superenamax| Climate changes that chocolate cannot bear

From: Wall Street

A fact that breaks the hearts of chocolate lovers around the world is that climate change is destroying the cocoa industry chain, which is a key raw material.SuperenamaxAnd in the form of acceleration.

Cacao trees grow near the equator and are sensitive to weather changes, and heat waves and heavy rains have disrupted harvests in West Africa, which accounts for 3/4 of the world's production.

The cost of cocoa soared 136 per cent between July 2022 and February 2024, according to UNCTAD commodity price monitoring. Cocoa futures rose nearly 200 per cent this year as speculative money entered the market. The futures market broke through $10000 a tonne for the first time on March 26th, reaching a record $12000 a tonne in April, about four times the price of last year.

As a result, cocoa processors have reduced production because they cannot afford to buy cocoa beans.

A study on the relationship between climate change and cocoa production found that there was a significant positive correlation between temperature rise and cocoa production. Under the extreme influence of the climate, the two major producers, C ô te d'Ivoire and Ghana, which account for 70% of the world's cocoa production, have been unable to meet their production commitments for three consecutive years.

With the downward transmission of the industrial chain, there may be a sweet crisis in the future.

The Climatic difficulties of the "Cocoa Economic Belt"

The global cocoa industry is heavily dependent on West Africa, and the cocoa belt is the most important source of raw materials, not only because of the large amount of cocoa grown, but also because of the high quality of beans, including C ô te d'Ivoire, Ghana, Nigeria, Togo and other countries. There are more than 2 million cocoa farms in West Africa.

However, the challenges of climate and environmental change are causing loss of productivity and gradually calling into question the long-term sustainability and prosperity of the industry.

El Ni ñ o, a sea temperature phenomenon that occurs every three to five years, made a comeback last year, bringing first off-season heavy rainfall and then dry heat to the areas concerned.

In December 2023, a strong El Ni ñ o caused the region's total precipitation to more than double the average over the same period of the past 30 years. Cocoa farms in Ghana and C ô te d'Ivoire were flooded under torrential rains.

In February, West Africa suffered another severe drought, with temperatures soaring above 40 °C at one point, breaking records in countries such as Ghana and C ô te d'Ivoire. According to the World Climate Attribution Organization (WWA), high temperatures and relatively humid air have brought the region's average extreme heat index (Heat Index, a thermal indicator of air temperature and relative humidity) to about 50 °C, a "dangerous" level, and even as high as 60 °C in some areas, an "extremely dangerous" level. At the end of March and early April, West Africa again experienced extreme high temperatures that were even hotter for several consecutive days.

"temperate and polar countries may see some small economic benefits because additional warming will benefit their agricultural production, compared with tropical and subtropical countries at a disadvantage. because the damage from climate change will disproportionately affect their marginal water balance and damage their agricultural sector." One participant in the study told Wall Street that this was the case in sub-Saharan Africa, especially in the Western Corridor.

The results show that in the short term, an increase of 1% in temperature will lead to a decrease of 6% in cocoa production in the second year.Superenamax.72%, down 9.03% in the second year.

Climate change is a periodic change of the earth's climate caused by atmospheric changes, as well as the interaction between the atmosphere and other geological, chemical, biological and environmental, which brings severe challenges to human beings. West Africa experienced further climate change in the 20th century, resulting in a 30 per cent reduction in population. The annual rainfall of the savanna in West Africa also affects forest areas.

"Cocoa plants are particularly vulnerable to drought, lack of water can lead to low yields, and continuous rainfall for a few weeks can easily lead to the widespread spread of highly contagious black pod disease and greatly reduce yields. Sunlight falling on cacao trees can also affect growth and yield. As the cocoa economic belt is an economically marginal country, lack of information on climate change and adaptation, and lack of financial resources, only a small number of farmers can adopt coping strategies. " The researcher analyzed.

Take Ghanaian farmers as an example. Oxfam conducted a survey of 400 farmers across the country in 2023 and found that up to 90% of them could not afford enough food or other basic necessities, such as clothing, housing and health care. Since 2020, the net income of the farmers surveyed has fallen by an average of 16%, of which the income of women has fallen by nearly 22%. Due to lack of funds, farmers are unable to invest in land to increase production or enhance their ability to resist climate change.

Industrial conduction effect

At the same time, the world's demand for chocolate is only increasing. Demand for cocoa has doubled in recent decades, creating a huge shortage. According to a report released by the United Nations Trade and Development Organization on March 28th, the International Cocoa Organization forecasts a global cocoa shortfall of about 374000 tons in the 2023-2024 season, compared with 74000 tons in the previous season.

According to data from sustainability solutions, which provides consulting services to companies, the ratio of inventory to consumption reached 31.4%, prompting business participants to start buying more and more, pushing up prices.

According to market research firm Circana, chocolate products in US retail stores increased by 11.6 per cent in 2023 compared with the previous year.

Barry Callebaut said in February that it planned to cut jobs by 18 per cent. Hershey also announced plans to cut 5% of its workforce after reporting an 11.5% year-on-year drop in profit in the fourth quarter of 2023.

And most likely this trend will continue. As highlighted in the report of the Intergovernmental Panel on Climate change (IPCC) Climate change 2014: impacts, adaptation and vulnerability, the future of these smallholder farmers looks uncertain. Without fundamental changes temperatures in cocoa-growing countries in West Africa will rise by 2.1 °C by 2050 resulting in a significant reduction in suitable cocoa acreage.

The report also uses data from a 2011 paper published by Peter L ä derach, which reported that higher forest areas will become more suitable for cocoa cultivation as higher temperatures lead to changes in ecosystems. One example is the Atwa Mountains in Ghana, a forest reserve that forbids farming. The report concluded that cocoa growers may have to choose between growing cocoa and protecting natural habitats.

Another paper by the International Center for Tropical Agriculture in Colombia, published at the 2017 International Cocoa Research Symposium (ISCR), issued a stern warning and concluded that the cocoa industry is caught in a destructive feedback loop, and climate change reduces the amount of suitable arable land, prompting farmers to cut down more forests to open up crop-growing areas, thereby causing more climate change.

The report even speculated that rising temperatures would lead to increased evaporation of water from plants and soil, and chocolate would become extinct by 2050.

It is worth mentioning that chocolate is not the only food that has been "defeated" by climate change. Drought and heat waves have forced some areas to bid farewell to fine wine due to the loss of raw material production. According to data from the Wine Growers Association of British Colombia, Canada, almost all vineyards in the province need to be replanted after last year's hot weather and a prolonged period of extreme cold this winter. Data predicts that total grape production this fall will fall by 99%.