What is the Current State of Cocoa?
The ongoing cocoa shortage is hitting home for us at Conexión, as we've witnessed its impacts firsthand. It's a result of various factors, with climate change and diseases wreaking havoc on cocoa crops, particularly in Africa’s Ivory Coast. The 24% shortfall in the 23 - 24 African cocoa crop, responsible for over 70% of the world's production, due to disease, is slashing the world market supply by over 15%. For three consecutive years, we've faced a global shortage in cocoa stock, leading to inflated prices that continue to climb. From around $2,000/metric ton to over $10,000/metric ton, cocoa prices have skyrocketed, causing a ripple effect across Conexión and the wider chocolate industry, inevitably driving up chocolate prices.
Source: Business Insider
The Complex Realities of Cocoa Trading: Navigating Futures, Smuggling, and Underinvestment
Government Involvement
The cocoa industry in the Ivory Coast grapples with multifaceted challenges that are amplifying the current shortage. The government of the Ivory Coast pre-sold this year's cocoa crops at relatively low prices (prior to the onslaught of disease). If they were to default on these pre-existing contracts there could be severe consequences in the ability of the Ivory Coast to secure future trading relations, which includes loans to finance future crops. This means that while the prices of cocoa have skyrocketed due to the reduction in inventory, Ivorian cocoa farmers are not getting the market value of their crop due to preexisting rates within the years pre-sale contracts.
Cocoa Smuggling
This is leading to an increase in an already present issue of cocoa smuggling, resulting in farmers seeking higher prices in less regulated markets of neighboring countries like Liberia, Cameroon, or Nigeria. Despite border restrictions, smuggling persists, which deregulates the Ivory Coast market and poses an increased risk to cocoa farmers safety and legality of their operations.
Underinvestment
While recent events in Africa have seemingly intensified the cocoa crisis, underlying issues have lingered for years. A significant concern is the chronic underinvestment in cocoa crops over time. This coupled with the continued effects of climate change has brewed the perfect storm. Now more than ever we should be focusing our efforts on building a more sustainable and resilient cocoa industry, which in all cases starts with equitable and fair resolutions for cocoa farmers.
Our Farmers First Philosophy
At Conexión, we believe that cocoa farmers are at the heart of the industry, which is why we’ve built our business around the fair and equitable sourcing of cocoa from local Ecuadorian small family farmers. We have had the privilege of witnessing firsthand the dedication and passion these farmers pour into their craft, and it's our honor to support them by ensuring fair compensation and sustainable practices.
A New Opportunity for Latin American Farmers
While Ivorian cocoa farmers are struggling to see a fair market share within the industry, the resulting increase in cocoa prices has been in favor of Latin American farming operations. The surge in cocoa prices
means more revenue, enabling farmers to invest in crucial farm infrastructure, adopt modern farming techniques, and enhance the quality of their cocoa beans. This financial injection not only enhances the livelihoods of individual farmers but also fuels economic growth within their local communities. It also serves as a compelling incentive for individuals to pursue cocoa farming as a viable occupation, potentially expanding cocoa production across the region and increasing interest from investors.
However, it is incredibly crucial that this opportunity for growth is met with a strong commitment to both social and environmental justice. As challenges escalate, from price fluctuations to environmental concerns, embracing diversity and sustainability becomes crucial. By diversifying farming methods and prioritizing sustainability, cocoa farmers and investors can bolster resilience and ensure long-term viability while safeguarding the environment and community well-being.
Our Resolute Response at Conexión Chocolate
Amidst the daunting challenges, Conexión remains strong in our dedication to ethical practices and the use of traceable, top-tier products. We will continue to source our cocoa directly from small family cooperatives ensuring all of our products are traceable and single origin. We have and will continue to champion transparency and actively support initiatives aimed at empowering cocoa farmers and fostering biodiversity.
Jenny Samaniego, the Founder of Conexión, emphasizes, "Although the future is uncertain and will likely present new challenges, we believe that the industry will respond. Furthermore, we believe that conscious consumers are prepared to transition away from mass-produced chocolate products and establish specialty chocolate as a high-quality indulgence with ethical and sustainable origins. At Conexión, we will stay true to our mission of providing the finest quality of specialty confectionary chocolate. Our focus will remain on delivering world-class flavor profiles, using natural and traceable ingredients, and implementing ethical and sustainable practices throughout our supply chain.”
To our customers, we want to preface that chocolate price increases are inevitable and will be seen across the entirety of the market. We are taking time to reflect on our business to ensure that we are in line with best practices in order to enhance our value chain and ensure direct trade from farmers to our valued customers. Choosing to source your chocolate from Conexión represents not only a commitment to both social equity and sustainability, but a product that empowers your creations and leaves customers wanting more. We aren’t going anywhere and are here to work together to ensure your success!
What can you do?
Amidst the tumult of the cocoa crisis, it is imperative for consumers to rally behind smaller craft chocolate businesses. By consciously opting for ethically sourced chocolate, consumers play a pivotal role in shaping a more sustainable future for the industry. While the current predicament poses formidable challenges, it also presents an opportune moment for collective innovation and collaboration. Together, we can navigate these turbulent waters and forge a more resilient chocolate supply chain.
For those purchasing chocolate on a larger scale, it is vital to recognize that you have the ability to create a significant impact. By choosing ethically-driven, specialty confectionery chocolate instead of mass-produced alternatives that prioritize lower prices at the expense of guarantees and quality, you can make a historical difference. It is crucial, especially in these evolving times, to prioritize sustainable sourcing for the future of the industry. Furthermore, demonstrating commitment to ethical practices is essential to meet the growing demand for such values among customers.
Wrapping it up
Navigating these challenges necessitates all industry stakeholders to address systemic issues, prioritize sustainable practices, and invest in the long-term resilience of cocoa farming communities. Only through concerted efforts can the cocoa industry withstand these challenges and ensure a sustainable future for all involved.
As we grapple with the ramifications of surging cocoa prices, we reaffirm our commitment to sustainability and uncompromising quality. We extend an earnest invitation to our customers to stand in solidarity with ethical chocolate producers and champion resilience amidst adversity. Together, let’s chart a course towards a brighter, more sustainable future for specialty chocolate lovers worldwide.