From shortage to glut: how the cocoa boom turned into a West African crisis

Eighteen months ago, chocolate-makers feared they would run out of cocoa. Today the problem is the opposite: West Africa cannot find buyers for what it has grown. The price of the world's most important confectionery ingredient nearly tripled to a record of more than $12,000 a tonne in December 2024, then collapsed to around $3,100 a tonne by early 2026 — a loss of roughly three-quarters of its value. For Ivory Coast and Ghana, which together produce nearly 70% of the world's cocoa, the swing has turned a windfall into a macroeconomic shock.

The cycle: from record deficit to surplus

Commodity busts usually follow commodity booms, and cocoa is a textbook case. The 2024 spike was driven by genuine scarcity: disease, ageing trees and the El Niño weather pattern slashed harvests in West Africa, leaving the market in a record deficit estimated at more than 400,000 tonnes in the 2023/24 season. Sky-high prices then did what high prices do — they pulled out a response. Favourable rains restored healthier crops, and the global market is now set to record a surplus of about 300,000 to 400,000 tonnes this season. Analysts at StoneX and others project further surpluses into 2026/27, so the glut is unlikely to clear quickly. The same mechanics that produced 2024's spike — including delayed clarity over the European Union's deforestation rules and dwindling stockpiles — have now gone into reverse, leaving traders with more beans than the market can absorb.

Demand destruction did the rest

Supply only tells half the story. The other half is that record prices destroyed demand. Faced with input costs that had quadrupled, chocolate-makers raised shelf prices, shrank bar sizes — so-called shrinkflation — and reformulated recipes to use less cocoa, substituting cheaper fats for expensive cocoa butter. The effect showed up in grindings, the industry's main gauge of demand: second-quarter 2025 processing fell 7.2% in Europe and 16% in Asia year on year, according to industry data. As J.P. Morgan researchers note, weaker demand also hammered cocoa butter — the most profitable output for processors — accelerating the price slide. Once consumers trade down to smaller or reformulated bars, those habits tend to stick, so a chunk of the lost demand may not return even as raw-bean prices fall.

Why this is an African macro shock, not a chocolate story

For consumers in Europe and North America, cheaper cocoa is a modest relief. For the producing countries it is a fiscal emergency. Cocoa accounts for nearly 40% of Ivory Coast's export revenue and roughly 15% of Ghana's, and supports close to 2 million farmers and dependents, most of whom live below the poverty line. Unlike global traders, the two governments lack the capacity to warehouse unsold beans. Reports describe more than 200,000 tonnes at risk of rotting in village stores and at ports. Ghanaian farmers said they had not been paid for their beans since November, and industry sources told Reuters the situation was similar in Ivory Coast. For a smallholder living harvest to harvest, an unsold or unpaid crop is not an abstraction but missed school fees and unpaid debts — as one farmer told reporters, accepting current prices could mean pulling a child out of school.

Governments scramble, prices to farmers fall

Both producers regulate farm-gate prices through state boards, which sets up a painful trade-off: protect farmers or stay competitive with cheap world prices. They have leaned toward the latter. Ghana cut its fixed farmer price by nearly a third to about $3,580 a tonne in February to make beans easier to sell. Ivory Coast went further, slashing its mid-crop farm-gate price by 57% from March, to 1,200 CFA francs (about $2.13) per kilo. To clear the backlog, Ivory Coast's cocoa regulator also launched a programme late in January to buy 100,000 tonnes of unsold main-crop stock at a cost of about $500 million (CFA 280 billion).

What to watch

Three signals will determine whether this is a one-season slump or a longer downturn. First, weather: another benign rainy season would entrench the surplus, while drought or disease could snap prices back, as the market's history shows. Second, demand: if grindings stabilise as cheaper beans filter through, the glut could ease by 2027. Third, farmer behaviour: with margins gutted, some growers are abandoning cocoa for crops like rubber or even sand mining, which risks under-investment that sows the seeds of the next shortage. The cruel logic of the commodity cycle is that today's glut is how tomorrow's scarcity begins.