According to Tropical Research Services’ Steve Wateridge at the World Cocoa Conference in Brussels, farmers who cultivate approximately 40% of the world’s cocoa are currently benefiting from record prices for their crops. As a result, they could potentially increase output significantly as early as next season.
Wateridge emphasized that farmers outside the top cocoa producers Ivory Coast and Ghana now have the financial means to invest in fertilization, pesticide spraying, and pruning for their cocoa trees. Such agricultural practices can lead to a substantial increase in yields in the following season, contributing to higher overall output.
This contrasts with the impact of increased plantings, which typically takes three to four years to result in amplified output.
However, Wateridge cautioned that it is too early to determine whether the global cocoa market, expected to register a third successive deficit this season, will be able to avoid a fourth deficit next season.
He pointed out that farmers in Ivory Coast and Ghana, responsible for about 60% of the world’s cocoa production, have not fully benefited from record global prices due to the manner in which their governments manage the purchase, sale, and establishment of farmgate prices. This situation may hinder farmers’ ability to invest in their cocoa trees.
Additionally, adverse weather conditions and a widespread outbreak of swollen shoot disease are posing challenges for the top two producers, Ivory Coast and Ghana, affecting an estimated 20-40% of their cocoa-growing land. Ghana’s cocoa industry has also been impacted by illegal gold mining and sector mismanagement.
As a result of the challenges faced by the world’s two largest cocoa producers, cocoa prices have nearly tripled over the past six months, impacting the profits of leading chocolate makers such as Hershey HSY.N and Mondelez MDLZ.O.
The evolving dynamics in the cocoa market and the potential impact on global supply underscore the complexities and challenges faced by cocoa producers and the wider industry.