Ghana and Côte d’Ivoire, the primary global suppliers of cocoa, are experiencing a significant decline in their production. The culprit? The Cocoa Swollen Shoot Virus… but other factors are also at play.
The primary cocoa suppliers on the global stage, Ghana and Côte d’Ivoire, are grappling with a significant decline in their cocoa production, attributed to the Cocoa Swollen Shoot Viral Disease. The total cocoa production of Côte d’Ivoire, the world’s leading producer, is expected to drop to 1.75 million tons for the 2023⁄24 season, compared to 2.3 million tons in the previous season. Meanwhile, Ghana, the second-largest producer, has recently lost over half a million hectares of plantations, approximately one-third of its total production area of around 1.5 million hectares.
The decline in yield is attributed to the mysterious Cocoa Swollen Shoot Virus, a plant pathogenic virus endemic to West African regions and transmitted by mealybugs. Typically fatal to trees within a few years, the disease manifests symptoms such as leaf discoloration, root swelling, and withering.
The Cocoa Rehabilitation Program, initiated in 2020 by Ghana in response to this viral threat, aimed to replace diseased cocoa trees with hybrid plants to boost productivity. The project received a 600-million-dollar loan from the African Development Bank (AfDB).
The situation is critical
Eric Opoku, spokesperson for the National Democratic Congress for Agriculture, nevertheless criticized the Ghanaian government’s handling of the situation, alleging inefficient use of the funds borrowed for plantations. Opoku emphasized that the disease now affects over 25% of their farms, contrasting with the 17% reported between 2006 and 2017.
In addition to the viral outbreak, major challenges stemming from climate change have significantly impacted cocoa crops in recent years. The leading cocoa-producing nations, accounting for nearly 60% of global cocoa beans, face the disruptive effects of El Niño, causing irregular precipitation patterns and bringing hot, dry weather to West Africa.
Illegal mining exacerbates the situation, with serious damage observed in cocoa farms due to the activities of illegal miners over the past five years. Michael Kwarteng, Director of Anti-Illegal Mining Operations at the Ghana Cocoa Board (COCOBOD), expressed concern over the alarming proportion of land lost to illegal mining.
Unveiling repercussions on the price of chocolate
As a result of these challenges, global cocoa prices have soared to record levels, surging by over 40% in New York since the beginning of the year and nearly doubling in London compared to the same period last year.
The escalating prices pose a significant challenge for chocolate manufacturers, as the historic surge in cocoa prices is anticipated to limit profit growth this year. CEO of The Hershey Company, Michele Buck, observed a 6.6% decline in sales during the fourth quarter, attributing this downturn to consumers scaling back on confectionery expenditures due to inflation.
Analysts predict that consumers will bear the brunt of these challenges, as chocolate companies, having absorbed high prices in 2023 and built up stocks, are now exposed to rising raw material costs. Paul Joules, an analyst at Rabobank specializing in the agri-food sector, asserts that the only viable option for these companies is to transfer these increased costs onto consumers.
