Photo Illustration: Intelligencer; Photo: Getty Images
Inflation is taking a toll on our chocolate. This spring – the season of edible Easter bunnies and Cadbury eggs – is putting a strain on the bank accounts of America's chocolate lovers. The portions were disappointing, with significantly less chocolate chip cookie dough in a pint of Jimmy Fallon ice cream, for example.
Yes, everything costs more now, and there are other important things to worry about affordability. On Wednesday, the Bureau of Labor Statistics released its monthly inflation survey, the Consumer Price Index, and it rose 3.4 percent more than expected – with higher rent and gas prices accounting for most of the cost increases. Most people's chocolate bills don't come anywhere near their other monthly expenses (and if they do, that's good for you!). But with the cost of candy and snacks well above inflation, it's somehow even more insulting: Can't we have a little Godiva without all the financial guilt?
Price changes since 2019 by food:
1. Cocoa: +345%
2. Orange juice: +260%
3. Olive oil: +219%
4. Sugar: +120%
5. Fruit snacks: +77%
6. Cooking oil: +54%
7. Chocolate bars: +52%
8. Applesauce: +51%
9. Beef: +51%
10. Mayonnaise: +50%
11. Loaf of bread: +42%
12. Eggs: +40%…
– The Kobeissi Letter (@KobeissiLetter) April 7, 2024
It turns out that the cost of forbearance is one of the things the U.S. financial system has almost no control over. In recent months, cocoa prices on futures markets – where traders buy and sell contracts for delivery – have risen to their highest ever, more than quadrupling to $10,000 a tonne over the past year. The reasons for this lie in climate change, exploitative labor practices in West Africa and the rapacity of the financial markets. According to Bloomberg, the vast majority of the world's cocoa, the main ingredient in chocolate, is harvested by small-scale farmers in Ghana and Ivory Coast, which have experienced both droughts and floods in recent growing seasons. These farmers receive little money – their wages are set by the government – so they cannot plant more cocoa trees to replace those killed by extreme weather or buy pesticides that would ward off the disease.
Meanwhile, the financial markets have exacerbated the problems. Bloomberg columnist Javier Blas pointed out that commodity traders' normal trading strategies, which typically hedge their bets – helping to keep market prices from being disrupted – have failed. (Hedging is a cheap way to prevent a trade from being blown up by unforeseen risks.) The price rise was so steep and rapid that anyone betting in any direction other than up would go bust. Because these hedges are so unprofitable, traders buy up futures contracts just to cover the costs. (And make a profit, of course.)
🍫🍫🍫THE CHOCOLATE CRISIS – an UPDATED thread🆕🆕🆕:
Chocolate retail prices are going up (and will go up a lot more while shrinkage will reduce the size) after wholesale cocoa prices rose to an unthinkable all-time high of ***$10,000 per ton*** on Tuesday.
1/15 @Opinion pic.twitter.com/rX9pUhInz0
– Javier Blas (@JavierBlas) March 26, 2024
Has anyone thought through the world-historical implications of all this? Since chocolate is (somehow) good for the heart and (maybe) an aphrodisiac, the world's population is (theoretically?) at risk. Chocolate consumption is also (doubtfully) linked to the number of Nobel Prize winners in the world – so without chocolate, who would be smart enough to solve this problem for the rest of us?
Unfortunately, there just isn't much that can be done. The U.S.'s primary tool for controlling overall inflation is for the Federal Reserve to keep interest rates high—and that's exactly what the central bank will likely continue to do for the foreseeable future. But that won't lead to more cocoa trees being planted across West Africa. Meanwhile, generationally high cocoa futures prices are likely to continue into the future. These costs continue to be passed on to bakers, pastry chefs and bodegas that sell chocolate bars. Next time you have to ask yourself if you deserve a reward, you may need to consider whether you can afford it.
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