ACCRA, Ghana — Shoppers may be in for a bitter surprise in their Easter baskets this year. Chocolate eggs and bunnies are more expensive than ever as changing climate patterns eat into global cocoa supplies and farmers’ profits in West Africa.
About three-quarters of the world’s cocoa – the main ingredient in chocolate – is produced on cocoa trees in Ghana, Ivory Coast, Nigeria and Cameroon. But dusty seasonal winds from the Sahara have been strong in recent months, blocking the sunlight needed for the bean pods to grow. In the previous season, heavy rains spread a rotting disease.
With exports from Ivory Coast, the world’s top producer, down by a third in recent months, the global price of cocoa has risen sharply. Cocoa futures have already doubled this year, trading at a record high of more than $10,000 a metric ton in New York on Tuesday, after rising more than 60% in the previous year. Farmers who harvest cocoa beans say the increases are not enough to cover lower yields and higher production costs.
However, the high demand for Easter chocolate is a potential treat for the big confectionery companies. Major global manufacturers in Europe and the United States have passed on more of rising cocoa prices to consumers. The Hershey Company’s net profit margins rose to 16.7% in 2023 from 15.8% in 2022. Mondelez International, which owns the Toblerone and Cadbury brands, reported a jump to 13.8% in 2023 from 8.6 % the last year.
“Consumers are likely to see a sharp spike in the price of chocolate candy this Easter,” Wells Fargo said in a report this month.
Mondelez said it raised chocolate prices by up to 15% last year and will consider additional price increases to help meet its 2024 revenue growth forecast. “Pricing is clearly a key component of this plan,” it said. in January Chief Financial Officer Luca Zaramella. “Its contribution will be a little less than we’ve seen in 2023, but it’s higher than an average year.”
Hershey’s also raised prices on its products last year and has not ruled out further increases. “Given where cocoa prices are, we’re going to use every tool in our toolbox, including pricing, as a way to manage the business,” Hershey President and CEO Michele Buck said during a conference call with investors last month .
Consumer groups are watching. In the UK, British consumer research and services company Which? found that chocolate Easter eggs and bunnies from popular brands such as Lindt and Toblerone cost around 50% more this year. It said that some caramel eggs were also smaller.
Cocoa is traded in a regulated, global market. Farmers sell to local dealers or processing factories, who then sell cocoa products to global chocolate companies. Prices are set up to a year in advance. Many farmers blame climate change for their poor crops. Cacao trees only grow near the equator and are particularly sensitive to changes in weather.
“Harmattan was severe when the pods were supposed to develop,” said Fiifi Boafo, a representative at the Ghana Cocoa Board, referring to the cold trade winds that carry enough dust to block the sunlight they need to bloom. the trees. and produce beans.
Months of rain are also blamed for black pod disease, a fungal infection that thrives in cooler, moist and cloudy weather and causes the pods to rot and harden.
To help increase production, authorities are promoting education about farming methods that could mitigate the effects of climate change, such as the use of irrigation systems. Ghana’s president has also promised to step in to help farmers get a better deal.
“With the current trend of the world price of cocoa, cocoa farmers can be sure that I will respond well to the next cocoa season,” President Nana Addo Dankwa Akufo-Addo said last month.
The National Retail Federation, an American trade association, expects spending this Easter to remain high relative to historical norms, despite rising candy prices. Its latest survey showed consumers were expected to spend $3.1 billion on chocolate eggs and bunnies and other sweets this Easter, up from $3.3 billion a year ago.