Chocolate and prices

An article in the Herald says some interesting things:

The world could run out of affordable chocolate within 20 years as farmers abandon their crops in the global cocoa basket of West Africa, industry experts claim.

“In 20 years chocolate will be like caviar. It will become so rare and so expensive that the average Joe just won’t be able to afford it.”

Now, as the article says, the price of cocoa is rising because alternative uses of the same land is also rising – this is not surprising, and is really what should occur.  We have scarce resources, and the price adjusts to signal this scarcity and allocate resources to the highest bidder.

But the first claim, running out of cocoa?  Surely if prices rise, this will get some people back into the market.  We don’t just magically run out of the thing – the price of cocoa relative to say washing machines should rise, but this is because the opportunity cost of growing cocoa is now higher.  Also note that these poorer farmers in Africa are getting higher incomes now – as the price of what they produce compared to, say washing machines, is higher … so they can buy more washing machines.  Why is this article begrudging them that?

And the second claim – that chocolate will be like caviar.  WTF.  I am pretty sure we would see a massive amount of entry into the market if cocoa prices went up that far – entry that will drive the price down.  When “John Mason, executive director and founder of the Ghana-based Nature Conservation Research Council” makes that claim about people not being able to afford chocolate I think he is forgetting that part of the equation.

I find these articles weird.  In a much smaller space they could have said:

With the price of agricultural crops rising, some farmers are switching crops, driving up the price of cocoa relative to non-agricultural goods and services.  This will see the price of chocolate rise.  This will also increase the incomes of farmers in these regions.

  • Dave Tatttersfield

    Exactly right. I often despair of the media. How can they even find it worth passing on the quote? The industry experts may be be expert in the field of cocoa farming and marketing but they (along with the repeater passing on the message) demonstrate how woefully short of common sense they are.

  • phew – chocolate addictions saved by economics