The Great Cacao Collapse of 1984

A Bitter Prelude: From Boom to Bust in the Cocoa Market

In the late 1970s, cocoa was riding high. Prices for cacao beans – the lifeblood of chocolate – had surged to record levels, sweetening the profits of farmers and speculators alike. West African nations like Côte d’Ivoire (Ivory Coast) and Ghana, the world’s leading producers, prospered during this boom. New players in Asia and Latin America also planted cocoa eagerly, hoping to cash in on the brown gold. By 1977, cocoa prices spiked to unprecedented heights (over $5,000 per ton), and optimism abounded that the good times would last.

However, as often happens with commodity booms, this feast was followed by a dramatic famine. Oversupply became the bitter theme of the early 1980s. Farmers worldwide, encouraged by earlier high prices, had expanded cocoa plantings. By 1984, a series of bumper crops flooded the market. Ivory Coast, Brazil, Malaysia, Ecuador, Indonesia – virtually every major cocoa-growing region – harvested record volumes of beans in the 1984-85 season. Warehouses brimmed with cacao. Chocolate manufacturers suddenly had more than enough supply, and buyers on commodity exchanges began to bid much lower for each ton of cocoa. The price of cocoa plummeted, falling by more than half from the late-70s peak. What had been selling for over $5,000/ton in the 1970s sank to around $1,500–$2,000/ton by the mid-1980s. For context, this was the lowest price range in well over a decade.

Cocoa’s collapse was stunning in speed and scale – yet outside of trading circles it went largely unnoticed. Global attention in the 1980s was fixed on flashier headlines (stock market antics, oil gluts, and corporate takeovers). But in the cacao heartlands of West Africa, the impact was devastating and unmistakably real. An entire economic pillar was crumbling, even if few elsewhere were watching.

Storm Clouds Over West Africa

Nowhere was the crisis felt more keenly than in Ivory Coast, which by the 1980s had become the world’s top cocoa producer (providing nearly 30–40% of the global supply). This West African nation’s fortunes were so intertwined with cocoa that its longtime president, Félix Houphouët-Boigny – affectionately known as “Le Vieux” or “The Old Man” – tracked cocoa prices with the intensity of a stockbroker. Under his leadership, Ivory Coast had enjoyed a “cocoa miracle” in the 1960s and ‘70s: the country paved highways, built one of Africa’s most modern city skylines, and attained a relatively high per capita income, all thanks to cocoa export revenues.

But by 1984, storm clouds were gathering. The world cocoa price collapse meant Ivory Coast’s primary source of income was shrinking fast. Other key commodities like coffee were also suffering price slumps, compounding the pain. President Houphouët-Boigny grew increasingly alarmed and frustrated. He had always harbored a mistrust of foreign commodity traders and big chocolate companies, suspecting that speculative trading shenanigans or market manipulation were keeping cocoa prices artificially low. To him, the situation was becoming intolerable: how could it be that the more cocoa his farmers grew, the less money they earned?

On the cocoa farms themselves, the price crash spelled hardship. Thousands of Ivorian smallholder farmers, who just a few years prior were rewarded handsomely for their beans, suddenly saw buyers paying a pittance. In neighboring Ghana, the situation was arguably even worse – Ghana’s cocoa industry had been mismanaged in the late 1970s, leading to rampant smuggling of beans into Ivory Coast (where prices were better). By 1983, Ghana’s official cocoa output had plummeted to barely one-third of its peak, its lowest level in half a century. Ghana’s farmers were abandoning cocoa trees, unable to survive on the meager fixed prices offered by the state marketing board amid high inflation. Many gave up or smuggled their harvests across the border for a better deal.

Thus, as 1984 dawned, West Africa’s two cocoa giants faced a dire new reality. Chocolate had turned bitter for those who grew it. The once-ebullient Houphouët-Boigny was reportedly so depressed by cocoa’s nosedive that, on at least one occasion, he refused to even meet with visiting traders at his palace – an aide apologetically explained that the president’s spirits were low “because the cocoa market is down.” Such was the mood: a national leader’s health seemed tied to the commodity’s fortunes, and those fortunes were sinking.

The Withholding Gambit: Ivory Coast’s One-Nation Cocoa Cartel

Desperate times breed desperate measures. In 1987 – after several years of persistently weak prices and failed attempts to rally the market – President Houphouët-Boigny decided to take dramatic action. Frustrated with what he saw as an “unfair” market dictated by speculators and buyers in London and New York, he essentially declared economic war on the global cocoa market. Ivory Coast would boycott the market and single-handedly try to force prices back up.

It was a bold and risky gambit, soon dubbed the “withholding scheme.” The Ivorian government ordered that no more of its cocoa beans would be sold for export unless buyers paid a higher, fixed minimum price that Ivory Coast demanded. In effect, the world’s largest producer attempted to form a one-country cocoa cartel, unilaterally. By choking off supply, Houphouët-Boigny hoped to create a shortage on the world market that would push prices upward to his target level. Only then would Ivory Coast resume normal sales. It was a high-stakes game of chicken with the international commodity markets.

For a time, beans simply piled up. Starting in the summer of 1987 and through 1988, ships at Ivorian ports sat empty while huge burlap sacks of cocoa beans filled warehouses to the rafters. Nearly 135,000 tons of Ivorian cocoa – almost a quarter of the country’s annual harvest – were being held off the market, essentially stockpiled as a bargaining chip. At first, the scheme caused barely a ripple in global prices. Other countries like Malaysia and Indonesia were happy to continue selling, and big chocolate manufacturers drew down their own stockpiles or found alternative sources. Ivory Coast was discovering the hard way that even a dominant producer might not sway a global market if others don’t cooperate.

Inside Ivory Coast, opinions on the scheme were divided. Many local economists and bankers quietly feared disaster. “Most of us knew the cocoa withholding scheme would be a disaster,” one Abidjan banker admitted later, shaking his head at the gamble. But Houphouët-Boigny’s word was law – few dared openly question the 84-year-old president’s decision. To outside observers, the move was audacious but puzzling: was it pride? Was it the last stand of an aging leader trying to defy inexorable market forces? Or simply a miscalculation born of desperation?

Whatever the motive, the market showdown escalated through 1988. Each passing month that Ivory Coast refused to sell cocoa, its government coffers grew emptier. The country’s Caistab (the state-run cocoa marketing board) still had to pay local farmers a high guaranteed price for their beans – about 65 cents per pound, the world’s highest farm-gate price – even though the world market price was barely half that. The Ivorian treasury was effectively bleeding money, subsidizing farmers while receiving no export revenue. To keep farmers loyal and off the smuggling trails, Ivory Coast stubbornly maintained these high local prices, even importing beans from neighboring countries (like Ghana) to meet domestic supply gaps! The result was a perverse situation: Ivory Coast was paying more for cocoa than it could possibly earn by selling it, and smugglers were actually sneaking cocoa into the country to take advantage of the generous price, only to aggravate the domestic surplus.

Victims of a Financial Tailspin

By late 1988, cracks in the scheme were turning into chasms. Ivory Coast’s finances were in shambles. The nation had amassed huge debts – foreign debt swelled to around $10 billion by 1987, and by 1988 the government had to suspend interest payments, verging on default. Several Ivorian banks that had lent heavily to cocoa exporters suddenly found those loans going bad; with no exports, the exporters couldn’t repay. A few banks became insolvent, collapsing under the weight of unpaid cocoa loans.

And what of the farmers, the very people this strategy was meant to help? Tragically, they suffered greatly. Up-country villagers, far from the capital, waited anxiously for buyers to take their crop. But with the official boycott, many licensed buyers stopped purchasing beans altogether – they had no market to send them to. Mountains of cocoa pods rotted on farms or lay idle in warehouses. In remote towns, unscrupulous middlemen took advantage of the chaos. Some foreign traders (including opportunistic Lebanese and French businessmen who traditionally ran rural buying operations) offered to buy the farmers’ beans for rock-bottom unofficial prices, paying in IOUs or even counterfeit paper scrip instead of real money. Thousands of farmers, desperate to unload a perishable crop and get some cash, accepted these worthless promissory notes – only to find the buyers vanished overnight. In one district, a notorious case saw a trader flee after buying up cocoa with IOUs; enraged farmers were left with neither money nor their cocoa.

The human toll of the collapse began to show in harrowing ways. Rural poverty deepened sharply. Families who once earned a modest living from cocoa suddenly had no income at all. Reports trickled into Abidjan of violent reprisals in some villages – according to rumor, a few of the most exploitative middlemen met gruesome fates at the hands of cheated farmers. (Whispered stories spoke of vigilante justice, even of bodies of swindling agents found in the bush, though such tales remain difficult to verify.) What is certain is that bitterness and resentment flared. Cocoa, once the proud engine of prosperity, had become a source of misery and anger.

On the world stage, commodity traders watched the Ivorian standoff with a mix of curiosity and caution. The London cocoa futures market occasionally stirred with rumors: Would Ivory Coast dump its hoard? Could the stalemate hold? In August 1988, an unconfirmed whisper that Ivory Coast had finally sold a chunk of its stockpile sent cocoa futures plunging to new lows. Panic selling erupted on London’s exchange, and prices hit their daily downward limit, as everyone scrambled to get out before a potential flood of beans hit the market. In New York, cocoa futures similarly sank to contract lows – around $1,300 per ton, a price that barely covered the cost of production for many farmers. It became clear that the markets had utterly lost faith in Ivory Coast’s bluff. Warehouse space in Abidjan was finite; a new harvest was coming in; sooner or later, the dam would break.

Collapse and Consequences

By early 1989, reality could no longer be denied. Ivory Coast capitulated. The great cocoa mountain that had been withheld was finally released to the world market. Unfortunately for Ivory Coast, by the time they sold their accumulated stocks, prices were at rock-bottom. The nation incurred massive losses – selling cocoa at lower prices than if they had just continued normal exports all along. The one-nation cartel gambit had failed catastrophically. “Le Vieux” Houphouët-Boigny, the grand old man of African politics, had been beaten by the invisible hand of the market.

The Great Cacao Collapse reverberated far beyond Ivory Coast’s borders. In the short term, global chocolate makers benefited from the windfall of cheap cocoa. Candy bars and chocolate confections in the late 1980s had a remarkably stable or even declining raw material cost, thanks to the glut of low-priced beans. But the chocolate world was reshaped in more profound, lasting ways as well:

• Power Shift in Production: West Africa’s stranglehold on cocoa production loosened. While Ivory Coast remained (and still remains) the largest producer, its misfortunes opened the door for new producers. In the 1980s, Malaysia rapidly rose to become the number four cocoa producer globally – a shocking development, since Malaysia had not been a major cocoa source historically. Taking advantage of high prices in the late ’70s, Malaysia planted vast cocoa estates; by the time Ivory Coast stumbled, Malaysia was exporting significant volumes of cocoa (ironically lower quality beans but cheaper). Chocolate manufacturers, hungry for reliable supply, increasingly turned to Asian origins. Similarly, Indonesia began a cocoa boom in the late 80s and into the 90s. The net effect: the geographic landscape of cocoa production became more diversified. West Africa’s share of the market slipped, and it faced new competition from Asia and Latin America.

• Economic Upheaval in Producer Countries: The collapse devastated the economies of Ivory Coast and hurt other African producers. Ivory Coast went from being a star economic performer in Africa to entering a prolonged economic slump in the 1990s. The government, strapped for cash, had to implement austerity measures and later accept structural adjustment programs. The social fabric frayed: as cocoa profits dried up, unemployment rose and long-simmering ethnic tensions over land and resources intensified. Some observers even link the cocoa crash indirectly to Ivory Coast’s later political instability – the country eventually fell into a coup and civil conflict in the 2000s, after decades of peace under Houphouët-Boigny. While many factors contributed to that unrest, the economic stagnation after the 1980s commodity collapse certainly didn’t help. In Ghana, the earlier cocoa crisis forced major reforms: the Ghana Cocoa Board was overhauled in 1984, farmgate prices were raised to discourage smuggling, and with international help Ghana rehabilitated its cocoa sector in the late 80s. Eventually, Ghana’s production rebounded by the 1990s – but only after the country had lost a generation of output and income.

• A New Reality for Chocolate Makers: The wild swings of the 1970s and the collapse of the mid-80s taught the chocolate industry hard lessons. Major chocolate companies and cocoa grinders learned to hedge their risks on futures markets more carefully and to diversify their sourcing. The era also saw the strengthening of the International Cocoa Organization (ICCO), an entity of producers and consumers that tried (with limited success) to stabilize prices via buffer stocks and export quotas. In fact, a new International Cocoa Agreement was negotiated around 1986-87 in response to the turmoil, but it lacked teeth – the failure of Ivory Coast’s unilateral move had shown how difficult controlling the market was. Chocolate manufacturers, for their part, quietly enjoyed a period of lower ingredient costs, but they also realized the importance of sustainability; some began investing at origin to support farmers or even explore cocoa butter substitutes (like palm oil-based cocoa butter equivalents) to be less vulnerable to future cocoa shortfalls or spikes.

• Human Costs and Industry Awakening: Perhaps the most significant consequence was the human one. Tens of thousands of small farmers in West Africa were plunged into poverty. The wealth gap between the rich world’s chocolate consumers and the poor world’s cocoa producers widened painfully during this collapse. These events planted seeds of awareness that would only grow in later decades: questions about fairness in the chocolate supply chain, farmer livelihoods, and eventually the push for “fair trade” chocolate can trace some roots back to crises like 1984’s collapse. It became ever clearer that cocoa’s volatility directly impacts vulnerable communities. Although the collapse itself was underreported in the mainstream press, within the chocolate industry and policy circles it served as a cautionary tale – a financial thriller with very real victims.

Lessons from a Lost Chapter in Chocolate History

By the end of the 1980s, the cocoa world had been irrevocably changed. What makes The Great Cacao Collapse of 1984 so fascinating – and tragic – is how underreported it was outside of insider circles. This was a financial disaster every bit as dramatic as better-known Wall Street crashes, yet it unfolded mostly in the shadows, on the trading floors of commodity exchanges and in the remote villages of West Africa. For the average chocolate lover nibbling a candy bar, there was little hint that a worldwide cocoa crisis had upended lives and fortunes. Chocolate bars didn’t suddenly disappear from store shelves, nor did their prices skyrocket overnight. In fact, if anything, consumers enjoyed relatively cheap chocolate in the late 1980s. The turmoil was largely invisible to them – absorbed by faraway farmers and distant financial maneuverings.

In hindsight, the collapse offers a rich narrative of market folly and human resilience. It has all the elements of a nonfiction thriller: a powerful leader’s quixotic gamble, secretive deals and rumors in global trading hubs, fortunes made and lost, and ordinary people caught in the crossfire. Unlike a fictional thriller, these stakes were real – a misjudgment in pricing strategy meant children pulled from school because their parents could no longer afford fees, or banks folding and threatening an entire nation’s stability.

Today, the cocoa market still faces cycles of boom and bust. In fact, recent years have seen cocoa prices spike to multi-decade highs again due to new pressures, reminding us that the lessons of the 1980s remain relevant. Efforts by modern Ivory Coast and Ghana to gain more control – such as jointly raising a price premium for their cocoa in 2019 – echo the same age-old desire to escape the “resource curse” and get a fair price for farmers. So far, these efforts have met mixed results, but they show how the legacy of the 1984 collapse endures.

For chocolate enthusiasts, knowing this history adds a deeper appreciation for every chocolate treat. The sweet delight of a bar of chocolate belies a complex, often bitter story in the background. The Great Cacao Collapse of 1984 may be a forgotten chapter to many, but its impact lives on in each cocoa bean’s journey from tropical farm to candy wrapper. It reshaped the chocolate world, teaching a hard truth: in the world of chocolate, financial disasters aren’t just numbers on a chart – they are real stories of people, power, and perseverance.