Multiple media reports state that Ivory Coast, the world’s top producer of %Cocoa, is planning to raise prices for its upcoming harvest by as much as 23%.
If the planned increase goes through, it will lift the farmgate price of cocoa to as much as $3,400 U.S. per ton.
Government officials in Ivory Coast say the price hike is needed due to cocoa harvest shortfalls across West Africa. Ivory Coast’s cocoa price decision is made by the president’s office.
The price hike is likely to be unwelcomed by chocolate companies such as Hershey Co. (NYSE: $HSY), which have been struggling with higher prices for cocoa, the active ingredient in chocolate.
Cocoa crops across West Africa have been severely damaged or wiped out in recent years by flooding and disease caused by climate change.
The situation sent the price of cocoa futures contracts to an all-time high earlier this year of more than $11,000 U.S. a ton in New York trading.
Cocoa futures are currently trading near $7,500 U.S. per ton.
Further complicating matters has been rampant smuggling of cocoa beans in both Ghana and Ivory Coast.
The government in Ivory Coast has estimated that the country has lost as much as 200,000 tons of cocoa beans to smuggling this growing season.
