2023-12-26 11:08:36
The French will pay more for their chocolate bars from 2024. And for good reason: the price of production inputs, namely cocoa and sugar, is experiencing a surge which risks having a lasting impact on the market. This situation results from the impacts of climate change that the planet is currently experiencing.
To say that chocolate will cost more because it rained heavily in Ivory Coast might make you smile. And yet, this is the reality. Cocoa and sugar are the two essential components in the production of chocolate. However, these two products are experiencing a dizzying rise in world prices.
Cocoa at its highest price level since 1979
There is particular tension in the cocoa market, whose production has been significantly affected recently, particularly in Ivory Coast and Ghana. Two countries which alone represent more than 60% of world production. The harvest suffered a notable decline due to unfavorable climatic conditions, particularly marked by unusually heavy rains.
The climatic conditions were therefore not lenient to promote a better harvest, affecting the plantations from flowering, and guaranteeing better drying of the fruit. This significantly reduced annual production, causing the surge in the price of the product, for which the futures contract on the ton for expiry in December reached 37.86 dollars. (its highest level since 1979) in New York on October 23, reports BFM Bourse.
El Niño dries out India and increases sugar prices
Sugar, the other essential ingredient in the manufacture of chocolate, has also recorded a significant increase in its price. The FAO Food Price Index gives it “ a value up 50.6 points (46.6%) compared to last year “. And there too, there is talk of a drop in production in producing countries, notably India, Mexico and Thailand, again due to unfavorable climatic conditions.
And if cocoa production was affected by rain and wind in West Africa, sugar production was inversely affected by extreme heat and drought, caused by the El Niño meteorological impact which raged on the coast of the Indian Ocean. The scarcity of rains has severely hampered the growth of sugar cane. And as long-term climate forecasts predict a persistence of these weather disturbances, the negative repercussions are likely to be just as long-lasting on agricultural production. They will therefore continue to weigh on costs already impacted globally by inflation.
Towards a mechanical increase in chocolate prices in the absence of a Shrinkflation
This is why the price of the final product based on cocoa and sugar, such as chocolate, is not likely to be spared from an increase which would occur mechanically, as with all chocolate products. Unless producers opt for «Shrinkflation» some products. An alternative which would consist of maintaining prices as they are, but reducing the weight of the products to compensate for the shortfall.
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