Record Price for Cocoa Puts Chocolate Manufacturers Under Pressure

Cocoa prices reached a historic record level on the international commodity markets in April and December 2024. "Crop failures due to extreme weather and pests also result in lower yields, which then balances out again," said Fairtrade Austria's Managing Director Hartwig Kirner, according to a press release, regarding the economic situation of cocoa farmers in West Africa.

In early April, Côte d'Ivoire (Ivory Coast), the world's largest cocoa-producing country, announced the new state-set harvest price for the off-season cocoa harvest. With an increase of over 20 percent compared to the previous year, this is "a decision with a signaling effect for the international commodity markets - and for millions of cocoa farming families worldwide," said the Fairtrade Austria chief.

Raw Cocoa Prices Quintupled on the Stock Exchange

The stock exchange price for a ton of raw cocoa surged from around 2,000 British pounds (2,350 euros) in 2022 to the record high of over 10,000 pounds in April 2024. Then the price halved by September and doubled again by December 2024. Currently, a ton of raw cocoa costs around 6,400 pounds on the commodity exchanges. Previously, the price fluctuated for years between 1,500 and 2,000 pounds and only briefly broke the 2,500 mark in 2011 and 2016. The record cocoa prices from 2024 have reached chocolate manufacturers and the food industry with a delay because they often have longer-term contracts for cocoa mass, cocoa powder, or cocoa butter. Not only has cocoa on the stock exchange skyrocketed, but according to the food industry, so have the surcharges calculated for the food industry, such as for transport, storage, and insurance of the cargo or for the services of intermediaries.

"Currently, it is not easy for Austrian chocolate manufacturers to deal with the high prices and uncertain harvest forecasts," said the Fairtrade Austria chief. "Reliable, long-term, and fair partnerships along the entire supply chain are all the more important." Exploitative child labor and forced labor are prohibited in Fairtrade-certified cocoa cooperatives and their farmers. There is a Fairtrade minimum price for conventional cocoa, which is 2,400 US dollars (2,062 euros) per ton and is currently not applicable due to the record prices. The premium for organic cocoa is 300 dollars. Additionally, there is a Fairtrade premium of 240 dollars per ton for small farmer organizations, for example, to improve the quality of cocoa cultivation and to enable community projects such as school and road construction.

Chocolate Manufacturers Raise Prices

In Austria, Manner, Heindl, and Heidi, as well as partially the food retail sector with its chocolate private labels, rely on Fairtrade cocoa. Worldwide, there are around 485,000 cocoa farmers who cultivate according to Fairtrade standards and nearly 400 Fairtrade cocoa cooperatives.

In view of the increased cost pressure, the US company Mondelez announced at the end of January that it would reduce the content of some of its Milka bars. The measure affects, among others, the varieties Alpine Milk, Hazelnut, Dark, and White, whose content shrinks from 100 grams to 90 grams. The weight of several large bars will also be reduced from the previous 270 grams to 250 grams. The Swiss chocolate manufacturer Lindt & Sprüngli announced at the beginning of the year that it would increase prices for its products due to the high costs of cocoa. The German manufacturer Ritter also raised its prices in the fall of 2024.

(APA/Red)

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