Why you should look at the ingredients on your Easter eggs this year amid cocoa price surge
Don’t be surprised if this week’s Easter eggs cost a bit more and weigh a bit less than they did last year. In contrast to any of the crops we actually grow here, prices for cocoa and sugar are both rising. Sugar price has increased by about 20pc in the last year, largely down to weather in Brazil, but cocoa’s rise is more dramatic and complicated.
Sugar is an annual crop and the old saying that the cure for high prices is high prices applies to it, as this year’s prices will increase the area planted next year and prices will fall again. Cocoa beans are harvested from a tree that lives for 100 years so the crop cannot respond easily to market prices.
The cocoa bean is the source of cocoa, the key ingredient in chocolate, and it comes from equatorial regions. Ghana and Ivory Coast in west Africa account for 70pc of global cocoa production, and Indonesia for another 15pc. Most of the rest is grown in Latin America where the plant originated.
Most cocoa farmers only have a couple of hectares, often rented, and have very little scope to invest. Trees take five years after planting to produce their first crop and output declines from 30 years of age. The kind of planned replacement programme this requires is difficult for small farmers, and the Ghanaian and Ivorian governments have programmes to fund replanting, but there are still challenges.
Swollen root virus, spread by mealybugs, is rampant in cocoa trees, and infected ground cannot be replanted for five years. Environmental restrictions on deforestation limit options for planting in fresh ground so farmers often switch to alternative crops such as cassava.
El Nino has affected west Africa severely in the last year and the higher rainfall has driven fungal diseases, further reducing output.
Less fertiliser is being used due to high prices, and overall cocoa production is expected to drop by more than 10pc this year.
Lower production has coincided with a post-Covid rise in demand for chocolate and this, along with billions of hedge-fund dollars, has driven prices up by 60pc since January and 150pc in the last 12 months. If this sounds like a great time to be a cocoa farmer, the reality is more bitter.
In 2019, Ghana and Ivory Coast formed a cocoa-exporting cartel based on oil’s OPEC. At the start of each harvest, a price based on the average of the previous 12 months is fixed for growers. This should allow high prices to eventually trickle down to growers, but in practice there seem to be a lot of noses in the trough and farmers are currently getting about one-quarter of the internationally traded price.
Various initiatives from buyers, environmental organisations and the European Union aim to support sustainable cocoa production but most of these are likely to further constrain production in the short term. Deforestation bans limit African production and, while there is suitable land available in Latin America, the political stability needed to promote such a longterm crop is absent in many countries. Moves to agroforestry and regenerative farming are encouraged but these can also be expected to constrain production while they are being established, and the better education being encouraged often sees fewer people going back to the grind of subsistence farming.
Cocoa prices will come back a bit when speculators have a meltdown but supply will be hard to increase. If my Easter egg costs the same as last year’s, it probably contains less cocoa. It may have been replaced with cheaper ingredients like palm oil, or the egg may be part of a fivefor-€10 supermarket deal that has nothing to do with the cost of production. Personally, I am hoping that it will simply be a lighter egg and I can enjoy a second one without any extra guilt.