Cacao beans, the natural source of chocolate, famously were used as a form of money among the Aztecs. Not that everyone wandered the markets in Tenochtitlan with bags of them ready to pay for other goods: consumption, and probably ownership, of cacao was restricted to the nobility. Instead, cacao beans were a valuable, scarce luxury, used as a standard of value-- a means to express the prices of other goods.
We know all this from Spanish descriptions of markets they saw in action in the 1520s. While we cannot be as certain about earlier periods in Mexico and Guatemala, we do see bags of cacao beans offered to Maya rulers by lesser nobles visiting their palaces.
If current market trends continue, we may all revisit the days when chocolate was too costly for anyone but the very wealthy.
Part of the story is the rise of demand. Appreciation for specialty chocolate is highlighted by an article in the New York Times this week. It tells the story of the rediscovery of a rare variety of Theobroma cacao (the technical name for the cacao plant) growing at an unexpected altitude in northern Peru, which produces a chocolate described as "intense, with a floral aroma and a persistent mellow richness", "extremely smooth when melted, with a full-bodied, nutty flavor that was not bitter". All the produce from almost 200 cacao farmers in this small area is sent to Switzerland for processing, and sell for a reported $12 per two ounces.
That's $96 a pound.
But that's not all to the story. It isn't just rare chocolate that is heading for stratospheric prices. An article published December 25, 2010 by Canada's CTV, headlined "In 20 years, could a chocolate bar cost $100?", summed it up:
"some argue that the days of cheap chocolate are already coming to an end... a combination of politics in key cocoa-growing nations and unsustainable agricultural practices could cause a crisis soon".
A key issue: 40% of world cacao production today comes from Ivory Coast. And right now, Ivory Coast is being held hostage by Laurent Gbagbo, who refuses to step aside and let the legally elected president, Alassane Ouattara, take office. In December the Financial Times of London reported that "The cocoa industry has all but stopped at what otherwise should be the busiest harvesting period of the year".
The latest reports are that the EU has frozen port and bank assests to pressure Gbagbo to give way.
And this instability at the point of origin for cacao comes as demand for chocolate continues to grow, even during a global recession. The CTV story quotes a British chocolate market authority as saying "consumption is increasing faster than cocoa production -- and it's not sustainable." It cites a conservation researcher estimating that if demand keeps growing as it has been, in ten years, there would need to be the equivalent of a second Ivory Coast dedicated to production.
For most people, this points to a distressing future. But for some, it is an opportunity.
The CTV story summarized the story of an attempt to capture a significant portion of the cocoa market in summer 2010
when cocoa speculator Anthony Ward bought 241,000 tons of cocoa beans. That was enough to manufacture 5.3 billion quarter-pound chocolate bars and amounted to an astounding 7 per cent of the world's cocoa supply. Investors worried that Ward's commodity fund, Armajaro, would use its holdings to try to dominate the cocoa market, pushing prices higher....
In the end, the plan, if it was deliberate, didn't work. Though cocoa prices did shoot up after the Armajaro buy, the run-up didn't last. Turns out 2010 has been a great year for cocoa crops, political turmoil notwithstanding, so worries about supply shortages waned. The Wall Street Journal later reported that Armajaro disposed of its cocoa stockpile after realizing the gamble had failed.
Unexplained here, though, is precisely why cocoa prices rose to a 30-year high this summer. Demand is continuing to rise, and supply is lagging, and it isn't just because of political instability.
In Ghana, the second-largest producer of cacao, the CTV reports that "climate change is jeopardizing crops by allowing pests to thrive, leading to more disease such as 'black pod" and a shorter lifespan for cocoa trees". A conservation specialist there
predicted last year that forest depletion and soil erosion and other agricultural threats would fuel such a sharp rise in global prices that a chocolate bar could cost as much as $100 within 20 years.
Because that's the seamy underside of chocolate: cultivation of cacao plants is widely viewed as destructive to the environment. Global companies marketing cacao pay premium prices, but little of that money gets back to the small producers. Efforts to improve both the environmental and social sustainability of cacao farming got their initial boost from the premium chocolate market but have expanded to large chocolate companies that are pledging to use 100% certified, sustainably grown cacao.
While that doesn't promise lower chocolate prices, it should make consuming chocolate less of a guilty pleasure in the future.