“IT’S KIND OF baffled me, this steep increase over a short period,” said Mud Bakery owner Shane Murray of the dramatic rise in cocoa prices.
Mud Bakery supplies restaurants and coffee shops around Dublin with brownies and traybakes, and also sells directly to customers at markets.
The bakery has had to increase its prices to wholesale and retail customers as a result of the surge in cocoa prices, with many other shops in the same situation.
“I’m only a small producer, but I use a lot of chocolate,” Murray told The Journal.
You don’t mind the cost of something that you use a small amount of going up, but you do when it’s something you use a lot of and the cost goes ridiculous compared to what it was.
For close to a decade up to 2023, global cocoa prices hovered at around $2,500-$3,000 per tonne (€2,300-€2,760).
But the prices have risen dramatically since then and in March of this year, hit over $10,000 a tonne (€9,210).
Prices have since come down to around €7,750 per tonne (€7,140).
For Murray, this meant a kilo bag that use to cost around €7 now sets him back around €16-€18.
He has had to increase his prices as a result of the cocoa price surge, but remarked that “there’s only so much people are willing to pay for a brownie”
“The wholesale side is the one that’s most affected, because you’re selling on wholesale costs rather than retail costs, so that’s a big difference,” said Murray.
He recently posted to Instagram explaining that he would have to increase prices and said that after doing so, “a lot of bakers and coffee shops and restaurants replied to say they are going to have to do the same thing, because margins are tight”.
“And these prices don’t come down again, they just stay at a higher level.”
While Murray said he has “less money than I did two years ago”, he adds that people in the food industry need to “strike a balance”.
If you keep increasing how much you’re selling stuff at, there’s a point where they stop selling because people only spend so much.
“If the true cost of a brownie was given to a customer, it would cost them €5 now, instead of €3 two years ago, and customers just aren’t willing to pay that, they would just stop selling.
“You have to balance everything and then reduce costs as you can.”
One way he has reduced costs is by bulk buying things like nuts: “I probably wouldn’t have kept 100 kilos of walnuts in the kitchen two years ago, but I do now.”
While Murray said he was “baffled” by the price increase, he noted that most of it stems from a poor harvest in West Africa in the early part of this year.
At the beginning of the year, the world’s largest cocoa exporters – Ivory Coast and Ghana in western Africa– were hit by extreme weather.
Ivory Coast and Ghana saw heavy rains in December, with total precipitation more than double the 30-year average for the time of year.
This impacted yields due to issues like cocoa plants rotting with black pod disease.
The disease rots cocoa pods and occurs mainly during the rainy season due to it mostly being spread by rain splash.
The wet conditions were followed by droughts typical of El Nino conditions in February, which further decimated yields due to cocoa being a drought-sensitive crop, the environmental non-profit Energy and Climate Intelligence Unit (ECIU) said.
Almost all cocoa globally – 99.9% – is grown in countries that are the most vulnerable and least well prepared to cope with worsening climate impacts, the ECIU said, citing data from the UN‘s Food and Agriculture Organisation.
“Combined with the impact of climate change – which has significantly dampened this year’s cocoa harvest – the price of chocolate is soaring,” said Marco Forgione, director general at The Institute of Export and International Trade, in response to soaring prices in March.
“What seems to have happened is that the bigger companies have bought up all the better-quality beans in other parts of Africa,” said Mud Bakery owner Shane Murray to The Journal.
“They’ve bought all the beans they could to keep their supply going and all the beans that were available were in different parts of Africa, which would be more expensive, higher quality beans.
“The supply of the better-quality beans is now gone, because the bigger companies are coming in and buying them all.”
The major cocoa processors generally negotiate a large part of their supplies in advance, but poor crops meant some contracts could not be honoured and they used cash reserves to purchase urgently needed cocoa at a high cost elsewhere.
But smaller companies found it difficult to advance the funds needed to adapt to the higher prices.
“I’m told it’s only going to get worse because the weather seems to be wiping out the crops,” said Murray.
“It’s obviously crazy for the people who produce these beans.”
Over one million people are reliant on the cocoa industry in Ghana, but there has been a significant decline in production in recent years.
The Ivory Coast meanwhile is seeking to move away from farming and cocoa and towards a new role as an oil and gas producer due to recent harvest woes.
Three discoveries of oil deposits were made in the Ivory Coast in September 2021, July 2022 and February this year, revealing huge reserves estimated at six billion barrels.
Murray added that the cocoa price increases “highlight how out of your control these costs are when something comes from so far away”.
“In the long term, shipping in raw ingredients from Africa is not going to be viable.
“The raw ingredients for chocolate can’t be grown in Ireland so in 50 years’ time, are we going to see as many chocolate products on the shelf as now?
Probably not, if climate change impacts these countries so much that they can’t produce the raw ingredients anymore.
“If you were starting from scratch, it wouldn’t be a viable way of doing business, bringing in a raw ingredient from the other side of the world.
“But because it’s happened over generations, we’re relying on these ingredients to make our everyday food, but not really thinking about where they come from.”
While Murray said this is “concerning”, he added that “there’s an awful lot of things going on in the world that are very concerning”.
“We’ll just have to change our business models to suit,” said Murray, who noted that he is already making a “little less chocolate products now than I did two years ago”.
“You’ll probably be seeing food businesses use more and more locally sourced ingredients.
“We already do, but it’s probably going to be more pronounced in the years to come.”
Linda Stuart-Trainor, the deputy director of Food Drink Ireland, told The Journal that “current cocoa prices are extremely challenging for the food sector”.
“This input cost inflation has hit food businesses at a time when many of their other costs, such as labour and energy, are also increasing, putting real strain on margins, competitiveness and investment across the sector,” she added.
Stuart-Trainor said there “is a need for the Government to ensure that its policies, especially the upcoming Budget, have a positive rather than a negative impact on the competitiveness” of Ireland’s food industry.
Food Drink Ireland has called on the Government to roll out a PRSI rebate for companies and to provide greater capital investment support.
Murray said “anything that the Government could do would help” but added that he doesn’t think “it would get to a situation where it can be subsidized by a government intervention or a grant”.
“Like anything, you have to build in enough of a margin in your business to account for cost fluctuations,” said the Mud Bakery owner.
“Chocolate is a commodity, so the price does fluctuate, but these things are going to get worse with climate change.
“You’re seeing a direct impact on food from climate change here.”
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