Latest news with #cocoa
ABC News
10 hours ago
- Business
- ABC News
Australian grown chocolate set to boom
If you've browsed the chocolate aisle in your local supermarket recently, it's likely you've noticed prices are soaring. That's because supply challenges in West Africa have led to global supply shortages of chocolate's key ingredient, cocoa. But it's creating opportunities for Australian cocoa farmers, who are expecting the local industry to boom over the next decade.
ABC News
18 hours ago
- Business
- ABC News
Australian chocolate gains a competitive edge in global cocoa shortage
Chris Jahnke's Far North Queensland cocoa farm is not the cheapest place to buy chocolate, but as the price of imports soars, people are lining up to buy his beans. "I've actually got a waiting list of people wanting to buy Australian cocoa beans and we just don't have enough to supply them," Mr Jahnke said. Supply challenges in the major West African cocoa-producing countries, Ghana and Ivory Coast, have led to record prices, driving up the cost of chocolate for consumers. Not just a cocoa grower, Mr Jahnke also produces chocolate at his Mission Beach property, about 130km south of Cairns in Queensland's far north. "I get calls probably at least once a week from Australian chocolate makers — these are the sort of boutique, bean-to-bar kind of makers — wanting to buy Australian beans," he said. "That's not just in Australia. We get inquiries from overseas now that we're becoming a bit more well known." He expected it would lead to growth in the Australian industry over the next decade. "I think we'll get to a point where we'll be … maybe producing a couple of thousand tonnes of cocoa here in Australia, which is still a drop in the ocean in the worldwide cocoa supply," he said. Historically, cocoa prices have averaged close to $4,600 a tonne, according to Rabobank agricultural analyst, Paul Joules. But by the end of last year, prices peaked at almost $17,000 a tonne, eventually settling at about $14,000 a tonne. Later this year, the European Union plans to enforce new trade regulations that penalise products linked to deforestation. It will apply to commodities including cattle, wood, cocoa, soy, palm oil, coffee, rubber, and their associated products. Mr Joules says it will be a significant change. "It could have big impacts and it could cause a bit of a shift in supply chains for these key EU importers and where they're getting their products from." He says, to some degree, prices have already started to move because Europe is a significant importer of cocoa. "It's going to be very difficult to source products from key [European] producers so that, potentially, was also one of the factors as to why we saw higher prices," Mr Joules said. "There's already a bit of fear in the market and, of course, depending on how it plays out, it could potentially cause a little bit more upside." In May, the federal Department of Agriculture said Australia had been classified as a low-risk country under the European regulation. That means it will be easier for EU businesses to source ingredients grown here than from countries classified as higher risk, like Ivory Coast. For Mr Janke, that presents a big opportunity. "Deforestation is a common thing in West Africa, which grows 70 per cent of the cocoa, so there is a significant problem for that industry in Europe," he said. "Because so much of cocoa is grown in Third World countries, where they have all sorts of compliance issues, we're at the head of the queue just by virtue of where we are."
Bloomberg
3 days ago
- Business
- Bloomberg
Why Are People Smuggling Cocoa Beans out of Ivory Coast?
00:00 Prices for cocoa on the global market have nearly tripled since 2023, as bad weather and disease outbreaks exacerbate supply issues. But farmers in Ivory Coast have found it hard to cash in as the government run regulator sets the price at about a third of the global level, fuelling smuggling of the crop to neighbouring countries. For more, Bloomberg's Ondiro Oganga joins us now from Kigali, Rwanda. Talk to us about the incentive to smuggle cocoa and how smugglers actually get it out of the Ivory Coast, looking obviously, to take advantage of these higher cocoa prices now. Smuggling is a dangerous but highly lucrative business. Now, when you're caught, you face up to ten years in prison or pay a fine of up to $86,000. But on the flipside, if you're not caught, you can make up to $240 a week in comparison to $80, which is a monthly living wage of the country. So that is incentive enough. You also look at the prices of cocoa in the international market, the nearly triple the peak to 13,000. Now those settled at 9000. And in the intro you mentioned that there are a couple of other victims that are fueling shortage, bad weather, diseases and investment in the industry. And all these are factors that are just leading to price gains in the international market. And as a result, we are seeing prices soar. But farmers are not feeling the gains because most of their beans are bought by government run institutions. And this is because the government is trying to insulate farmers from volatility in the international market. Now, when the prices are low, the farmers enjoy the cushion, but when the prices are high, they can't help but feel shortchanged, particularly when countries like Togo, Liberia and Guinea are offering to pay nearly twice what the government is paying in Cote d'Ivoire to buy just a ton or a bag of the beans. And so we are seeing smuggling on the rise, motorbikes and trucks taking alternative routes in the night, trying to smuggle cocoa out of Ivory Coast into neighboring countries like Guinea. And as a result, despite Guinea not making enough investment to boost domestic cocoa production, the shipments have grown by 15%. And while they are reaping the benefits, the pain is being felt across the border. How is the smuggling actually impacting the economy in both an Ivory Coast, but also just broadly more broadly in the region as well? What sort of an impact is it having? It's unfolding quite fast. In 2023, 2024, shipments of cocoa at the port dropped by over 30%. And while there are other factors contributing to this, the government says over 100,000 tonnes were smuggled out of the country in comparison to 1.7 million tonnes that they produced in that season. And because cocoa account for up to 40% of total export revenue for the government, this could leave a big dent in their national budget and also the development problems in the country. Other people were also feeling the pain at international buyers. Sourcing has become more difficult because one the shortage until you cannot trace the business, particularly now that EU regulations are going to come into effect on the 30th of December. If you cannot trace the beans, then you are unable to rule out deforestation and child labour from the value chain. And that means that it will be harder for this beans to be absorbed in the international market. Exporters and traders are also feeling the pinch because when there's a shortage, then they are torn between either breaking the law or paying exorbitant prices at farm gate to be able to get their hands on these coffee beans and that new cocoa beans, rather. And that means that these prices are being passed down to the consumers. A cup of chocolate is higher and also above chocolate prices are going higher and higher.
Japan Times
3 days ago
- Business
- Japan Times
High cocoa prices drive smuggling surge, alarming traders
At the town of Gbapleu, a rope tied between two metal barrels separates Cote d'Ivoire from Guinea. A thin trickle of traffic passes through the border post, mostly motorbikes or cars stuffed with passengers and overburdened with food and household items tied to their roofs. For those who want to avoid the scrutiny of officials, there are other routes. Scattered throughout the region are dirt tracks that snake through the forests and grassland. After dark, motorcycle couriers arrive at warehouses in Ivorian towns near the frontier and load up with two or three sacks of cocoa, each weighing about 65 kilograms. From around 10 p.m., the riders set out for the border in a convoy, dodging the checkpoints to carry beans into Guinea. It's a dangerous, but lucrative business. If they're caught, smugglers face up to 10 years imprisonment or a fine of 50 million CFA francs ($86,640). But the smugglers can earn over $240 a week, more than three times the country's living wage. The trade has become increasingly worth the risks as cocoa prices have spiked. "God has been on our side this season,' said Fred, a smuggler in the border town of Danane, who asked to be identified by a pseudonym to avoid retribution. Prices for cocoa on the global market have nearly tripled since 2023, reaching around $13,000 per ton in December, before falling back to around $9,000. Adverse weather and disease outbreaks have exacerbated supply issues caused by decades of underinvestment in major producing countries, leading to severe shortages. But as prices soar, farmers in Cote d'Ivoire, the largest exporter of the crop, have found it hard to cash in. The cocoa trade in the country is controlled by a government-run regulator, the Conseil du Cafe-Cacao (CCC), which sets prices. The current CCC price is about a third of the global market price, which has created a powerful incentive to smuggle crops into neighboring countries that don't have the same central pricing. The surge in smuggling has made it harder for international buyers to source beans, as Ivorian suppliers struggle to fulfill their contracts. It has made traceability more difficult, a major problem for companies trying to address long-running issues of deforestation and child labor in their supply chains. For the Ivorian government, smuggling has cut revenues, undermining its national budget and its ability to invest in the long term future of the cocoa industry. Fermented cocoa beans dry in the sun on a farm in Azaguie. | Bloomberg "There is a huge loss of Ivorian harvest,' Arsene Dadie, director of domestic marketing at the CCC, said in an interview in Abidjan, Cote d'Ivoire's commercial hub. The CCC sells cocoa crops months ahead of harvest, which helps them to set a guaranteed price for farmers at the start of the season. That meant that as prices rallied last year, regulators had already committed to sell most of their cocoa well below the global market price. Farmers typically sell to brokers and middlemen who aggregate the crops and sell to major buyers, such as Barry Callebaut, Cargill, Olam Group and Touton. Ghana, the world's second-largest producer, has a similar setup to Cote d'Ivoire, with the Ghana Cocoa Board acting as a central buyer. Output in Ghana fell to its lowest in more than a decade last season. Smuggling exacerbated the supply shortfall. In April, prices in Guinea, Togo and Liberia were more than double those the CCC was offering, creating an arbitrage that some farmers and middlemen couldn't resist exploiting. The scale of the smuggling can be estimated from the growing disparity between Guinea's production and exports. Guinea hasn't appreciably invested in increasing its domestic cocoa crop, but in the 2023-24 growing season, shipments from the country rose 15% over the previous year, according to data provider Trade Data Monitor. That growth has continued. In the first three months of the current season, starting October, Guinea's cocoa shipments were more than twice the previous year. "You can assume that Guinea has been enjoying nice prices and increasing its production, so maybe a 10% increase would be a good accomplishment already but not enough to move from 25,000 to 95,000 tons,' said Fabrice Laurent, founder of cocoa research firm Forestero. The bulk of Guinea's cocoa ends up in Europe, with the Netherlands accounting for about 70% of all Guinean exports between January and December, according to Trade Data Monitor data. A cocoa-processing plant in Abidjan, Cote d'Ivoire | Bloomberg Over the 2023-24 season, beans arriving for export at Ivorian ports dropped by 30%. Some of the drop is down to bad weather that battered crops, but Laurent estimates that around 100,000 tons were smuggled out of the country, mostly into Guinea, Togo and Liberia. That compares with the total harvest of about 1.7 million tons. With every smuggled ton of beans, the country is losing out on export duties. The cocoa sector accounts for about 40% of Cote d'Ivoire's export revenue, making it a vital source of foreign exchange. The rise in illicit flows has left buying agents struggling to find enough cocoa to fulfill their contracts with international traders. Last year, exporters faced significant losses after both Ivory Coast and Ghana were unable to honor presold contracts. Frustrated traders in Abidjan, speaking on condition of anonymity to discuss sensitive information, said they were torn between breaking the law and overpaying to source supply, or failing to meet their obligations. Several admitted that they are now paying a premium over farm gate prices to secure beans, in defiance of CCC rules against overpaying. Cocoa traders typically hedge their physical purchases by selling futures contracts. Delayed cocoa shipments last season forced traders to buy back their short positions and initiate new ones at a time of rapid price inflation, with futures climbing from roughly $3,000 to $11,000 per ton. One of the traders said that they lost £2,000 ($2,700) on every ton's worth of defaulted contracts, as they were forced to roll over futures contracts at higher prices. The rise in smuggling complicates chocolate makers' efforts to improve traceability in their supply chains. Consumers are increasingly conscious of human rights and environmental risks in the cocoa business, which has put pressure on companies to invest in understanding where their beans are grown. At the moment, traceability is largely voluntary, but that will change for large companies in Europe when the European Union Deforestation Regulation (EUDR) comes into effect on Dec. 30. The law will require that traders provide documentation tracing supply back to the farm level. "People are bracing for EUDR and even though supply was tight, major traders were not willing to buy cocoa just from anyone,' Jonathan Parkman, head of agricultural sales at Marex Group, said. That makes smuggling a top concern for traders and buyers, he added. A delivery truck waits to unload sacks of cocoa beans at a re-bagging facility in San-Pedro, Cote d'Ivoire. | Bloomberg Several traders in Abidjan and middlemen in the western towns of Danane and Duekoue spoke of their experience on condition of anonymity to avoid reprisals. They said that they felt that the government isn't doing enough to crack down on smuggling, however, and that corrupt officials are aiding the illicit trade in beans across the border. While smugglers such as Fred move small cargoes of cocoa into Guinea, much of the trade happens in bulk, with organized, politically connected networks moving trucks carrying upward of 30 tons of cocoa at a time, according to smugglers, officials and traders. That's an expensive exercise, as the smugglers need to have enough capital to buy the beans from farmers or brokers, pay for logistics and spare some money for bribes. Bribes range from $8,000 to $21,000 per truck, according to smugglers and traders who asked not be named so they could discuss sensitive information. "It's the influential business people who have mastered the art of smuggling these goods, also working with civil servants who are happy to get their cuts from it, so it's a chain,' Ndubuisi Christian Ani, a Nigeria-based analyst at the Institute for Security Studies think tank, said. The CCC's Dadie said that the government has stepped up its anti-smuggling efforts. "It's a well-organised network but the CCC is working with the local anti-smuggling system to increase monitoring,' he said. This season the military was deployed to the border, and the Ministry of Interior has set up regional anti-smuggling committees with the regulator. They are tasked with publicizing and combating illegal cocoa sales, a CCC spokeswoman said. "As soon as the taskforce was set up, we seized three trucks and saw that a certain number of administrative actors who did not subscribe to this vision were sanctioned,' Dadie said. In a statement, Fidele Sarassoro, head of Cote d'Ivoire's national security council, said that anti-smuggling operations set up in October last year had achieved "significant results,' including the seizure of more than 590 tons of cocoa, and the arrest of 34 people. In February, Ivorian customs seized a stock of 2,000 tons of cocoa, worth around $19 million, which had been falsely declared as rubber. The leakage of crops, on top of the other structural challenges to the industry, is leading to frustration throughout the supply chain. In Duekoue, a town 400 kilometers from Abidjan, Abdul Baudula, the head of a farmers' cooperative that aggregates beans, said that the organization failed to meet its collection targets last season, partly because farmers sold their crops to smugglers. "How do you convince a farmer to accept less money when another trader is offering more?' Baudula said. "We can't control climate change, but smuggling should be something the government can address.'
Yahoo
3 days ago
- Business
- Yahoo
Why Are People Smuggling Cocoa Beans out of Ivory Coast?
Prices for cocoa on the global market have nearly tripled since 2023, but farmers in Ivory Coast have found it hard to cash in. The cocoa trade in the country is controlled by government-run regulator Conseil du Café-Cacao, which sets prices. The current price is about a third of the global market price, which has created a powerful incentive to smuggle crops into neighboring countries that don't have the same central pricing. Bloomberg's Ondiro Oganga reports. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
