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Global Cocoa Shortage: Its Causes, Impact From Every Aspect & Solutions Revealed

Global Cocoa Shortage: Its Causes, Impact From Every Aspect & Solutions Revealed

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Source@CNBC

Did you recently see that your favourite chocolate brand has decreased the quantity of chocolate while keeping the prices the same? All credit goes to the global shortage of cocoa supply.

Chocolate, a beloved treat enjoyed worldwide, contains a fundamental ingredient called cocoa. Cocoa or cacao beans is a highly versatile crop with importance that stretches beyond its delicious taste. It is also utilized in countless food and beverage applications. It's a crop that many farmers rely on to make a living.

Global cocoa consumption has today reached 7.3 million metric tonnes

Cocoa is mainly cultivated in countries located within a belt between 10ºN and 10ºS of the Equator. Growing cocoa trees requires a suitable climate with relatively high temperatures ranging between 30-32ºC and a minimum average of 18-21ºC. The ideal range of annual rainfall is between 1,500mm and 2,000mm, and dry spells should not exceed three months. 

It holds a significant economic weight, serving as a cash crop for many countries in Asia, Oceania, South America, especially West Africa, providing income for millions. There has been a global shortage of cocoa recently. This has resulted in a hike in the prices of cacao beans and cocoa-related products. There has been an 8% decrease in cocoa supply due to disruptions in major producing regions.

Following are the reasons for global cocoa shortage:

1. Black Pod Disease: Black Pod disease is caused by a fungus, Phytophthora Palmivora. The cocoa tree disease can spread to various parts of the plant like its pod, flower cushions, stems or roots. It occurs mainly during the rainy season usually spread by rain splash. This highly contagious virus weakens cocoa trees, stunting their growth and drastically reducing their cocoa pod production.

Cocoa tree affected by Black Pod Disease

2. Swollen Shoot VirusSwollen shoot virus is a DNA virus that weakens the tree, stunting its growth and causing its pods to swell abnormally. This significantly reduces the number of cocoa beans a tree can produce. This has been a major problem in West Africa, a key cocoa-growing region.

Cocoa tree affected by Black Pod Disease

3. Climate ChangeThe frequency and severity of weather events are increasing due to the impact of climate change. Droughts deprive cocoa trees of the water they need to grow and produce pods. Conversely, floods can damage trees and drown root systems. These extremes can lead to lower quality beans and even complete crop failure in some areas.

4. El Niño: El Niño, Spanish for "little boy," warms the eastern Pacific Ocean, disrupting global weather. Trade winds weaken, allowing warm water to slosh east. This shift in ocean temperatures brings floods to some areas and droughts to others. This climate phenomenon disrupts weather patterns in West Africa, a major cocoa-growing region eventually disrupting supply of cocoa or cacao beans.

4. Aging Cocoa Trees: Cocoa trees have a lifespan of about 25-30 years. As these trees age, they naturally produce fewer beans, contributing to the overall decline in cocoa bean output. Nearly 40% of trees have reached their maximum yield potential. Because there hasn't been any round of planting since 2000. Additionally, cocoa production and supply have been disrupted in major cocoa-producing countries like Côte d'Ivoire (Ivory Coast) and Ghana. These western African countries contribute 60% of supply to the world.

5. Child Labor Issues: The cocoa industry has faced criticism for child labor practices. Efforts to eradicate child labor have led to stricter regulations and monitoring. The positive development has caused labor shortages as some farms are facing difficulty finding legal sources of labor. This resulted in delayed harvesting and processing of cacao beans.

According to a report by the World Cocoa Foundation, an estimated 2.1 million children aged 5-17 are involved in child labor in cocoa production in the cocoa-growing regions of West Africa. Shockingly, 96% of these children work in hazardous conditions.

6. Increasing Cocoa Demand: The global demand for chocolate and other cocoa products is steadily rising, particularly in emerging economies like China and India. This growing demand puts a strain on existing cocoa supplies, leading to potential shortages if production doesn't keep pace.

7. Farmers Opting for Lucrative Crop-Rubber: The price of rubber, used in a variety of products like tires and gloves, has seen significant fluctuations in recent years. When rubber prices are high, it becomes more profitable for some cocoa farmers to switch to cultivating rubber trees instead. Changes in the way cocoa is grown are leading to a decrease in the amount of land that is used for cocoa production. This is one of the reasons why there is a global shortage of cocoa.

8. Diversion In Use Of Cocoa Beans: Some cocoa-producing countries are exploring alternative uses for their cacao beans beyond just chocolate production. This can include using cacao beans in cosmetics or even biofuels. While diversification offers potential economic benefits, it can also divert cacao beans away from traditional chocolate production and contribute to shortages.

Impact of Global Cocoa Shortage in India:

The chocolate industry and confectionaries in India require 50,000 million tonnes of dry beans every year making India world's fastest growing chocolate market. Cocoa bean production has fallen significantly. At the same time, demand for chocolate, particularly in growing economies like India, continues to rise. This has led to a surge in cocoa bean prices, which chocolate manufacturers are likely to pass on to consumers through higher prices for chocolate products. 

  • Cocoa powder, a key ingredient in chocolate and chocolate-related products be it cakes, cookies, waffles, etc. has significantly increased from ₹300-₹500 per kg to ₹800 per kg. Also, the price of a well-known commercial cocoa product, which has 46.5% dark chocolate, has increased significantly from ₹575 per kg to ₹1400 per kg. 
  • Major chocolate manufacturing  companies faced challenges while dealing with the surge in costs. One option was to increase prices to balance out the additional expenses, while others were considering alternative measures. These measures included reducing the size of the product packaging and using substitutes for cocoa butter that have been authorized by the Food Safety and Standards Authority of India (FSSAI).

Solution And Alternatives To Tackle Cocoa Shortage:

1. Opting for Cocoa Powder Manufactured in IndiaRather than using imported cocoa powder, you can purchase it from Indian Market (manufactured in India). This will be less costly and meet your daily cocoa consumption needs whether you are a home baker or a chef. Get our Mummachef Dark Cocoa Powder. Add it in cookies or your cake or you may prepare hot chocolate!

2. Cocoa Shell PowderCoco Rich Cocoa Shell Powder can be used as an alternative for cocoa powder. You can use it directly or try make a combination of cocoa shell powder and cocoa bean powder to reduce the cocoa bean content in a recipe. If the recipe primarily needs a brown color and doesn't rely heavily on chocolate flavor, cocoa shell powder might work as a natural coloring and flavoring agent. For drinks or snacks where a very subtle chocolate taste is desired, cocoa shell powder could be an option.
In conclusion, the global cocoa shortage presents a complex challenge for the chocolate industry and consumers alike. A confluence of factors, including disease, climate change, and aging trees, has significantly reduced cocoa bean production. As the demand for chocolate continues to rise, the price of cocoa beans has also been increasing. Consequently, this could potentially result in higher costs for chocolate buyers. To address this issue, it is crucial to explore sustainable farming practices, mitigate the impacts of climate change, and investigate alternative sources of cocoa.

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