KUALA LUMPUR: The recent surge in global cocoa prices that was caused a supply shortage is impacting local chocolate companies throughout the supply chain.
Smaller companies are being cautious in their contracting and planning. The situation has been dragged down by heavy rainfall and crop diseases in the top cocoa producers Ghana and Ivory Coast.
Experts believe that price fluctuation and market manipulation would cause worries about the future of the chocolate industry and other challenges could also arise such as decreased affordability, cost pressure on manufacturers, impact and smallholder farmers, disruption in the supply chain as well as the quality and sustainability concerns.
It was reported that the global cocoa supply will decrease by almost 11% over the 2023-2024 period, based on findings of the International Cocoa Organisation.
On 19 April 2024, cocoa had jumped four times to US$12,218 per tonne from US$3,515.2 per tonne on 2 January 2024.
According to Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani, Malaysia’s cocoa sector has not yet achieved a satisfactory level of self-sustainability as the production of cocoa beans in the country has declined significantly, which pushed many local industries to import cocoa beans from abroad.
Meanwhile, Benns Ethicoa Chocolate Factory Founder Wilfred Ng Chee Wai believes that if coca prices continue to rise, chocolate makers will encounter challenges such as increased production costs, pressure to raise product prices, reduced consumer demand due to higher prices and supply chain stress caused by fluctuating prices.
“As a result, factories would require increased cash flow to secure these essential resources.
“Consequently, chocolate prices will need to rise, which will eventually slow demand and the current price levels have placed immense strain on the entire supply chain,” he said.
Ng stressed that cost-cutting should be prioritised for chocolate companies, which may result in downsizing or diversifying to mitigate the impact.
— BERNAMA
