Summary

Global Chocolate Industry Faces Challenges Due to Cocoa Price Surge

The largest chocolate factory in the world is facing significant challenges due to a surge in cocoa prices, which have reached an all-time high of over $112,000 per metric ton. This is caused by a dire bean shortage, partly due to an incurable virus called swollen shoot, which is infecting cocoa trees in major cocoa-producing countries like Ghana and Ivory Coast, resulting in reduced chocolate production and smaller chocolate bars.

Cocoa Farmers in Ghana Face Significant Challenges

Cocoa farmers in Ghana face a significant challenge due to a shortage of cocoa, with a projected harvest of over 700,000 metric tons less than the previous season. The main issues are:

• The spread of swollen shoot virus, which requires infected trees to be cut down
• The takeover of cocoa farmland by illegal gold mining operations, leaving farmers without income and barren land
• Drought, economic crisis, and low income, making them vulnerable to selling their land to illegal mines operated by Chinese companies

Despite global cocoa price spikes, farmers don’t benefit as they are required to sell their beans to the cocoa board at a fixed price, which doesn’t increase with global market prices.

Impact of Cocoa Price Surge on Chocolate Production

Cocoa bean prices reached a record $112,000 per metric ton in April 2024, prompting farmers to sell to smugglers. However, after the price paid to farmers was increased to $3,000 per metric ton, the future price dropped, still remaining high and causing struggles for Ghanaian cocoa processors who aim to keep chocolate production local.

Local chocolate makers face challenges due to the global surge in cocoa prices, but some, like Michael and Lloyd, aim to produce finished chocolate products for African consumption, rather than just exporting raw beans. Ghana grows a significant portion of the world’s cocoa, but most of it is exported to Europe, leaving West Africa with only 5% of the $200 billion chocolate industry.

Effects on Chocolate Companies

Some chocolate companies, like Michael’s chocolate company, have pivoted to making chocolate drops, selling mostly to European baking and ice cream industries, and are now completely sold out for next year. Meanwhile, a New York City chocolate house, Lilac Chocolates, faced a 62% price increase in their chocolate contract, forcing them to raise prices on some items and accept lower margins to maintain sales.

Other companies, like Mars Wrigley, have increased their suggested pricing due to rising costs, and are adapting to changing consumer trends, with younger generations preferring fruity and sour candies over traditional chocolate. The company is introducing new sour-based products and variety packs to cater to these tastes.

Future of the Chocolate Industry

Rising cocoa prices may force businesses to increase prices, but large chocolate companies are managing costs by reducing product sizes or altering recipes, while smaller businesses try to hold off on price increases as long as possible. Chocolate should be viewed as a precious item rather than an everyday luxury due to its potential changes in appearance and availability.

As the chocolate industry continues to evolve, companies will need to adapt to changing consumer trends and find ways to manage rising costs. With the holiday season approaching, some chocolate companies are hoping for a boost in sales, but the future of the industry remains uncertain due to the ongoing challenges faced by cocoa farmers and the impact of rising cocoa prices on chocolate production.

Key Vocabulary

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Vocabulary Quiz

1. Which word means ‘a situation in which something is not enough or is scarce’?

A) Drought
B) Shortage
C) Surplus
D) Abundance

2. What does ‘incurable’ mean in the context of the swollen shoot virus?

A) Can be treated with medicine
B) Can be prevented with precautions
C) Cannot be cured or treated
D) Is not serious

3. Which term refers to ‘a period of time when there is not enough rain’?

A) Economic crisis
B) Drought
C) Price surge
D) Harvest season

4. What does ‘vulnerable’ mean in the context of cocoa farmers selling their land?

A) Strong and resistant to change
B) Weak and easily influenced or harmed
C) Unaffected by external factors
D) Completely protected

5. Which word means ‘to change direction or focus in response to new circumstances’?

A) Adapt
B) Evolve
C) Pivot
D) All of the above

Answer Key:

1. B
2. C
3. B
4. B
5. D

Grammar Focus

Grammar Focus: Causative Verbs and Passive Voice

Grammar Quiz:

1. The company’s profits ____________________ by the rise in cocoa prices.

• are being increased
• have been reduced
• are being reduced
• were increased

2. The infected trees ____________________ to be cut down to prevent the spread of the disease.

• must
• are required
• have to
• can

3. The chocolate industry ____________________ to adapt to changing consumer trends.

• is forced
• has been forced
• is being forced
• will force

4. The cocoa farmers’ income ____________________ by the drought and economic crisis.

• is being affected
• has been reduced
• was increased
• are affecting

5. The company’s prices ____________________ due to the rising costs of cocoa.

• are being increased
• have been reduced
• were increased
• can be increased

Answer Key:

1. c) are being reduced

2. b) are required

3. a) is forced

4. b) has been reduced

5. a) are being increased