Why Will Chocolate Bars Cost $100 in the Future?

“One ounce of Chocolate costs the equivalent of one ounce of Gold.” Well, almost. In the ancient Aztec world, cacao beans were actually used as currency, but what I am talking about here is a real possibility in the near future. In 20 years, you may need to give your daughter a $100 bill so that she can get just a small bar of chocolate. If you are curious, read on.

The consumption of cacao beans increased from 2.8 million tons in the year 2000 to 3.6 million tons last year — an increase of about 2.2%. The production rate is also increasing at a compatible rate of 2.1% a year. Although Africa is still the main area of cacao bean production, Asian countries are rapidly increasing their production to fill the gap. Still, the cacao bean commodity price increased from $1,000 per ton in the year 2000 to $3,500 per ton this past year.

Although the recent sharp increase in the price of cacao is mainly due to the current disturbances in the Ivory Coast (where the major cacao export ports are located), there are deeper problems. First of all, many cacao plantations had been using semi-”slave” and child laborers to keep the prices low, but more and more people in the western world, where 80% of cacao are consumed, realized what was going on and pressured the plantation owners to “free” the laborers, and there laborers’ wages went up significantly. There is also wide-spread corruption and political unrest in these countries which won’t go away anytime soon. In the worst case scenario, the export from these countries may end up stopping completely.

Secondly, after news of the health benefit of chocolate was published, the demand for “real” chocolate increased significantly. By the year 2011, the demand of organic cacao is expected to hit 25% of all cacao imports to the western world. Since the production of organic cacao is far more labor intensive and costly (probably 20 – 30% more costly per ton comparing to non-organic products), it pushes up the average cost of chocolate significantly.

Thirdly, the demand for cacao is expected to be far outpacing the rate of production in the coming years. The pace of economic growth of China is much faster than that of the rest of the world. The GDP of China will exceed that of Japan in a couple of years (if not this year), and China will then be the second largest economy in the world. Although chocolate is not yet a commonly-consumed sweet among Chinese citizens, their taste in food is rapidly changing and getting close to that of the western world. Because of the sheer size of the population in China, if they start consuming an extra half-pound of chocolate per person, it will result in an increase of 0.3 million tons of cacao consumption! (And did you know that Americans consume 12lbs of chocolate per person per year?). It is already rumored that the best sushi tuna cut is found in China, NOT in Japan; soon, the same may be true about chocolate.

Fourthly, well, we all blame global warming for everything, and here we can do that, too. If global warming advances quickly, it will dry out the region in which the cacao trees are grown. This, in turn, will cause a decline in the production of cacao beans. You can shift the cultivation area geographically, but it is costly and may not create the same quality of cacao beans. Although this is just speculation, the climate change often brings plant diseases as well, and it may kill a large number of cacao trees, as has happened with other tropical plants in the past (in fact, it happened with cacao in the mid 18th century). Modern cacao growers can use pesticides and fungicides or similar chemicals, but you cannot do that for organic cacao trees.

Although anything can happen to change the situation, if the cacao price keeps going up at its current rate, in 20 years, it will be $10,000 per ton (and this is a conservative estimate). If the Chinese people decide that they love chocolate, it could push up the commodity price far more; even as much as $50,000 could be possible. Now, you know why you may end up needing to give a $100 bill to your daughter just to buy a bar of chocolate in 20 years!

Comments are closed.