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New York City isn’t known for its cocoa beans.
But Pennsylvania-based Hershey has taken to New York’s futures market to procure its cocoa supplies after West African nations imposed stiff premiums on their beans.
From West Africa To Wall St.
In the past, chocolatiers such as Hershey have bought cocoa primarily in the physical market (using traders and intermediaries to buy directly from the source).
African nations produce over 75% of the world’s cocoa but capture just 3% of global chocolate revenue, according to the International Cocoa Organization. Last year, leaders from Ivory Coast and Ghana set out to remedy those figures by creating their own “OPEC for cocoa”:
- The nations created a $400/ton “living income differential” premium on cocoa sales to support their farmers (which went into effect last month).
- That’s on top of the “country premium” buyers already pay the two West African nations for their highly regarded beans.
