"Cocoa is More Expensive than Copper"... Food Prices Driven Up by Climate Change [Chosun Price Records]

(18) Coffee Bean Import Prices Rise 46.7%
Cocoa Prices Surpass Copper Spot in April

The price of cocoa, the raw material for chocolate, is soaring to the point of surpassing copper. Due to climate change, the prices of raw materials for not only agricultural products but also processed foods are rising, causing a global surge in food prices.

The import price index announced by the Bank of Korea for April rose 3.9% from the previous month to 143.68. The Bank of Korea analyzed that the rise was largely influenced by increases in international oil prices and exchange rates. Dubai crude oil, which South Korea mainly imports, averaged $84.18 per barrel in March, but rose 5.9% to $89.17 in April, and the won-dollar exchange rate increased by 2.7% from the previous month and 3.6% from a year ago.

Photo by Pixabay

Among imported goods, the raw material with the highest price increase was coffee. The import price of coffee beans in April rose 14.6% from the previous month and 46.7% compared to the same month last year. The futures price of Robusta coffee beans, mainly used for low-cost coffee and instant coffee, reached a record high of $4,575 per ton last month at the London ICE Futures Exchange. The highest price in the same month last year was $2,602, marking an increase of over 75% in one year. Arabica beans used in coffee shops surpassed $5,000 per ton in the same month.

The price of cocoa (processed from cacao fruit) has surpassed the spot price of copper, one of the six non-ferrous metals. On the 15th of this month, the spot futures price of copper traded on the London Metal Exchange (LME) was $9,554 per ton, while on the same day, cocoa futures prices on the ICE Futures Exchange recorded $10,650 per ton and then reached a new high of $11,722 per ton three days later on the 18th.

Major producing countries of coffee and cocoa suffer poor harvests due to severe drought and heatwaves

The sharp rise in raw material prices is largely due to climate change. Abnormal weather phenomena such as severe droughts, heavy rains, and heatwaves are repeatedly occurring worldwide, leading to decreased crop yields. In the case of coffee, Vietnam, the world's largest Robusta producer, is experiencing ongoing drought due to prolonged hot and dry weather. Arabica coffee, which usually requires a large temperature difference between day and night and is typically grown in tropical highlands, is seeing reduced cultivation areas as temperatures rise.

On the 29th of last month, women in downtown Manila, Philippines, where an unusual heatwave struck, are walking using parasols to shield themselves from the scorching sunlight. Photo by Yonhap News

Cocoa prices surged due to reduced harvests caused by drought and concerns over supply disruptions. West African countries such as Ghana, C?te d'Ivoire, and Nigeria, which produce cocoa, have been hit by severe droughts, El Ni?o weather anomalies, and rampant cacao diseases.

Sriracha is facing a shortage crisis again this year following last year. The most popular Sriracha sauce manufacturer, Huy Fong Foods, has notified distributors that it will halt production of all products at least until September. Among the jalape?o varieties, some cannot tolerate high temperatures and are only produced in winter; however, due to Mexico's dry weather and high temperatures, jalape?os are not ripening red, causing production setbacks.

"Temperature and precipitation are factors driving consumer price inflation... Need to enhance climate adaptability"

The Korea Development Institute (KDI) quantitatively analyzed the impact of weather shocks such as temperature and precipitation on prices and found that these shocks acted as factors increasing consumer prices for about 1 to 2 months. Specifically, when the average temperature rises or falls by about 10℃ compared to past trends, the price of fresh food rises by up to 0.42 percentage points (p.p.) in the short term, and the overall consumer price index increases by 0.04 p.p.

The report stated, "Due to global warming, summer temperatures are rising, and weather conditions such as heavy rains and droughts caused by this are likely to change more frequently and with greater intensity. This may lead to more frequent short-term price instability, especially in fresh foods." It added, "To reduce the impact of localized weather shocks on consumer prices, structural measures such as diversifying supply sources by expanding agricultural imports should be explored. Additionally, it is necessary to enhance climate adaptability through measures such as crop variety improvement in response to climate change."