Bad news for the chocolate world. The largest cocoa producing country in the world, the Ivory Coast, is on the verge of civil war and all of its cocoa has been seized by the state in a move that the US State Department yesterday said, “amounted to theft.”
Despite losing the election last year, Laurent Gbgabo, stated his government would take over paying the farmers and selling the beans on the open market in yet another move to resist handing over power to Alassane Ouattara the UN-sanctified winner. Ouattara countered with the statement that any exporter co-operating with Gbgabo will lose his license when Ouattara finally takes over.
EU sanctions and a ban on cocoa exports already put into place by Ouattara as a way of squeezing Gbgabo’s access to funds prompted this sudden move to nationalize cocoa production in the country that produces roughly 40% of the world’s output..
What does this mean for the chocolate making industry? According to Bloomberg’s Poppy Trowbridge, cocoa rose to record high of US$3,444/ton in the month of February driving prices up 20% since the November 28th election. And for the investor? In London yesterday, cocoa futures for May delivery rose to US$3, 858/metric ton. Meanwhile an estimated half million tons of the cacao beans are sitting in the ports of Abidjan and San Pedro as buyers are unsure which head of state to follow and do not want to violate existing sanctions agreed on by the international community. Smuggling, already in practice via neighboring countries, is expected to rise.
As consumers who already consider fine chocolate a luxury, get ready. Prices will only be going up, up, up. Time to stockpile.