Agricultural Commodities: Volatility Accelerates the Verticalization of Value Chains

Price instability reshuffles the deck

The volatility affecting global markets — fueled by geopolitical tensions, climate uncertainties, and an increasingly unstable supply-demand dynamic — does not spare agricultural commodities. Grains, coffee, vanilla, and cocoa now operate in an environment marked by successive and unpredictable shocks.

Between 2023 and 2024, coffee prices experienced a spectacular surge, with increases exceeding 30% in just a few weeks. The cause was very unfavorable weather in Brazil and Vietnam, the world's second and first largest producers, respectively, affected by droughts, irregular rains, and excessive heat. By the end of 2024, Arabica prices approached €7.40/kg and Robusta surpassed €5.20/kg, levels not seen in over a decade. Since the beginning of 2025, the market has remained very volatile: some anticipated a decline of up to -30% by the end of the year; in reality, the observed drop is only about -6% from the peak in February 2025, with prices still significantly higher than those in 2024. Cocoa offers an equally telling example of this instability. After reaching historic highs in 2024, driven by the production crisis in West Africa (2023–2024) — a combination of cocoa tree diseases, aging plantations, and severe climate uncertainties — prices began to correct in 2025. While the decline is real, prices remain very high compared to levels preceding this crisis, confirming how vulnerable agricultural markets are to climatic, logistical, or geopolitical shocks.

The 'majors' are verticalizing their value chain

To cope with this instability, more and more players are taking control of the value chain. This phenomenon, called verticalization, involves integrating raw material production into the business model, allowing companies that make this choice to secure their supplies and smooth their costs. As a result, large agri-food or cosmetics companies are taking stakes in plantations, creating their own supply chains, or even acquiring agricultural or forestry operations. This verticalization often involves direct or indirect control of land, plantations, and forests. Nestlé, Mars, Unilever, as well as luxury or construction players, are now investing in production itself.

An interesting example: at the end of April, the agency Reuters announced that Brazilian businessman Moises Schmidt, head of the eponymous agricultural group, would develop the largest cocoa farm in the world in the Brazilian state of Bahia. A region that, as Reuters points out, is not known for its cocoa bean production. Brazil currently produces only about 200,000 tons, while Côte d'Ivoire, the world's largest producer, harvests ten times that, and Ghana, the second largest producer, about 700,000 tons. The commodity trading giant Cargill has invested in the development of a farm project larger than Manhattan, where high-yield cocoa trees will be planted, fully irrigated and fertilized. The goal? To revolutionize the production method of the main ingredient in chocolate. The partnership stipulates that in exchange for its investment, the American leader would benefit from a supply guarantee.

Swiss Barry Callebaut, the world's largest supplier of cocoa and chocolate products, is also reportedly in talks to partner with the agricultural group Fazenda Santa Colomba in an investment aimed at forming a cocoa farm of 5,000 to 7,000 hectares in the municipality of Cocos, in western Bahia. Colombia, Ecuador, and Mexico are also on the radar of other majors, such as Mars.

Towards the end of the 'small owner' model and the return of intensive farming?

As a consequence of this verticalization, the model of the independent small producer is gradually fading. Faced with economic pressure and standardization requirements, it is becoming increasingly difficult to survive alone. Instead, large integrated farms, financed or co-financed by the majors, are emerging. A new resource capitalism is taking hold.