Upcoming Price Increase on June 1st

tom holding drying cacao beans at cacao bisiesto, nicaragua, goodnow farms chocolate

dried cacao beans, goodnow farms chocolate

Price increases are something we try very hard to avoid – in eight years we’ve only done two.  But due to several factors we’ll be raising the price of our chocolate bars on June 1st.  The increase will be between 11% and 15% depending on the bar.

The biggest reason is the disruption of the cacao market due to the historically high price of beans.  Commodity prices are typically around $2800 – $3200 per ton, but in the past six months the price has risen to over $12,000 per ton – a 400% increase.

Cacao prices are stratospherically high because it was a terrible harvest year in West Africa, where most commodity cacao is grown.  The seasonal El Nino weather pattern certainly played a role, although it doesn’t fully explain the worst harvest ever.  Most likely climate change had an effect as well.  Regardless of the exact causes there simply wasn’t enough cacao harvested in West Africa this year to meet the demand of commodity buyers like Hershey’s, Cadbury, Mars, Mondelez and others.

You may (reasonably) ask why a shortage of cacao West Africa has any impact on us, since we buy from Latin America, and also why the price of commodity cacao has any effect on us, since we’ve always pay far more than commodity prices anyway.

opening a ripe cacao pod, goodnow farms chocolateThe reason is straightforward – since there wasn’t enough West African cacao grown this year to meet the demand of commodity buyers they’ve turned to Latin America out of necessity, which is driving up prices there.   And since commodity prices are so high, the price they’re paying is well above the usually-much-higher-than-commodity prices we typically pay.  To give just one example, in 2023 we paid $6800 per ton for our Zorzal cacao, which at the time was 230% more than the commodity price.  This year Zorzal is costing us $13,000 per ton – almost double the price from last year and still only a few percentage points above commodity.

Higher prices have an immediate effect on our expenses, but they’re also causing a longer-term problem.  Namely, there’s too much price competition for wet cacao beans right now, which not only locks in higher prices for longer, but also means fine flavor bean producers often aren’t able to get the volume of beans they need.

To understand why what’s happening with wet cacao is a problem, it’s first necessary to understand how cacao is farmed and processed at origin.

Most cacao is grown on very small farms, and each farmer sells their wet cacao (the cacao beans and pulp which are scooped out of the ripe cacao pod, and which are referred to as “baba”) at a set price (the “farm gate” price) to a local post-harvest processing facility, which then ferments and dries the beans.  The fine flavor post-harvest processors we work with have always paid a higher farm gate price for fine flavor baba, since they’re paying for higher quality beans (among other things).  However, now that commodity prices are so incredibly high, commodity buyers are offering even higher farm gate prices for baba than what our fine flavor buyers typically pay.  This means our buyers have had to raise the farm gate price they’re offering to farmers.

But, even paying a higher price doesn’t guarantee the buyers we work with will get the cacao.  One reason is because our buyers buy small amounts compared to the many tons that commodity buyers are looking for.  So, if a commodity buyer comes in and offers to buy all the cacao a farmer produces at a very high price the farmer will often sell it to them, which shuts out the fine flavor buyers.  This is actually an existential problem for the fine flavor post-harvest processors we work with, since they can’t buy just any cacao – they can only buy fine flavor beans, which only some farmers have.  They’ve also often spent years working with those farmers to identify which trees produce the best beans, and teaching them the best methods for propagating the trees and harvesting the pods.  Once that supply goes away they have nowhere else to turn.

So, not only is the price we’re paying for dried cacao beans much higher right now, but we’re also committing to pay higher prices down the road so that our fine flavor producers at origin can offer competitive prices for baba.

a ripe cacao pod in nicaragua, goodnow farms chocolateAnother reason higher cacao prices have a bigger effect on us than it does on mass-market chocolate makers is because our chocolate is made with only cacao and sugar, and isn’t loaded with all the cheap additives used by large companies.  Plus, our bars have a higher cacao content than  mass market bars.  Take, for example, a Hershey’s “Special Dark” bar – it contains only 45% cacao and the main ingredient is sugar.  Even though it’s a “dark” bar it also contains milk, as well as soy lecithin, which is a very cheap substitute for cocoa butter (most of which they press out and sell separately).  It also contains vanillin, which is a byproduct of processing wood pulp and far, far cheaper than real vanilla (they need to add this because without it the bar would taste terrible – since they alkalize their cacao all of the natural flavors, as well as most of the healthy polyphenols, are removed).   As for a Hershey’s milk chocolate bar, it contains only 10% cacao.

By comparison most of our chocolate bars are in the 70% to 77% cacao range.  The only other ingredients in our unflavored bars are organic sugar (which currently costs us 800% more than conventional sugar) and cocoa butter we press ourselves.

Which brings us to yet another reason higher cacao prices hit us so hard – pressing our own cocoa butter means we use 60% more beans per batch than we would otherwise.  Many fine flavor chocolate makers don’t add any butter, or buy it off the shelf, and large chocolate companies press it out and sell it at a profit, often to the cosmetics industry.  So, what’s actually a profit center for mass-market chocolate manufacturers is a big liability for us.  And we add a lot of freshly pressed cocoa butter to our chocolate, since it enhances the flavors in addition to making the chocolate incredibly smooth.

The decision to raise prices is always a difficult one, but we hope this helps explain, at least in part, why it’s necessary for us to do this right now.  We should note that while the rising price of cacao is the main reason behind the price increase it isn’t the only one – many of our other costs have increased, too.  We can only hope that, with inflation now much lower than it was last year, the upward price increases will slow down or stop soon.

Thanks for taking the time to read this, and as always thanks for being an engaged consumer who cares about where their food comes from and how it’s made.   If you have any questions at all please reach out to us at info@goodnowfarms.com!

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