Why Your Valentine’s Chocolate Is Getting More Expensive

Cocoa futures have climbed more than 80% since this time last year

By Owen Tucker-Smith of The WSJ. Excerpts:

"cocoa futures . . . ended Thursday at $10,538 a metric ton. That is around 86% higher than a year ago and more than three times the typical price over the last two decades."

"Bad weather and plant diseases have wrecked crops in West Africa’s growing regions, where aging cacao trees are becoming less productive. Meanwhile, a European Union deforestation law and low returns for growers have limited the planting of new groves. The extent of the supply issues means that prices are unlikely to return soon to the levels chocolate makers and consumers have been accustomed to paying"

"But a string of dry months has disappointed chocolate sellers, setting up the industry for a fourth consecutive year of supply shortfalls."

"it takes years to grow a new cacao tree"

"The world’s biggest chocolate makers, like Hershey and Mondelēz International, said their prices are rising much more slowly than the price of cocoa, and they prefer taking a hit to profits over a blow to demand. Mondelēz Chief Executive Dirk Van de Put told investors recently that the company needed to maintain its price thresholds “so that consumers can continue to enjoy their chocolate,” adding that cocoa prices would “eventually” come down. 

Many trees in West Africa have died due to cacao swollen-shoot virus, which causes root necrosis."

"Some analysts said that to shore up supply, the industry should invest in production outside West Africa. But shifting cocoa’s center of output is easier said than done. In an industry like corn, farmers can respond to a weak harvest by planting more the next year. But cacao trees take years to grow. Farmers can respond to drought by adding external water sources to trees, but doing so doesn’t help the tree until the following year’s harvest."

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