AFRICA—In a dire turn of events for the global cocoa industry, major cocoa processing plants in Ivory Coast and Ghana have halted or reduced operations due to financial constraints in acquiring cocoa beans, potentially catapulting chocolate prices worldwide to unprecedented heights. 

This revelation comes amidst a backdrop of successive years of diminished cocoa harvests in these two leading cocoa-producing nations. Worse still, prospects show that there will be yet another disappointing harvest looming on the horizon. 

Transcao, an Ivorian state-controlled cocoa bean processor, has ceased its bean procurement operations due to these pricing concerns.  

While the company continues processing from existing stock, insiders reveal that its operational capacity remains severely hit, with whispers of imminent shutdowns echoing within the company. Additionally, global trading giant Cargill faced similar challenges in sourcing beans for its major processing plant in Ivory Coast, prompting a temporary cessation of operations. 

Ghana, which is the second largest cocoa producer, has seen most of its processing plants suspend their operations intermittently.  

For instance, the state-owned Cocoa Processing Company (CPC) has had on and off operations since it commenced its production season in June. The company actually admitted to operating at a mere 20% of its capacity due to bean shortage. 

This shortage has had its effects trickle down to the preexisting cocoa supply chain. Typically, farmers would sell beans to local dealers who would, in turn, supply them to processing plants or global traders. 

 Under normal circumstances, this process operates under stringent regulations, with pre-arranged prices set well in advance between local traders and farmers.  

However, the current shortage has thrown this system into disarray – local dealers have resorted to offering additional premium prices to farmers to secure beans, thereby inflating spot market prices. 

Since global traders have the financial muscle to procure the beans at any cost to fulfill their commitments with chocolate manufacturers, local processors are grappling with acute shortages. 

 Despite efforts by Ivorian and Ghanaian authorities to shield local plants by offering financial assistance or imposing limits on bean purchases by global traders, the looming crisis persists unabated. 

Shortage leads to escalating consumer prices 

Consequently, chocolate makers have been compelled to pass on the escalating costs to consumers, with US retail stores registering an 11.6% increase in chocolate product prices in 2023 compared to the previous year. 

Additionally, the International Cocoa Organization (ICCO) anticipates a significant shortfall in global cocoa production this season, exacerbating the supply-demand imbalance and depleting cocoa stocks to their lowest levels in 45 years. 

Looking ahead, experts warn of the potential for another deficit in the upcoming season, underscoring the urgent need for coordinated action to address the underlying issues plaguing the cocoa industry. 

 With the specter of a prolonged crisis looming large, stakeholders must come together to navigate these turbulent waters and safeguard the future of one of the world’s most cherished commodities. 

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