Commodity Cacao Prices are a Problem

Commodity Cacao Price Chart, 6 months

If, like most people, you don’t pay attention to global commodity cacao prices you probably don’t know how crazy they are right now.  The price for a ton of cacao has historically been around $3200 – $3600 per ton, but here’s the price as of March 18th:

Commodity Cacao Price as of March 19th, 2024

This is well above the previous all-time high of $5, 909 per ton.  And it’s shot up from normal levels in less than six months:

Commodity Cacao Price Chart, 6 months

But wait, you say – I thought the problem with commodity cacao prices is they’re normally too low, so farmers are locked into poverty.  So, aren’t higher prices a good thing?

Short answer – not for most farmers, and not long-term.  To explain why, let’s look at three main reasons behind the current high prices:

Problem #1: There isn’t enough cacao.

Problem #2:  Weather is hurting the cacao harvest.

Problem #3:  Short term profit-taking may be at the expense of long term price sustainability.

To dig into these a bit more:

Lack of cacao:  Since farmers have less to sell, most aren’t receiving any more income than they would in a typical year.  If the cacao harvest is better next year it’s very likely prices will return to their artificially low levels, which means farmers are once again being underpaid.  The benefit will accrue to the big chocolate companies, who have already started raising prices, but most likely won’t lower them when they’re paying less for cacao.  The big chocolate companies will be the ones making more profit while the underlying issues causing unsustainably low cacao prices remain unchanged.

Weather:  This is a problem that will likely only get worse, which is bad news for farmers.  Due to climate change there’s a good chance yields continue to be challenging – 2023 was the hottest year on record and 2024 may be even hotter.  So, again, prices may be high but farmers won’t see the benefit because they have less cacao to sell.  Climate change also means additional work, and therefore expense, to keep the cacao trees healthy and productive.

Short vs. Long:  This is specific to the fine flavor cacao industry, and is more complicated.  Most farmers growing cacao for fine flavor chocolate sell “baba” (the fresh mixture of beans and pulp which is scooped out of the cacao pods) to local specialty buyers who pay a higher price than commodity buyers.  But with commodity prices at record levels, commodity buyers are paying prices so high they’re basically stealing the baba out from under the specialty buyers, who have spent years and invested a lot of capital building a fine flavor cacao supply chain.  The danger is that specialty buyers may go under, meaning they won’t be there to reliably purchase the baba at higher-than-commodity prices each year.  While it’s understandable for farmers to take the best price they’re offered, it’s a short-term fix that could cause long-term problems, and is causing real challenges for specialty buyers even now.

A reasonable question to ask is why specialty buyers can’t just keep beating the commodity price.  And the answer is because specialty buyers usually sell to specialty chocolate makers like us, who don’t have the huge profit margins of big chocolate companies and therefore don’t have room to absorb price increases on an already premium price.  That’s an oversimplification and there are many other factors, such as the fact that cacao makes up a much larger percentage of our products – for example, our chocolate bars are mostly between 70% and 77% cacao, whereas a typical mass-market milk chocolate bar contains 11% cacao.

So, while a small number of cacao farmers may be seeing some benefit from the high prices this year, the underlying problems with the cacao supply chain still exist, and could actually be exacerbated by what’s happening right now.  How, exactly, this will all affect the fine flavor chocolate industry is still an open question.  For now we’re keeping an open dialogue with all our producers and doing our best to support them.


Monica in Colombia reviewing the prices paid for wet cacao beans

Monica in Colombia reviewing the prices paid for wet cacao beans.

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