Climate change threatens cocoa production in West Africa, jeopardizing ability to meet growing global demand
RALEIGH, North Carolina, March 6, 2019 /PRNewswire/ -- The global cocoa market is expected to reach $10 billion by 2026, growing at a compound annual growth rate (CAGR) of 3.4 percent, according to Beroe Inc., a leading global procurement intelligence firm. With the market for cocoa derivatives such as cocoa butter surging, and climatic conditions threatening cocoa production in West Africa, the ability to meet growing global demand remains uncertain and prices are projected to rise.
"Worldwide, we've seen demand for cocoa increase year over year for the past 10 years," said Nagarajan S, Team Lead, Agro Commodities and Food Ingredients at Beroe Inc. "This demand, coupled with unfavorable cultivation conditions, is slated to drive up cocoa prices. Climate change is having a profound impact on crop yields, and cocoa has been one of the crops hardest hit. With insecure cocoa production on the horizon, procurement organizations must adopt assertive strategies to ensure the long-term sustainability of cocoa supply chains."
Demand for cocoa is projected to increase 30 percent by 2020, with chocolate production continuing to serve as the chief driver of global supply needs. Strong forecasts for cocoa derivatives are further bolstering market demand; the U.S. and Europe comprise the top consuming countries for both cocoa powder and cocoa butter, reflecting high market consumption of chocolate products. In addition, cocoa liquor is positioned to experience accelerated growth at a CAGR of 4.5 percent until 2020, credited to its diverse utilization and rising preference of its use in chocolate production.
The ability of cocoa producing regions to meet booming global demand remains uncertain. West Africa is the top cocoa producing region, with the Ivory Coast, Ghana and Nigeria holding nearly 70 percent of global production. As climatic conditions threaten cocoa yields across Africa, estimated production is questionable through 2020. Compounding this issue, labor shortages and the rising cost of labor are driving up the expenses associated with harvesting cocoa—leading many farmers to exit the cocoa farming business entirely. Strengthening co-operatives presents one viable option for incentivizing cocoa farming while ensuring cocoa price sustainability—by eliminating intermediaries in the supply chain, a focus on co-operatives has the potential to save 10–12 percent in cocoa procurement costs.
"Without empowering and investing in small-scale farmers, the cocoa industry will struggle to produce sufficient supply," added Nagarajan. "Investing in co-operatives is a win-win—it ensures farmers get a fair price for their yields while enabling procurement organizations to ensure the stability of cocoa prices and their supply needs over the long-term."
Major trends governing the cocoa industry include a strong focus on organic cocoa and its nutritional benefits—both driven by global consumer preference. While the market for organic cocoa is increasing, the smaller yields of organic cocoa farms are fueling a shortage in organic cocoa supply.
The methodology adopted for this research follows Beroe's unique 3C approach: data confidence, data coverage and data credibility. Powering its 3C approach are experts with twenty years of domain experience, comprehensive interaction with buyers and in-depth inputs from supply chain partners. The full report can be accessed by procurement professionals on Beroe's innovative, on-demand market intelligence platform, Beroe LiVE: live.beroeinc.com.
About Beroe Inc.
Beroe is the world's leading provider of procurement intelligence and supplier compliance solutions. We provide critical market information and analysis that enables companies to make smart sourcing decisions—leading to lower costs, greater profits and reduced risk. Beroe has been providing these services for more than 13 years and currently works with more than 10,000 companies worldwide, including 400 of the Fortune 500 companies.
To learn more about Beroe Inc., please visit: http://www.beroeinc.com
SOURCE Beroe Inc.