Sweet distraction, Cocoa shortage confusion remains

Sweet distraction? Cocoa shortage confusion remains

Forget oil. Chocolate may have a bleak future as an alleged looming cocoa shortage by 2020 threatens the future of companies built around candies and confectionaries. A warning from two of world’s biggest chocolate makers, Barry Callebaut and Mars, Inc., has sent ripples of concern and anxiety across the globe, especially the media.

However, several industry players downplayed the media reports. Recent performance reports of chocolate companies revealed moderate projections.

Cocoa shortage according to media

Farmers are producing less cocoa than the world eats, according to a November 2014 report from the Washington Post. Furthermore, an earlier report from BBC revealed that there has been a cocoa output deficit for the last 50 years—the longest streak in the industry’s history.

Bloomberg has also described chocolate candies as the most endangered treat in the world. The Guardian even ran an article featuring expert advice to halt the looming shortage.

There are many other reasons for the aforementioned projection from the Barry Callebaut and Mars, Inc. warning. The Guardian, again, cited several reasons for the looming cocoa shortage. These include environmental hurdles to cacao farming that thwart off farmers in Ivory Coast, high demand for chocolates in new markets including China and India, and emerging demand for product derivatives within the food and beverage industry.

Among the factors that might affect future supplies of cocoa, cacao farming is worth noting.

Droughts and pestilence are among major environmental hurdles faced by farmers. However, the very process involved in planting and growing the cacao plant has always been challenging according to the World Agroforestry Centre. Moreover, a considerable number of cacao trees in the world are already old and soon, they’ll cease to produce yields.

Probable impacts of cacao shortage

For average consumers, especially chocolate lovers, a cacao shortage could raise the off-the-shelf price of their favourite treats. Note that price of raw cacao has been steadily increasing for the past years. A full blown global cacao shortage could mean a more expensive end product.

There’s also the possibility of reduced product quality. A shortage in raw material could compel chocolate companies to stretch further their products by adding extenders or additive ingredients in order to keep normal production volume. This would mean combining cacao with other ingredients including vegetable fat, chemical flavouring, nuts, nougats, and other fillers among others.

If companies ought to retain pure or basic chocolate products, they might reduce their serving size. Other companies in other industries that use cacao or chocolates as a raw material might also modify their existing chocolate-added product lines.

Cacao supply according to some industry players

The media reports are overblown, at least according to some industry players. For instance, the International Cocoa Organization (ICCO) has quelled reports about a cacao shortage in 2020 in its November 2014 statement.

“In the past ten years, the cocoa market experienced five years with production surplus and five years with production deficit,” said ICCO in a statement. “The last cocoa season experienced a production surplus, with the two leading producing countries, Côte d’Ivoire and Ghana, each posting record production.”

The increase in cacao prices, added by ICCO, should not be a gauge to determine existing supply and project future supply. Price increase merely reflects macroeconomic factors.

A report from the Foreign Agricultural Service of the U.S. Department of Agriculture has also revealed that cocoa production across the globe has increased by 14.5% over the past five years. There is also a 69% production growth in Ivory Coast, 12% in Ghana, and 35% in Indonesia—the three largest cacao producing countries in the world.

The annual report from Barry Callebaut also revealed significant growth in sales volume and profit.

“We achieved another record year, both top and bottom-line,” said Juergen Steinemann, chief executive of the Barry Callebaut Group. “Our sales volume was boosted by the acquired cocoa business and further supported by our three growth drivers—emerging markets, gourmet, and strategic partnerships.”

Further details of The Washington Post report are in the article “The world’s biggest chocolate-maker says we’re running out of chocolate” by Roberto A. Ferdman. Details of the Bloomberg report are in the article “To save chocolate, scientists develop new breeds of cacao” by Joel Weber. More details of The Guardian report are in the article “Save our chocolate: Expert tips to halt the cocoa shortage” by Katy Salter.