Last year was disastrous for cocoa crops, with the ‘swollen stem virus’ decimating crops in West Africa. The price of chocolate is steadily rising. This Christmas, food prices seem to have fallen. In many countries the decline in inflation allows consumers to move with relatively greater financial comfort compared to previous years – unless of course they want to buy chocolates.

German media reports that the price of Kinder chocolate in the shape of Santa Claus has risen by up to 50%, while in the UK the prices of some chocolate products have almost doubled. At the same time, a French chocolate company recently told Ouest France that cocoa prices have also skyrocketed, with the company paying €12,000 per metric ton this year – last year the cost of cocoa was just €3,000 per metric ton.

A nightmare for chocolate lovers

So there seems to be a worldwide… “chocolate inflation” – and according to some experts the situation will get even worse.

Cocoa crops in West Africa are suffering because of the CCSV virus, also known as “swollen stem virus”, which affects cocoa trees and can even cause a 50% reduction in the harvest in just two years.

This year’s season has therefore proved disastrous for cocoa crops – and conditions have been made even worse by climate change and adverse weather conditions, as well as a lack of fertiliser, an issue exacerbated by the Russian invasion of Ukraine and the resulting problems in exports through the Black Sea.

Cocoa futures on London’s Intercontinental Exchange (ICE) traded last week at 8,363 pounds (10,136 euros) per metric ton, up five times from December 2022 and almost three times over the past year.

This is due to “concerns that crops in the Ivory Coast and Ghana will not meet expectations, reducing the potential output surplus for 2024/2025,” Steve Wateridge, head of soft commodities research, told DW. at Tropical Research Services, London.

The threat of CCSV

Wateridge described the CCSV virus as a “disaster”, adding that “not much seems to be being done to limit the spread of the virus in Ivory Coast and Ghana and therefore the situation is only going to get worse”.

Michel Nardella, Director of the Department of Economics and Statistics at the International Cocoa Organization (ICCO), believes that it is imperative to focus on improving sustainability programs in Africa to improve farming practices.

“Smallholder farmers are not sure about the damage it causes to crops [ο CCSV]but they don’t even know what agricultural practices to apply to limit it,” Nardella tells DW. “Also, they don’t want to uproot the cocoa trees because cocoa is their only source of income.”

In a recent article in the Financial Times, Pierre Andurand, founder and chief investment officer at Andurand Capital Management, also warns that “much higher prices are coming” due to a “multi-year structural deficit in cocoa supply and demand”.

The Association of the German Confectionery Industry (BDSI), which represents the interests of more than 200 confectionery producers, expressed its concern that the figures on limited production may be “unreliable”.

“There is conflicting evidence regarding the total harvest in West Africa. While some estimates point to declines in harvests, cargoes arriving at ports, a very important indicator, have increased significantly compared to the same period last year,” BDSI points out in writing to DW.

The German Ministry for Economic Cooperation and Development (MZ) estimates that for every euro a consumer pays to buy a chocolate bar, just 7 cents go to cocoa farmers, while traders and manufacturers of the product receive around 80 cents.

What about the crops in Ghana?

Farmers in Ghana, the world’s second-largest cocoa producer after Ivory Coast, have started hoarding as much cocoa as they can in anticipation of higher prices – and supply shortages have worsened as a result.

Ghana’s government announced last month that payments to farmers were increased by almost 50% in a bid to stop the practice and curb the smuggling of cocoa to neighboring countries for higher revenue.

So far, however, the price increase has had a limited effect on demand. In Germany, chocolate consumption per capita increased from 9 kg in 2018 to around 9.9 kg in 2023, according to the BDSI. Figures from market research firm NIQ show a 1.3% drop in chocolate sales over the past 12 months.

Competitors lurk

Meanwhile, competitors are waiting for developments and, in the event that West African cocoa harvests continue to decline, they intend to drastically increase their production. “While production in Africa has declined, in Asia and Oceania it remains stable and has only increased in Latin America,” observes ICCO’s Nardella.

Several farmers from India, who currently account for just 1% of global cocoa production, see the shortages as an opportunity. And in Indonesia, the world’s third-largest cocoa producer, the government is seeking to revive the sector with significant subsidy programs. According to the Jakarta Post, from January to October Indonesia’s cocoa exports doubled compared to the previous year to reach $2 billion.

But even if countries in Asia and Latin America decide to shift even more to cocoa cultivation by using new areas of land to plant cocoa trees, the latter typically take four years to mature – and therefore cannot contribute to the immediate response of the crisis.

Wateridge estimates that the latest rise in the price of cocoa will hit consumers six to nine months from now, meaning chocolate is likely to be even more expensive next Christmas.

Edited by: Giorgos Passas