On the Money

Pay farmers more and chocolate will flourish: Jacques Torres

Jacques & the chocolate factory
Jacques & the chocolate factory

Candy lovers around the world are contributing to a global chocolate deficit, but one chocolatier has a simple solution to the brewing crisis: pay farmers more.

Increased consumer demand, especially from emerging economies, is squeezing global cocoa production. The price of cocoa futures sits about 25 percent higher than a year ago, leading to a recent prediction from Hershey's that the higher cost of ingredients will be passed on to chocolate lovers.

"We are producing today 3.5 million tons of cocoa around the world" each year, said Jacques Torres, a master pastry chef and entrepreneur, who weighed in on the rising fears of a chocolate shortage in a CNBC interview. "We need about 4.5 (million tons annually) in about six years, by 2020."

Approximately 80 to 90 percent of cocoa bean farming is done by small, family run operations, according the World Cocoa Foundation. That has made ratcheting up production an increasingly difficult conundrum.

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"Maybe the solution will be fair trade, because the farmers are not paid enough," Torres said, "and a lot of farmers are actually abandoning cocoa" for more cash-effective crops.

Chocolate gets pricier, Torres pays for it

Jacques Torres on the set of "On The Money"
Scott Mlyn | CNBC

The World Cocoa Foundation reports that 68 percent of global cocoa production in 2012 was in developing countries in Africa. Torres believes farmers should benefit from the growing consumer taste for chocolate.

"We want to pay a little bit more for the pound or the kilo of cocoa in order for them to grow it," which provides better financial incentives, he said.

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An entrepreneur since 2000, Torres departed his longtime job as the pastry chef at New York's Le Cirque restaurant. He's eventually grown to operating eight retail locations and two chocolate factories in New York City.

A small-batch producer, the cocoa Torres uses to make his high-end chocolate is mostly sourced from the Americas. This isolates his ingredient costs a bit more from global market moves that have sent key commodities on a tear.

"We already pay a premium for the chocolate—we pay a premium for the beans," Torres said. "So our price doesn't go as high as fast as African chocolate" when there is a rise in commodity prices.

The Christmas season accounts for 35 to 38 percent of annual sales at Jacques Torres Chocolate. Best-sellers include hot drinking chocolate and molded chocolate novelty figures as well as bonbons and chocolate-covered snacks.

"We have a lot of gifts and a lot of chocolate ready" for holiday shoppers, Torres said.