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Cocoa prices are threatening revenues for chocolate companies

My father-in-law joked that he was thinking of growing cocoa in his little farm outside Jitaúna, deep in the heart of Bahia, Brazil. Right now, rising cocoa prices are the talk of the town.

It is actually a surprisingly abundant fruit in Brazil. If you tap it lightly on the side of a rock to break the shell in half, inside you will find the cocoa beans wrapped in a sweet, white fleshy fruit. There is only one rule to eating it: don't throw away the seeds. Especially now.

So what's happening?

We're witnessing an unprecedented spike in cocoa prices internationally and it is hitting the chocolate industry hard. Hershey and Cadbury's Mondelez International are feeling the pinch, with increased product prices leading to dips in sales and sadly job cuts.

The reason is West Africa, which supplies 60 percent of the globe's cocoa. Thanks to El Niño, the region has been hit by both torrential rains and hot weather, wreaking havoc on cocoa crops.

If that’s not bad enough, these cocoa trees are also battling the swollen-shoot virus and black-pod disease, slashing production even further. Then there are structural hurdles like heavy regulation, sky-high wholesale prices, and a stark lack of investment in new plantations are casting long shadows over the future of cocoa farming.

Let's hope for a sweet resolution.

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