Cacao Case Study

RESOURCE SCARCITY OF CHOCOLATE CONFECTIONERY MARKET

Cacao Steady growth over the last hundred years has transformed the chocolate confectionary sector into an $80 billion a year global industry. However, with demand forecast to surpass supply, a crisis is approaching for the sector. Approximately 3.5 million tones of cocoa are produced by farmers each year. However, rising revenue in developing markets like India and China, combined with anticipated economic recovery in the rich North, have provided sector forecasts of a 30% growth in demand to more than 4.5 million tones by 2020. According to major global chocolate manufacturers, production of cacao cannot meet the demand of the chocolate and after 2020’s production gap will increase.

Thought comfort and disregard for the livelihoods of more than 5 million small-scale family farmers who grow 90% of the world's cocoa mean that the industry may simply be unable to provide sufficient supply to meet the demand. Cocoa prices are unbalanced and influenced by many factors such as; extreme weather, pests and disease to speculation and political instability in producing countries. Hence, many cocoa farmers are abandoning the chocolate industry. Many of their children see no future in cocoa and are switching to more profitable rubber production or heading for the cities in the hope of finding a better livelihood. As a result, the average age of cocoa farmers in West Africa is now 51, leading to serious concerns across the industry about the long-term sustainability of the supply chain. The more cocoa farmers, means the more chocolate bars. For instance; Ghana which is the second biggest producer of cacao has some problems about production of cacao. Because of the Ghana’s environmental problems, distribution of cacao is interrupted. Therefore, this situation causes increase in prices of cacao at the world. Increasing of cacao prices will affect producer of chocolate