The world market price for cocoa has experienced a significant surge in the past few months. Last September, a ton of cocoa was priced at $2,500, but it has now risen to over $10,000, with the current price standing at around $7,500. This increase in price is expected to lead to significant price hikes in the chocolate sector in the coming months, according to Hartwig Kirner, Managing Director of Fairtrade Austria.
Many retailers are facing empty warehouses as they had previously secured cocoa through futures contracts at lower prices. With the need to restock at higher prices expected by autumn, the chocolate industry is bracing for the impact of the soaring cocoa prices. Additionally, manufacturers are also grappling with increased costs for transport, energy, packaging, and personnel, further contributing to the price increase.
Supermarkets are already feeling the effects of the rising cocoa prices, with some like Billa branches experiencing shortages of popular chocolate brands like Milka. This scarcity is a result of price negotiations with companies such as Mondelez and Lindt & Sprüngli, who have announced impending price increases due to the spike in cocoa prices.
Despite the high cocoa prices, farmers, especially in key producing countries like Ghana and Ivory Coast, have not benefitted significantly from the price increases as the government regulates cocoa prices. Farmers in these regions are receiving substantially lower prices compared to the current market rates. Climate change has also impacted cocoa cultivation, leading to lower harvest yields and further exacerbating the price hikes.
The current situation is leading to widespread smuggling of cocoa, disrupting supply chains and contractual agreements. Fairtrade is working to support cocoa farmers through guaranteed minimum prices and premiums to invest in sustainable farming practices. In Austria, Fairtrade sales have remained resilient despite the price increases, indicating a growing preference for sustainable products in the market.
In 2023, Fairtrade products generated sales of 663 million euros in Austria, with significant increases seen in categories like orange juice and cocoa beans. The support in promoting sustainability in the farming sector is crucial for maintaining stability in the cocoa supply chain and ensuring fair compensation for farmers.