These escalating prices are straining both producers and consumers, with long-term implications for the global agricultural landscape.
Casablanca — The global markets for coffee and cocoa have hit record-high prices, largely driven by a combination of extreme weather conditions, supply chain disruptions, and growing global demand.
This surge is driven by a combination of climatic, economic, and logistical factors. Let’s dive deeper into the key forces shaping this price spike.
Price spike alert
Brazil, the world’s largest coffee producer, has faced extreme weather patterns, including severe droughts and frost, which have drastically affected its coffee crop yields.
According to BNN Bloomberg, Arabica coffee futures reached around $3.35 per pound in November, marking the highest price since 1977. These price hikes have been linked directly to the adverse climate conditions, which have led to reduced yields and a tighter global supply.
Brazil’s weather patterns, which directly impact coffee harvests, highlight the growing vulnerability of coffee production to climate change.
Cocoa under pressure
In West Africa, particularly in Ivory Coast and Ghana — responsible for around 75% of the world’s cocoa supply — the situation is similarly bleak.
The region has been battling heatwaves, irregular rainfall, and changing weather patterns, which have hindered cocoa harvests. As a result, cocoa prices surged by 136% between July 2022 and February 2024, according to the United Nations Conference on Trade and Development (UNCTAD).
These disruptions are not only affecting the livelihoods of millions of farmers but also putting upward pressure on the prices of cocoa-based products like chocolate, further exacerbating the global cost of living.
Logistical nightmares and supply chain chaos
Along with climatic challenges, supply chain disruptions continue to amplify the price increases in both coffee and cocoa.
The COVID-19 pandemic left a legacy of logistical inefficiencies that are still being felt in the form of port congestion, transportation delays, and higher shipping costs.
These challenges have raised the cost of moving goods around the globe, and it’s having a direct effect on commodity prices.
Furthermore, cocoa farmers in Ghana, for instance, have struggled with fertilizer shortages, undermining their ability to produce high-quality cocoa and further driving up global prices.
The forces driving prices up
At the same time, global demand for coffee and cocoa products has surged, particularly in emerging markets where both coffee consumption and chocolate consumption are on the rise. This increased demand is further inflating the pressure on already strained supply chains.
Additionally, commodity speculators have entered the market, driving volatility and amplifying price surges. Stockpiling by major companies to secure supply has also contributed to price spikes.
The effect on consumers and the industry
For consumers, these rising prices are becoming more visible. Coffee drinkers are already seeing the effects of higher bean prices, with retail costs expected to increase across the globe.
In some markets, companies are responding to these price hikes by reducing the size of their products while maintaining prices, in order to offset rising production costs without losing customers.
For chocolate producers, the increased cost of raw materials has resulted in higher prices for chocolate bars and other cocoa-based products.
A global call for sustainable practices
The unprecedented surge in coffee and cocoa prices signals a need for urgent action on several fronts.
First, there must be a concerted effort to implement sustainable agricultural practices that can help mitigate the effects of climate change on coffee and cocoa production.
This includes investing in climate-resilient farming methods and improving crop diversification.
Moreover, addressing the persistent supply chain inefficiencies that continue to affect the agricultural sector is crucial for stabilizing prices and ensuring the long-term sustainability of these industries.
Brewing solutions
As coffee and cocoa prices soar to record highs, it is clear that climate change, logistical issues, and rising global demand are all contributing factors to the current crisis.
The agricultural industry, consumers, and policymakers must all work together to build more resilient supply chains and sustainable farming practices that can withstand future challenges.
Without proactive measures, these price fluctuations could become a regular occurrence, impacting not only the cost of everyday products but also the livelihoods of millions of farmers around the world.
