Record Global Cocoa Prices Could Have a Chocolate Lining for Australian Growers

Record Global Cocoa Prices Could Have a Chocolate Lining for Australian Growers

In April this year, the price of the most widely traded cocoa contract rose to $12,000 tonne which was an all-time record. This year is the third one in a row where the global supply of cocoa has been less than the demand which has driven prices steadily upwards.

The most immediate cause of the shortage is due to turbulent weather in West Africa where four fifths of the world’s supply of cocoa is grown. While floods and prior to them, drought have played havoc with West African supply, the industry in Ghana and Ivory Coast has deeper, structural issues which will continue to cause shortages. Another shortfall in production is forecast for 2025.
Most growers in these countries are small landholders tied into contracts by state owned purchasers that give them a fixed, low price for their beans. This price is too low for them to be able to afford fertilisers or pesticides, so their yields are low and don’t provide a decent standard of living. There is also no incentive to produce higher volumes or to improve their operations. Increasingly growers are giving up on cocoa and turning to other more lucrative crops.

While the high price of cocoa makes life harder for chocolate makers, it is good news for Australian cocoa growers. While growing cocoa is a niche industry in Australia, cocoa trees grow very well in tropical North Queensland and existing growers believe that there is a lot of potential for growth. The crop is more profitable than sugar cane and not subject to the price volatility that is characteristic of the sugar market.

If the current high prices for cocoa do encourage more producers to investigate growing the crop, they may help develop a new agricultural sector in North Queensland.