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A pile of cocoa pods showing signs of black pod disease during a harvest in Kwabeng, Ghana. Paul Ninson/Bloomberg
Mud from incessant rain falls around Nestor N’Guessan’s feet as he points to a rot-ravaged cocoa plot on his farm in Ivory Coast.
The 52-year-old grower can’t save those plants from black pod disease, so he’s focusing efforts on quarantining whatever healthy ones he has left. Soaks in recent months mean fewer pods on his trees, with some supporting just a handful of cocoa buds.
βI had to create a boundary to prevent contamination of the rest of the plantation,β he said as he pruned the healthy thicket. “The returns are low. The weather didn’t help us.”
It’s a climate crisis unfolding across Ivory Coast and cocoa heavyweights Ghana, with implications for global food inflation and cost-of-living squeeze. Excessive rain is reducing production and delaying the harvest, with the resulting shortfall sending wholesale prices in New York to their highest level in 46 years.
Total rainfall in West Africa since the start of the rainy season on May 1 is more than double the 30-year average, according to Maxar Technologies Inc. Damage to yields is compounded by growers’ long battle for pay, leaving them with little money to pour back into their plots.
This is prime harvest time, and the constant deluge turns dirt roads into impassable quagmires, knocks down flowers before they sprout, and fosters the breeding of a fungal infection that turns the rugby-ball-sized pods into black mush.
Ghana’s output is expected to be the lowest in 13 years and Ivory Coast’s lowest in seven years, based on totals provided by traders and exporters. Together, the countries produce about 60% of the world’s beans, according to the International Cocoa Organization.
The most active futures are trading at their highest levels since 1977 in New York, topping $4,200 a tonne. At that price, you could buy about 50 barrels of oil.
“This is a rising market and it hasn’t peaked yet,” said Fuad Mohammed Abubakar, head of government-linked Ghana Cocoa Marketing, which sells and exports high-quality cocoa. “More dangers lie ahead.”
With sugar also hitting decade highs, consumers will likely spend more on chocolate bars, cookies and hot cocoa as Christmas approaches. The USDA predicts that prices for sugar and confectionery will rise 8.9% this year and another 5.6% next year, outstripping overall food inflation.
Citing higher supply costs, Mondelez International, maker of Toblerone bars and Oreo cookies, will raise some prices next year, CEO Dirk Van de Put told Bloomberg Television on Nov. 6. he said he would do the same.
It would be logical to conclude that farmers benefit from the bounty, but in fact they do not β even with the $400 per tonne premium adjusted to the market price as a difference in living income.
Cocoa markets in Ivory Coast and Ghana are tightly controlled by governments, and regulators typically sell beans to foreign buyers at least 12 months in advance.
That means the money paid to farmers for this season’s crop was locked in about a year ago, when futures were around $2,500 a tonne.
“At the current farmgate prices, farmers have no incentive to go to the farms,” ββsaid Mahmoud Khayat, senior marketer at Ivory Cocoa Products, a bean processor. “If prices were high, he would swim to get the cocoa.”
At the moment, growers are awaiting government negotiations for next season with leading buyers such as Barry Callebaut, Cargill and Olam International. The sides are at loggerheads, with the companies delaying purchases because they want a discount, according to people familiar with the matter.
Ordinarily, there would be an incentive to plant more seedlings to take advantage of the bloom, but many growers are rain-fed and cannot afford to hire more hands, use more fertilizers or buy the necessary chemicals to ward off black pod.
The soil on Samuel Addo’s 12-hectare plot in Suhum, Ghana β about 40 miles north of the capital, Accra β has a sandy texture, which makes growing cocoa a bit more difficult even in the best conditions.
After a heavy rain, almost every tree grew a pod that either rotted or turned black. The only way to tame the spread is for Addo to spray his buds, called Cherelles, every two weeks β but that expense is out of reach.
“It has never attacked my farm so badly since I started growing cocoa,” said Ado, 52. “What I earn is not enough to invest back into the farm.”
The El Nino weather pattern could cause more difficulties in the future, as dry conditions typically prevail across West Africa. Global production has not kept up with demand in the past two seasons and is expected to remain so for several more years, Abubakar said.
“The supply response will not be immediate,” he said. “It will take time for higher prices to stimulate production.”
Additionally, deforestation regulations coming from the European Union β a major hub for West African crops β are likely to escalate costs as the beans are tracked through the supply chain.
At this time of year, processing plants in San Pedro, Ivory Coast’s main export hub, must be running at full tilt to clean, smoke and pack the beans into 143-pound jute bags ready for shipment.
However, total port arrivals in the season that began Oct. 1 totaled 479,449 tonnes, compared with an estimated 707,200 tonnes a year ago. This is a 32% drop.
The supply shortage forced Societe Ivoirienne de Transformation de Produits Agricoles, which can process more than 1,500 tons a day, to idle one of its machines the day a Bloomberg reporter visited.
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Workers receive a delivery of cocoa beans at the Societe Ivoirienne de Transformation de Produits Agricoles processing plant in San Pedro, Ivory Coast. Paul Ninson/Bloomberg
The exporter receives about 20 truckloads daily, compared to about 24-26 truckloads a year ago. The artery to the cocoa basket β a rough road to begin with β is now riddled with potholes filled with rainwater, making the journey even more treacherous.
The National Federation of Dockworkers, which represents workers at Ivory Coast’s main ports, said this season was abnormal. During a recent week, he counted 29 trucks in San Pedro and 32 in Abidjan, compared with 70 and 61, respectively, a year earlier.
“The flow of cocoa harvest arrivals is very low,” the federation said in an email. “Members who are usually very busy unloading cocoa bags from trucks have been reassigned to other jobs.”
The difficult climate and low wages are prompting some farmers to abandon their beans to buy other products, notably rubber and gold.
N’Guessan’s farm in Soubre, the cocoa heart of Ivory Coast, is about seven hours’ drive from Abidjan. In recent years, huge rubber plantations have grown around it to meet the demand for tires, tubes and other products.
Rubber trees require less maintenance and Ivory Coast is now the leading producer in Africa.
“A lot of growers have given up on cocoa,” he said.
In Ghana, the lure is gold. Artisanal mining accounts for about a third of the country’s output, and farmers speak of companies persistently offering them large sums of money to hand over their land.
A walk through the country’s cocoa belt finds many plantations being replaced by what is locally known as galamsey.
“There’s a myth that cocoa farms often sit on gold-rich rocks,” said grower Michael Acheampong, looking at the mine next door. “Some farmers can’t resist the lure of fast money.”
The Cote d’Ivoire-Ghana Cocoa Initiative was created by both nations to reduce this glare. The cartel’s aim is to raise prices paid to farmers, saying they have not covered production costs or been guaranteed a living wage for decades, said executive secretary Alex Assanvo.
“If farmers are seeing high prices today and are being given a lower price, how do we see farmers continuing to grow cocoa?” he said.
Bloomberg writer Megan Durisin Alberi contributed to this story.
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