Weather Woes Hit Farming Hard, Even Taking a Bite Out of Halloween Chocolate
By Michelle Pelletier Marshall, Women in Agribusiness Media (October 29, 2024)
As Halloween approaches and kids excitedly don their special costumes and talk of who will gather the most candy by night’s end, here’s something to note about the chocolate confections they eagerly await….
Around the globe, unpredictable weather has hit farming hard. From droughts to heatwaves to flooding and hurricanes, few of the crops needed to feed the world have gone unaffected. In the western part of the U.S. for example, yields for stone fruits are projected to decline by 40 percent by 2050 due to weather-related issues1; in the Midwest, the growing season was off to a wet, but good start with some planting in early April, but heatwaves and droughts have made harvest less than ideal.
Meanwhile in the south and southeast, hurricanes (and multi-vortex tornadoes) have spared no land from their effects. Initial estimates from the USDA from Hurricane Helene alone (Hurricane Milton hit less than 14 days later) indicate crop losses of up to $7 billion from more than 38,000 crop insurance policies covering about 4.8 million affected acres across the Southeast.2 Recovery from these catastrophic storms is expected to take more than 20 months, though rebuilding will likely begin within three months.3
What does all this have to do with chocolate? Well, internationally factors such as extreme weather events, crop diseases and exploitative labor practices have significantly impacted cocoa bean yields. This has led to soaring cocoa prices on the futures market that have more than quadrupled over the past year to a record-high $10,000 per ton. To navigate these challenges, manufacturers are innovating their chocolate offerings and promoting other candies, especially during this Halloween season when Americans are expected to spend a whopping $3.5 billion on candy, according to the National Retail Federation.
Wells Fargo’s David Branch, sector manager within the company’s Agri-Food Institute, noted in an article earlier this year that compounding this is the fact that the industry is comprised of approximately 6 million farmers, 90 percent of whom are cultivating cocoa on land averaging only 12 acres in size. Continuing, Branch noted that a vast majority of those are smallholder farmers in Ghana and the Ivory Coast, which have experienced both drought and flooding during the recent growing seasons, making for unpredictable yields and supply, and bringing to light the difficulty of determining what farming techniques can be implemented to safeguard cocoa protection.
Additionally, one must add the rise in product manufacturing costs with the Producer Price Index (PPI) for Food Manufacturing increasing 28 percent since January 20204. Also, the price of raw materials – sugar – has rallied to levels not seen since February 2011.5
According to an article released this month by Wells Fargo Agri-Food Institute, to counter this cocoa shortage and record cocoa prices, this Halloween, shoppers can expect to pay more for many chocolate candy bars, and will see major producers of candy alter their products to rely less on chocolate as an ingredient. This could mean including more fillers instead – like nuts – and of course, steering consumers towards other confections that do not include chocolate (think gummy candy, Twizzlers, SweeTarts, etc.)
Wells Fargo’s Branch said cocoa is different than other crops, in that its production requires a very specific type of weather, without which, producers are not able to keep up with the growing demand for chocolate, and scarcity brings higher prices.
“Warehouse stocks are at 50-year lows, they’ve been declining for the last 15 months. The lower production has the market in turmoil, and as a result, we’ve seen futures prices just skyrocket over the last two years because chocolate demand, for cocoa flavors and confectionery, is still going up year-over-year,” Branch said. “It’s gotten pretty dire.”
So while having less cocoa out there in the world is nothing like having commodity crops decimated by severe weather, it’s something to think about as you open and eat your somewhat smaller candy bar this Halloween that doesn’t quite taste as chocolate-y, remembering that no crop goes unscathed by unpredictable weather. But some chocolate is always better than none (in my book anyway).
SOURCES:
[3] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://webassets.inman.com/wp-content/uploads/2017/10/BuildFax-Hurricane-Recovery-Study.pdf
[4] U.S. Bureau of Labor Statists PPI by Industry: Food Manufacturing (PCU311311) as of September 2023
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