Chocolate prices climb on record high cocoa
Cocoa prices continue to climb to new record highs in both London and New York with three factors at play: weather, economic cycle-related issues and human intervention.
These issues are giving a real headache to the Ghanaian government which oversees the world's second-largest cocoa market. The El Niño weather phenomenon has caused drier weather in West Africa which has contributed to crop disease. This, in turn, has changed how farmers develop crops across the country.
Meanwhile, the land is becoming less and less fertile. Add to this the increased demand. With prices high, government grants are becoming scarce with Ghana facing funding challenges. The industry regulator in the country, the Ghana Cocoa Board, relies on foreign financing to pay farmers for their beans. But because of the plunge in production, there are now not enough beans produced to secure the funding facility.
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London and New York cocoa prices at new all-time record highs
Cocoa prices are currently at all-time highs in both London and New York for three main reasons: the weather, economic cycles, and human involvement. The El Niño weather phenomenon has caused dry conditions in West Africa, leading to crop diseases and a decline in cocoa production. Farmers are also struggling to maintain their old cocoa farms due to high costs, causing them to look for new land, which is becoming harder to find and cultivate. On top of that, the demand for chocolate and cocoa products is growing at a rate of 4% per year globally.
Problems for Ghana's cocoa farmers
All of these factors have contributed to the increase in cocoa prices. Just take a look at the New York cocoa chart, where prices have gone up by a whopping 138.7% this year alone. However, this price surge is causing problems for farmers who rely on government grants, especially in Ghana. The Ghana Cocoa Board, which regulates the industry, depends on foreign funding to pay the farmers for their cocoa beans. But with less cocoa being produced, there isn't enough supply to secure the necessary funds.
As a result, we can expect cocoa prices to continue rising in both New York and London. The situation is worsened by the fact that the Ghanaian government is struggling to provide grants to cocoa farmers. This is concerning for the industry as a whole because it could lead to even more supply shortages and make cocoa less available and affordable in the market.
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