Global cocoa markets will experience unprecedented rebalancing in 2025, as cocoa prices remain at a record high while the world is in turmoil due to geopolitical and economic tensions.Â
From mid-May to this point, cocoa futures have been trading as high as $9,764 a metric ton, hardly down from the psychological resistance level of $10,000. This price stability is despite tight supply, poor weather in major producing countries, and tariff disruptions disrupting world trade.
London and New York cocoa contract prices reversed their lows on April 19, showing the industry’s belief in the commodity’s long-term value. The recovery is being underpinned partly by better-than-forecast grinding figures posted by big cocoa groups, which point to ongoing demand from chocolate producers in the face of rising costs.
The mid-season cocoa crop is unstable in West Africa, the most exposed in Côte d’Ivoire and Ghana, and the perfect price-determining crop. West Africa supplies more than 60% of the global supply of cocoa and is currently fighting against climate issues such as unstable rains, loss of soil, and inadequate infrastructure. The European Union’s Deforestation Regulation also burdens African farmers with adapting to additional sustainability and traceability requirements at an increased cost of compliance for smallholder farmers.
The entire cocoa industry has also fallen prey to the uncertainty of dynamic global trade. Consider, for example, the United States, which has continually kept its 10% base duty on cocoa imports, which has constricted supply chains and price mechanisms. Although there was a recent respite in the form of not adding new tariffs in April last year, the periodic base charge nonetheless continues to be an exporter’s worry.
Nigeria, which has generated more than 90% of its export revenues in the form of crude over the decades, has also allowed cocoa exportation to get out of hand in diversifying the economy. Nigerian cocoa exportation in 2024 reached an all-time high of N2.7 trillion, a seven-fold boost. This was ensured by a global boom in cocoa prices and naira devaluation, which rendered Nigerian exports competitive. Challenges nonetheless confront the industry. Poor quality and absence of standard cultivation practice at times have made Nigeria depreciate with lesser funds globally for its cocoa.
But this is a gold rush. With proper investment in new agri-tech, traceability infrastructure, and farmer capacity building, Nigeria can dominate the world in the cocoa trade. Agritech start-ups and farmer cooperatives are already rising to the challenge of high-tech post-harvest management, digital trace systems, and climate-smart agriculture.
But it is not easy for most West African farmers to survive. Even when world prices were at a peak, farm gate prices, that is, the prices at which the farmer disposes of his produce, were very low because of middlemen, misdirected infrastructure, and assertive trade policy. Most farmers are selling themselves at a loss to stay in business in a market where world cocoa prices reached record levels.
The ICCO has been calling for structural reform, which means that the West African producing countries should allow the cocoa business more autonomy to be a commercial venture instead of a state monopoly. This would introduce more transparency, price fairness, and longer-term sustainability.
As long as cocoa remains one of the major export crops of most African countries, its destiny in the world will be shaping economic destiny for millions. For Nigeria, the day’s price boom is an eyes-open invitation and a possible option for transformation, a window of chance to lose oil for diversification and establishing an agrarian-based economy. If it is grasped, it is to be anticipated.
