The cocoa processing industry in Ghana is facing a crisis as a shortage of beans deepens in the country, causing processing units to shut down intermittently.
Major companies such as Cargill Inc., Cocoa Processing Co. Ltd., and Niche Cocoa Ghana Ltd have all had to close their units, leading to palpable effects in Ghana’s port city of Tema.
The shortage is attributed to extreme weather conditions in West Africa, which have caused heavy rains, disease spread, and delayed harvests.
The heat is expected to further limit production, leading to global supply falling short of demand for the third season in a row. This is particularly concerning as the processing plants are responsible for churning raw beans into products like cocoa butter and powder, which are essential for creating chocolate bars and other sweets.
The supply crunch has resulted in New York cocoa futures reaching record levels, and the industry is expected to face higher prices for cocoa-based products.
Ghana’s bean arrivals at ports have dropped by about 30% compared to the last season, and the country’s strict market controls have led to growers smuggling their output to neighboring countries in search of better prices.
The neighboring top-producer, Ivory Coast, is also on the verge of a similar crisis, with the deficit in the main-crop harvest contributing to a potential 100,000-ton shortage of beans on forward sales. Companies like Cargill, Barry Callebaut AG, and Olam Group Ltd. may be forced to stop their machines as a result of the shortage.
The current situation is expected to continue to put upward pressure on futures prices, with commodity analysts predicting that global cocoa supply could remain tight for many years. This, in turn, will likely force chocolate companies to pass on higher prices to consumers.
The cocoa industry in Ghana and the Ivory Coast is facing a severe crisis, and the impact of the bean shortage is expected to have far-reaching effects on the global supply and pricing of cocoa-based products.
