Ivory Coast's Cocoa Bean Production Challenges and Global Market Implications

Published Oct 6, 2023

The Ivory Coast, the world’s top producer of cocoa beans, is experiencing a limited supply of cocoa beans. Heavy rains triggering diseases, notably the Cocoa Swollen Shoot Virus Disease and Black Pod, have severely impacted production, with expectations of a 20% YoY drop to 1.8 mmt in output for the 2023/24 season. This decline has affected globally, leading to a record-high cocoa price, a 61% YoY increase to GBP 3,121/mt in W2 Sep-23. It has also impacted major chocolate companies like Mondelēz, which has pulled out some products from retailers after failing to agree on a price hike. With the Ivory Coast facing ongoing climate challenges and reduced output, the cocoa market is bracing for a decline in global supply, prompting concerns about high chocolate prices amidst limited cocoa availability from the world's largest cocoa-producing market.

The supply of cocoa beans from Ivory Coast, the world’s largest producer, has been tightening. Heavy rains in Ivory Coast have triggered the Cocoa Swollen Shoot Virus Disease (CSSVD) and the spread of Black Pod disease. These climatic challenges have taken a toll on Ivory Coast’s cocoa bean production. It is expected that Ivory Coast will produce only 1.8 million metric tons (mmt) of cocoa beans in the 2023/24 season, a significant 20% year-on-year (YoY) drop from 2.25 mmt in the previous season.

Source: International Cocoa Organization (ICCO)

The impact of lower cocoa production in the Ivory Coast affected the cocoa industry globally. London cocoa prices soared to a record high of GBP 3,121 per metric ton (mt) in W2 Sep-23, reflecting a notable 61% YoY increase. The soaring cocoa prices in Sep-23 prompted traders to reduce sales activity, resulting in a decline to GBP 2,940/mt in W1 Oct-23. Despite these fluctuations, cocoa availability remained constrained due to supply issues in the Ivory Coast for the 2023/24 season projections. While there were short-term price drops, it is anticipated that this downward trend will be temporary.

Source: ICE

The ripple effect of reduced cocoa production has also affected major chocolate companies like Mondelēz. One such battle resulted in Mondelēz pulling Cadbury and Milka bars from Belgian supermarket chain Colruyt's shelves after failing to agree on a price hike in Aug-23. As price-conscious consumers faced higher chocolate prices, many turned to private-label products with more budget-friendly prices. For instance, in mid-September, 7-Eleven in the United States (US) introduced private-label bagged chocolates, offering consumers an alternative at lower prices.

Looking ahead, the challenges in Ivory Coast’s cocoa production may persist. Ivory Coast, which is responsible for 50% of the world's cocoa production, has faced challenges such as excessive rainfall, and disease over the years. Moreover, the impending peak of the El Niño weather event in 2024 adds more concerns. Officials are grappling with ways to support farmers in coping with these adverse climate conditions. It is expected that cocoa bean shipments from the Ivory Coast will decline. The Ivory Coast's Cocoa and Coffee Council (CCC) regulator has closed its cocoa bean contract sales for the 2023/24 season at 1.4 million tons, marking an 18% YoY decrease from the previous season's 1.7 mmt. This poses a significant challenge for consumers, chocolate companies, and retailers as they adapt to the expected high prices of chocolate due to the limited cocoa beans supply.