Ivory Coast, Ghana Proposed Cocoa Price Floor Lacks Other Growers’ Support

(Investing Matters) – A cocoa price floor of $2,600 per tonne agreed by Ivory Coast and Ghana with buyers for the 2020/21 season lacks the support of other producing nations, the vice president of the World Cocoa Producers Organization said on Friday.

Sayina Riman, who doubles as president of the Cocoa Association of Nigeria, said the decision by the two countries was taken without consulting other growers. Nigeria is the world’s fourth-biggest cocoa producer.

Buyers of Ghana and Ivory Coast cocoa last week agreed to the minimum price proposed by the two governments to address a perceived imbalance between farmers’ incomes and money made by big commodities traders.

The two West African nations account for nearly two-thirds of global output, yet they exert limited influence over international cocoa prices, which have stayed low in recent years due to overproduction.

Riman said in a statement $2,600 per tonne was better than price swings which could sometimes go below $1,500 but that the agreed floor was still lower than where the benchmark should be based on production cost.

“We have been in talks with buyers to get a reasonable price for cocoa beans, but this is not to be done without inputs from other stakeholders in the value chain,” Riman said.

Representatives from across the industry met in Ghana’s capital Accra last week to discuss a common floor price for cocoa beans produced in Ghana and Ivory Coast that would protect farmers’ livelihoods.

Traders, manufacturers and processors agreed to the proposed floor price of $2,600 per tonne, but requested a technicalmeeting on July 3 to address details of its implementation, the Ghanaian and Ivorian agriculture ministries said.

Farmgate prices in Nigeria have been declining this year. They fell to around 720,000 naira ($2,353) per tonne from 850,000 naira in January. Though prices are expected to recover following the new price floor, the outlook for output has been dampened by heavy rains.

Riman said other growers were consulting and would come up with a uniform position on the development in a few days. The issue is also due to be tabled at the next meeting of the International Cocoa Organisation (ICCO) in September in Ivory Coast.

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