Alistair Dawber: Conflict in Abidjan could destabilise cocoa market
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Your support makes all the difference.As laurent Gbagbo clings on to power in Abidjan, one unforeseen consequence of the post-election crisis in Ivory Coast may be a surge in the price of chocolate.
The West African country produces about 40 per cent of the world's raw cocoa – one of the key ingredients in chocolate. As the political situation worsens, the price of cocoa has spiked because commodity traders worry there could be a supply shortage.
Before last month's disputed elections prompted a stand-off between President Gbagbo and Alassane Ouattara, whom the international community recognises as having won the vote, the price of cocoa had bucked the upwards trend of other commodities in the previous 12 months and fell from more than $3,000 (£1,950) per ton to a little more than $2,600.
But the belligerence of the two protagonists with designs on the Ivorian presidency since the vote on 28 November has unsettled the $5.1bn global cocoa market, leading to a jump of more than 12 per cent in its price, pushing it back up above the $3,000-a-ton mark in recent days.
About 8 per cent of the average chocolate bar is made up of cocoa, and with manufacturers and retailers' balance sheets still affected by the economic downturn, there is a strong chance these extra costs will be passed on to the consumer. If the crisis in Ivory Coast continues – or gets worse as many fear it will – the cost of chocolate next Christmas could be significantly higher.
It is not just consumers who will suffer if Ivory Coast's cocoa exports are hampered by a prolonged conflict. With agricultural exports contributing more than a quarter of the country's GDP, trade sanctions on Abidjan are likely to make life more difficult for many of the country's farmers, many of whom make up much of the 40 per cent of Ivorians who already live below the poverty line.
A cocoa bush takes three years to mature and without a functioning government to administer agricultural spending, a recovery for Ivory Coast's economy could take even longer to realise.
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