Ebola could hit chocolate prices

As West Africa struggles to contain the economic as well as the human impact of Ebola, Ivory Coast cocoa exporters are raising fears of supply shortages that have driven prices to three-year highs, warning output could drop dramatically if the virus spills into the world's top grower. Ciara Lee reports.

American health officials promise Ebola will never become an epidemic in the United States. But it could end up a national scourge in another way: by forcing up the price of chocolate.

The two largest producers of cocoa beans—the magic ingredient that makes chocolate chocolate—are Ivory Coast (also known as Côte d’Ivoire) and Ghana, which combined provide about 60% of the world's supply. Neither country is suffering an Ebola outbreak, but they’re in the same part of West Africa that includes Liberia, Sierra Leone and Guinea, which are basically ground zero for the killer virus that has claimed more than 4,000 lives so far. Nigeria, which accounts for another 6% of the world’s cocoa beans, has had roughly two dozen confirmed cases of Ebola inside its borders.

Cocoa production hasn’t shut down, but Ivory Coast has sealed its shared borders with Liberia and Guinea, constricting the flow of some workers who travel into the country to harvest beans. A trade group called the World Cocoa Foundation is collecting donations from chocolate companies such as Mars and Nestlé to help combat the virus. Commodity traders say cocoa prices could double or go even higher if Ebola spreads to Ivory Coast or Ghana.

So far, Ebola worries haven’t caused a lasting hike in cocoa prices, which ought to spare Americans stocking up on Halloween candy. There was a quick spike in mid-September, when cocoa prices jumped by about 11%. But they’ve since come back down to levels of a month ago. Traders, for now, seem to be betting that Ebola won’t cross the border into those cocoa-producing countries.

If cocoa prices were to soar, chocolate makers could replace some of the cocoa in their products with fillers, to help keep retail prices from skyrocketing. That could impair taste, however, especially in finer chocolates. Other ways to counteract higher cocoa prices: Reduce packaging, advertise less, and shrink portion size. Chocolate makers could also just pass on higher costs to consumers.

Ivory Coast is wealthier than its Ebola-stricken neighbors, with more resources to prevent an outbreak or contain one if it occurs. But its borders with Guinea and Liberia are long and lightly patrolled, raising the odds of an Ebola infiltration. New rules meant to keep the virus out include a 21-day quarantine for anybody caught crossing the border illicitly and prison sentences for other activities that could give the virus an edge. Chocolate is serious business.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.