In August 2025, JP Morgan published an article asking why cocoa prices were falling.[1] In fact, prices remain three times higher than their prior decade norms.[2] And, while retailers absorbed much of this initial increase, consumer prices have been on the rise. For example, in July 2025, Hershey announced price increases of 13-20% for retailers,[3] who in turn passed on 11% increases to consumers.[4] The Wall Street Journal[5] expects cocoa prices to remain elevated for the remainder of 2025, while JP Morgan suggests high prices may be the new normal.[6] In fact, significant structural threats from climate change to aging farmers present substantial risks to long-term supply. Therefore, it is in the best interests of private and public entities to secure a sustainable supply of cocoa through investment, education, and market liberalization.
Background
Cocoa is one of the world’s most widely traded commodities, with global production increasing nearly six fold from 1 million tonnes in 1961 to 5.6 million in 2023.[7] Over the same period, global imports of cocoa beans rose from 1.2 million tonnes to 11.3 million tonnes annually[8] demonstrating robust demand for chocolate and other cocoa products. Consumer preference for fine chocolate is also globally distributed, with Western Europe being the world’s largest consumer of chocolate followed by Asia and the United States.[9] Likewise, Brazil is a net cocoa importer[10] and one of the world’s top ten consumers of finished chocolate products.[11]
Cocoa demand is in part driven by income and status. The International Institute for Sustainable Development cited growth in Asia’s upper middle class and youth income as fueling demand for chocolate products,[12] suggesting a link between development, prosperity, and chocolate consumption. Similarly, researchers at the Center for Strategic and International Studies found that rising incomes accompanied changing food preferences and consumption that outpace population growth.[13]
Economic development is not limited to the United States. Brazil’s appetite for chocolate, for example, is indicative of a developing market but one that is not strictly western, European, or American. Likewise, consumers’ growing appetite for chocolate is fueling demand across the board. The U.S. market for finished chocolate products is expected to reach $189 million by 2026, while the global market for cocoa beans is expected to surpass $16 billion.[14] Per capita data suggest a similar trend. For example, annual cocoa consumption per person has roughly doubled in Australia from 1.5kg in 1961 to over 3kg in 2022. In Japan demand has increased eightfold for the same period from 0.18kg to 1.5kg.[15] In fact, per capita data understate total demand. In the United States, for instance, cocoa consumption per person increased by a factor of 1.5,[16] while cocoa imports increased by a factor of 2.7.[17] Population growth, income, and prosperity are therefore important considerations when forecasting future demand.
Risks
Climate change
About three quarters of the world’s cocoa is produced by just two countries: Ghana and Côte d’Ivoire. Agriculturally, this presents multiple risks. First, cocoa is not native to either region and successful cultivation requires substantial soil amendments. Second, both countries exist in a transition zone between savanna and rain forest and are prone to climate related weather extremes. Third, cocoa trees are vulnerable to slight variations in temperature, drought, and excessive rainfall.[18] To put this in perspective, cocoa’s ideal growing temperature exists in a narrow range of 22 - 25C. Just three consecutive months of fewer than 100mm of rainfall can damage plants and affect yields[19] while, annual rainfall in excess of 2500mm makes plants susceptible to disease, fungus, and other ailments.[20] Furthermore, according to predictions by the general circulation climate model, rising temperatures are expected to accompany decreasing rainfall across the region, putting downward pressure on cocoa yields. Finally, prior year rainfall is a predictor of the current harvest, making weather related cause and effect a multi-year cycle.[21] In summary, about three quarters of the world’s cocoa is farmed in an artificially produced ecosystem in a region that is at risk for extreme weather events. This may cause some farms to collapse or abandon cocoa production altogether.
Aging trees and farmers
If climate related challenges are the most intuitive risk facing production, aging trees and farmers are the silent killer. Cocoa trees reach peak production at 18 years,[22] yet in many of the world’s major cocoa producing regions, trees are decades past their primes. Cameroon, Ghana, Indonesia and Columbia are all plagued by aging trees. In Nigeria the problem is particularly acute where the average cocoa plant is around 40 years old.[23] Aging trees are also less productive and more labor intensive. For example, worldwide production averages just 0.4 tonnes of cocoa per hectare despite theoretical output of 3 - 5 tonnes predicted under fertile trees and well-maintained growing conditions.[24]
The demographics of cocoa farming are similarly worrisome. The average age of the Ghanan farmer is over 50. In Nigeria it’s 50 - 60 and in Cameroon 63 - 70. The children of cocoa farmers are either not entering the cocoa business, or are choosing to plant other more profitable crops (rubber, wheat, and maize).[25] Climate considerations aside, it is reasonable to wonder who will farm the land in 20 years.
Small farms
As mentioned, west Africa produces about three quarters of the world’s cocoa. However, the overwhelming majority of that production is from small farms. In fact, about 90% of the world’s cocoa production comes from just 5-6 million family run operations between 1 - 10 hectares. The farms small size makes them more susceptible to economic, political, and climate related pressure. Farmers receive just 6% of finished product sales, while farm gate prices (prices paid to the farmer) are often set by government-run wholesalers and do not cover the cost of operations.[26] The farm's small size reduces leverage and makes negotiation difficult. It’s also worth noting that where state-run buyers are compulsory, the farmer is locked out of the international market and therefore cannot benefit from high cocoa prices. Furthermore, family run farms also struggle with access to credit and insurance, with a lack of trust denominating both sides of the transaction.[27]
Finally, poor farming practices that range from limited agricultural knowledge, pest disease control and prevention, soil management, limited or no irrigation infrastructure, and poor pollination are common issues on small farms.[28] The combination of these factors are major drivers of low yields and failing crops.
Outlook
As JP Morgan pointed out, cocoa prices are expected to fall as short-term demand softens, but long-term, prices will likely remain well above their historic norms. The multi-year tail of climate cause and effect coupled with extreme weather events, suggest that supply will be subject to the whims of annual weather patterns. And, indeed, recent price volatility reflects the onset of drought and a renewed rainy season.[29] In short, annual supply is variable and not necessarily reflective of long-term risks.
Climate and agriculture
The aging farmer, tree, and lack of a replacement generation are significant, and in this opinion, underappreciated by short-term markets. That said, climate suitability is expected to persist in the world’s primary growing regions for the next 40 years, providing farmers and governments time to adjust.[30] Collapse, therefore, is not imminent or certain. Furthermore, demand for chocolate has tripled since 1960, growing in excess of 90% over the last two decades with more growth expected.[31] Nonetheless, agricultural sustainability is a chief concern. The average productivity of cocoa farms is only 30% higher now than it was 50 years ago and diminishing production is expected to persist as plants age and poor farming practices continue.[32]
The effects of climate and disease related challenges might be addressed through breeding drought and disease resistant varieties and distributing plants to farmers.[33] Ecuador, for example, has increased the production of high yield, disease resistant clones as part of a national program sponsored by the government.[34] Similarly, hand pollinating has been shown to result in up to a 160% increase in yield.[35] Still, without financing and economic incentives, the future of cocoa production is in doubt.
Public sector
To that end, public policy is shaping the future of cocoa production and agriculture around the world. For example, Cameroon fully liberalized their cocoa market, allowing farmers to charge market prices for their beans. Indonesia levied a 10% export tax on cocoa, incentivizing downstream processing and turning the country into a net cocoa importer.[36] Mozambique held auctions for US aid, which helped stimulate domestic refinement and marketing industries.[37] In Ecuador, the government’s High Quality Aromatic Cocoa Reactivation Project has helped position the country as one of the world’s top producers of fine flavored cocoa.[38]
That said, government initiatives don’t always favor special interests. For example programs like Feed the Future (an Obama administration initiative) failed to gain traction because farmers were incentivized by their governments to focus on food security (maize, rice, wheat).[39] Similarly, wholesalers and government run aggregators that buy at fixed prices, can indirectly incentivize farmers to switch to more profitable crops such as rubber or palm oil.[40] Access to land, lack of ROI, and finances continue to be the biggest hurdles to new cocoa development and generational engagement.[41] Yet all of these challenges can be at least partially addressed by policy. Either through subsidies, R&D, or by market liberalization.
Private sector
Finally, the importance of private sector involvement cannot be overstated. The Nestlé Cocoa Plan, for example, seeks to instill better farming practices, produce better, more sustainable cocoa, and improve the lives of farmers by increasing income and equality. As of 2025, the company claims to have engaged around 180,000 farmers under this program while establishing partnerships with the Rainforest Alliance, the International Cocoa Initiative, and others.[42]
The company also operates the Nestle Income Accelerator program which promotes (and rewards) sustainable farming practices by paying premiums for Rainforest Certified cocoa, offering cash incentives for adopting the accelerator program (including school enrollment, good agricultural practices, diversified incomes, etc), and encouraging farmers to develop secondary incomes.[43]
Similarly, Mars launched pilot programs in 2022 to provide sustainable incomes to small farmers throughout Côte d’Ivoire. The company says it plans on using lessons learned from these beta programs to inform strategies for tackling similar challenges throughout the global supply chain. Mars said it is committed to improving farmers' livelihoods by removing obstacles to finance and sustainable farming practices. Mars also highlighted the need for diversified incomes as a means of insulating farmers from market volatility. The company has partnered with a variety of organizations including Fairtrade and has established the Farmer Income Lab as an industry thinktank tasked with researching and advising the industry on best practices. Mars operates country-specific initiatives as well, aimed at promoting living wages in those regions, including LEAP in Côte and d’Ivoire, and ACTIVE in Indonesia.[44]
Smaller operators like Maeve Chocolate source directly from the farmer (when possible) and return 10% of their net profits to the farm. The company has also helped fund new wells, new trees, and enrolled farmers in savings and loan programs.[45] In short, private sector involvement is essential to the long term success of the cocoa industry, whether funding global change initiatives as Mars seeks to do, or establishing fresh water supplies as Maeve has recently done, for-profit enterprises have a stake in maintaining a healthy cocoa supply.
Conclusion
Clearly demand for chocolate remains strong and, as developing nations become more affluent, that demand is likely to increase. Though cocoa supplies are likely secure for the coming decades, the threats to long-term supply are real. It is imperative that governments and private organizations take steps to protect the cocoa industry by investing in their farmers, paying living wages, and incentivizing a new generation of farmers to take up their family’s work. Educating farmers on sustainable practices, revitalizing aging farms with younger trees, and liberalizing markets so that farmers have access to global prices are all positive steps that can be taken to ensure stable, long-term supply.
Notes
1. Tracey Allen, “Cocoa prices are finally falling. Why?” J.P.Morgan, August 5, 2025, https://www.jpmorgan.com/insights/global-research/commodities/cocoa-prices.
2. “Cocoa,” Trading Economics. Accessed October 2, 2025. https://tradingeconomics.com/commodity/cocoa.
3. Owen Tucker-Smith and Jesse Newman, “Hershey lifts candy prices, citing high cocoa costs,” Wall Street Journal, July 22, 2025. https://www.wsj.com/business/retail/hershey-lifts-candy-prices-citing-high-cocoa-costs-7aec150b
4. Jenni Reid, “Chocolate lovers, brace yourselves: Prices are rising, but not forever,” CNBC, August 22, 2025. https://www.cnbc.com/2025/08/22/chocolate-set-to-get-more-expensive-but-2026-outlook-looks-sweeter.html
5. Tucker-Smith and Newman, “Hershey lifts candy prices.”
6. Allen, “Cocoa prices are falling.”
7. “Cocoa bean production by region, 1961 to 2023,” Our World in Data. Accessed October 2, 2025. https://ourworldindata.org/grapher/cocoa-beans-production-by-region.
8. “Imports of cocoa beans, 1961 to 2022,” Our World in Data. Accessed October 2, 2025. https://ourworldindata.org/explorers/global-food?tab=line&country=~OWID_WRL&Food=Cocoa+beans&Metric=Imports
9. Vivek Voora, Steffany Verudez and Cristina Larrea. “Global Market Report: Cocoa,” International Institute for Sustainable Development, (January 1, 2019). https://www.jstor.org/stable/resrep22025.
10. “Cocoa Beans in Brazil,” Observatory of Economic Complexity. Accessed October 2, 2025. https://oec.world/en/profile/bilateral-product/cocoa-beans/reporter/bra.
11. Marta Kozicka et al. “Forecasting Cocoa Yields for 2050,” Alliance biodiversity & CIAT, (2018). Forecasting cocoa yields for 2050 | Alliance Bioversity International - CIAT.
12. Voora, Verudez and Larrea, “Global Market Report.”
13. Julie Howard and Emmy Simmons. “Agriculture Under Pressure: Implications for Agricultural Development in U.S. Foreign Assistance,” Center for Strategic and International Studies, (August 1, 2020). https://www.jstor.org/stable/resrep26061
14. Voora, Verudez and Larrea, “Global Market Report.”
15. “Cocoa bean consumption per person, 1961-2022,” Our World in Data. Accessed 10/2/2025. https://ourworldindata.org/grapher/chocolate-consumption-per-person?tab=line.
16. “Cocoa bean consumption per person,” Our World in Data.
17. “Imports of Cocoa Beans,” Our World in Data.
18. John Eden Kongor, Margaret Owusu and Charlotte Oduro-Yeboah. “Cocoa production in the 2020s: challenges and solutions,” CABI Agriculture and Bioscience 5, no. 102 (October 31, 2024), doi: https://doi.org/10.1186/s43170-024-00310-6.
19. “Growing Cocoa,” International Cocoa Organization. Accessed 10/2/2025. https://www.icco.org/growing-cocoa/.
20. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
21. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
22. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
23. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
24. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
25. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
26. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
27. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
28. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
29. Allen, “Cocoa prices are falling.”
30. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
31. Francesco Recanati, Davide Marveggio and Giovanni Dotelli. “From beans to bar: A life cycle assessment towards sustainable chocolate supply chain,” Science of the Total Environment 613-614, (February 2018): 1013-1023, doi: https://doi.org/10.1016/j.scitotenv.2017.09.187.
32. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
33. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
34. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
35. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
36. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
37. Howard and Simmons. “Agriculture under pressure.”
38. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
39. Howard and Simmons. “Agriculture under pressure.”
40. Kozicka et al. “Forecasting Cocoa Yields for 2050.”
41. Kongor, Owusu and Oduro-Yeboah. “Cocoa production in the 2020s.”
42. “Nestle Cocoa Plan,” Nestle. Accessed 10/2/2025. https://www.nestlecocoaplan.com/our-approach/nestle-cocoa-plan.
43. “The Income Accelerator Program: How it works,” Nestle, (January 2022). https://kitkat20.factory.kitkat.com/sites/default/files/2024-10/nestle-income-accelerator-how-it-works.pdf.
44. “Mars, Incorporated supports 14,000 cocoa farmers on a path to a sustainable…,” Mars, (April 20, 2022). https://www.mars.com/news-and-stories/press-releases-statements/mars-supports-cocoa-farmers-sustainable-living-income.
45. “You + Us? Major Impact,” Maeve Chocolate. Accessed 10/2/2025. https://maevechocolate.com/pages/people.