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Africa . Initially , unseasonably heavy rains in the area – total precipitation in West Africa during the second half of 2023 was more than double the 30-year average – caused the spread of diseases in cocoa plantations ; swollen shoot virus in Ivory Coast and black pod disease in Ghana , leading to crop deterioration . This resulted in around 43 percent of the cocoa-producing area in Ghana being infected with black pod disease , while swollen shoot virus was reported in 11 out of 13 cocoa-growing regions in Ivory Coast .
Subsequently , the region experienced uncharacteristically dry conditions during Q1 2024 , caused by the adverse weather associated with the El Niño phenomenon , along with the driest Harmattan winds seen in the last 20 years , further reducing yields .
Preventing supply disruptions
As a quick fix to mitigate the impact of rising cocoa and coffee prices , food manufacturers have started to transfer the burden of increased commodity input costs to consumers . For instance , the confectionery giant Mondelez has increased its product pricing for 2024 in North America and Europe . However , there are several strategies food manufacturers can deploy to avert supply disruptions and mitigate the impact of rising ingredient costs on products , without raising product prices .
This includes actively evaluating multiple suppliers and assisting their critical vendors . By identifying suppliers in a variety of regions , this reduces the dependence firms have on a single provider or area , particularly if a manufacturer is purchasing a commodity from a territory where output is declining .
Additionally , firms should map supplier dependence . By conducting a comprehensive assessment of exposure to suppliers , organizations can ensure that any drop-off in production doesn ’ t significantly impact operations . For instance , coffee producers should review their exposure to vendors from Brazil and Vietnam , while chocolatiers can do the same for Ghanaian and Ivorian suppliers .
Elsewhere , to maintain profitability and ensure a steady supply of reasonably priced goods , food producers should also give thought to using artificial intelligence ( AI ) as part of their business strategies . The technology enables firms to analyze vendor information and establish which is the best fit for their business , based on a range of factors including price , quality and quantity . As a result of supply constraints and declining production , coffee and cocoa prices are expected to remain elevated in the short to medium term at the very least – with the potential for these price hikes to last for an extended period of time . While market consensus may dictate that to mitigate the impact of these rising ingredient costs , coffee and chocolate producers must pass on rising costs to consumers , a range of alternative solutions is available . ■
For a list of the sources used in this article , please contact the editor .
Kanica Goel www . thesmartcube . com
Kanica Goel is Senior Analyst at The Smart Cube . For leading businesses around the world , The Smart Cube is a trusted partner for high performing intelligence that answers critical business questions . It works with clients to figure out how to implement the answers , faster . Through custom research , advanced analytics and best of breed technology , The Smart Cube transforms data into insights – enabling smart decision-making to improve business performance at the top and bottom line .
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