
Farmers are now beginning to feel the consequences.
If farmers have no incentive to grow chocolate, they will move into a more dependable industry to support themselves and their families.
No Farmers, No chocolate.
So until more action is taken to make the industry more ethical and sustainable for the long-term, start stocking up and saving up. Make every bite count.