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Ivory Coast political strife pushes up price of cocoa, chocolate

SHARE Ivory Coast political strife pushes up price of cocoa, chocolate

When political strife plagues Ivory Coast, chocolate lovers should take notice.

The small West African country is the world's largest producer of cocoa by far, and its fate can dramatically change the price of candy bars in the United States.

Cocoa prices have surged 9 percent this month as Ivory Coast's presidential election turns into a standoff, according to the International Cocoa Organization in London.

"It hasn't hit us yet, but it sounds like it's going to go up," said Donna Bolles, manager of the retail store for Big John's Pacific Food Importers in Seattle. Big John's should have enough chocolate inventory to get through the holidays without raising prices, Bolles said. She is more focused on the skyrocketing price of crystallized ginger, which doubled in the past month to $10.70 a pound because of crop failures in China.

Many factors determine food prices, which are expected to rise this year on everything from beef to milk and coffee. Growing demand from China, India and other emerging markets plays a role, as do farmers' perennial worries: bad weather, disease and pests.

But in the case of chocolate, an unstable political climate in Ivory Coast has outweighed most other factors for the past decade. It produces about 35 percent of the world's cocoa.

"In the past, there's been a lot of violence in that country that disrupted exports, and now they have two guys declaring themselves the leader, which is driving prices up," said Phil Flynn, a commodities researcher at PFG Best Trading in Chicago.

Eventually, consumers will either pay more for chocolate, or candy bars will get smaller, he predicted. Mars, Snickers and other bars have shrunk in recent years as big chocolate companies cut costs.

"You can't pass the prices on to consumers who are struggling, so you end up giving them less in ways you hope they won't notice," Flynn said.

Manufacturers also have cheapened their ingredient mixes, using fewer chips and adding cocoa flavorings and compound coatings that are substitutes for chocolate, said Judy Ganes Chase, a commodities consultant in New York. "There is just so much bar-shrinking you can do."

If Ivory Coast's conflict is resolved quickly, cocoa prices might stabilize and not be passed on to consumers, she and others said.

The escalation of cocoa prices slowed a bit this week after Ghana's state cocoa agency, Cocobod, offered more cocoa to the market, according to Dow Jones Newswires. Ghana is the world's second-largest cocoa producer.High-end chocolatiers and confectioners say they do not anticipate sharp increases, partly because they already pay such high premiums for cocoa.

"We're not sourcing from the Ivory Coast," said Andrina Bigelow, CEO of Seattle-based Fran's Chocolates, which makes truffles and other treats using chocolate from France that is made with cocoa from a variety of countries, including Ecuador, Venezuela, Madagascar and the Caribbean.

Andy McShea is chief operating officer of Theo Chocolate, an organic, fair-trade chocolate manufacturer in Seattle. He sees the current crisis in rising commodity prices as economic karma.

"Fundamentally, it's a comeuppance, really, because had some of that profit trickled down to farmers, there might be more social stability in that particular place."

Whatever happens with Ivory Coast politics and cocoa prices, chocolate lovers appear to be safe from major price increases until Christmas.