Why a looming world chocolate shortage might be a good thing(Read article summary)
A global chocolate shortage (and higher prices) looms, according to a Swiss chocolate producer. Why a shortfall in cacao might not be such a bad thing.
On the heels of reports that the Ebola epidemic might threaten the world's supply of chocolate, the world's largest chocolate manufacturer has now put out the warning that it can't keep up with the soaring demand for its confectionary.
The Switzerland-based Barry Callebaut Group affirmed what others in the industry have been worried about: a 1 million-ton cocoa shortage by the year 2020.
The company revealed demand has already doubled chocolate prices in the last eight years.
And yet, sales continue to rise, with the company reporting a year-on-year sales increase of more than 11.8 percent. Rising concern about the shortfall has helped drive cocoa prices up 25 percent this year, according to The Independent.
The Swiss mega chocolate producer's report matches what Mars Inc claimed in 2012: that increasing economic and environmental pressures on cocoa farms were not sustainable.
The industry warnings are compounded by worry that the Ebola epidemic is jeopardizing cacao harvests and chocolate supplies.
Beyond claiming thousands of lives in West Africa, fear of the epidemic threatens production of chocolate as the three countries that produce almost 60 percent of the world’s cocoa production – Ivory Coast, Ghana, and Nigeria – neighbor the countries dealing with the worst of the outbreaks, The Christian Science Monitor previously reported.
The world’s largest producer of cacao, Ivory Coast, has closed its borders with Ebola-stricken neighbors Liberia and Guinea, shutting out many of the migrant workers needed to pick the cacao beans which go into popular chocolate candies such as Snickers Bars, Nestle Crunch, and M&Ms.
These moves prompted market jitters, and prices on cocoa futures have vaulted.
While there's no golden ticket solution immediately in sight, there may be a silver lining here. Chocolate consumption is rising worldwide, according to the Barry Callebaut Group report, says The Independent:
Despite the shortage warnings, the increase in demand for chocolate was almost seven times greater in Asia compared to that of traditional European markets, the manufacturer said.
Though supplies aren't keeping up with demand, there's another way to view this – rising demand for chocolate means more and more people can afford it. In a way, chocolate – as a luxury item – is an indicator of a growing world middle class.
By 2030, the global middle class is widely projected to at least double in size to as many as 5 billion – a surge unseen since the Industrial Revolution. This boom, however, is more global, more rapid, and is likely to have a far different – and perhaps far greater – impact in terms of global power, economics, and environment, say economists and sociologists.
"This dwarfs even the 19th-century middle class explosion in its global scale," noted economists Dominic Wilson and Raluca Dragusanu in a 2009 Goldman Sachs report. And they predicted, "the pace of expansion ... is likely to pick up."
The world will, for the first time in history, move from being mostly poor to mostly middle-class by 2022, the Organization for Economic Cooperation and Development projects. Asians, by some predictions, could constitute as much as two-thirds of the global middle class, shifting the balance of economic power from West to East.
Plus, as demand increases, it's possible that cacao farmers will rise to the supply challenge. Higher prices could lead some to switch to - or invest in boosting - cacao production, in time supplying more of the global commodity to a growing middle class that's acquiring a taste, and the income, for the Mayan treat.