Ghana, Cote d’Ivoire set $2,600 as cocoa floor price

Ghana, Cote d’Ivoire set $2,600 as cocoa floor price
Source: Ghana | JoyBusiness | JAD
Date: 12-06-2019 Time: 01:06:57:pm
Ghana and Cote d'Ivoire producce more than 65 per cent of the world’s cocoa beans

Ghana and Ivory Coast have succeeded in getting an agreement with global processors and marketers for the floor price of cocoa beans to be pegged at $2,600 per tonne. 

This follows an intensive two-day stakeholder engagement which hitherto ended in a snag on the first day.

To this end, the two major cocoa producers – Ghana and Cote D’Ivoire, have agreed to “suspend the sale of the 2020/2021 cocoa beans to pave way for the implementation of the floor price”.

Both economies and the global players are to meet on July 3 for the full implementation of this deal. Speaking at a pressing engagement, Chief Executive of COCOBOD, Joseph Boahen Aidoo explained all global players in the value chain have decided to join the effort to alleviate the suffering of cocoa farmers.

“Proposed floor price of $2,600 accepted in principle. Global players requested a committee meeting to fine-tune the technical implementation of the floor price,” he said.

Director General of the Conseil du Cafe-Cacao (CCC), Kone Brahema Yves described the entire negotiation process as an “uneasy task” as this remains the first time in the history of cocoa that the two leading cocoa producers have decided on a floor price.

Meanwhile, global partners have called for a fine-tuning of the proposal on July 3 2019. This is when the technical team meets to ensure full implementation of the floor price on the global cocoa market. 

Earlier, the Vice President urged stakeholders in the cocoa value chain, including Trade Houses, Cocoa Processors and Chocolate Manufacturers, to join the Governments of Ghana and Cote d’Ivoire to address the high-income disparity between farmers and the end users of cocoa products.

“It is startling to learn from the President of the World Cocoa Foundation that only 6 per cent of the total value of chocolate goes to farmers. The percentage may be lower in the case of cosmetics and pharmaceutical end uses” Vice President Bawumia stated.

“It is to this end that our governments (Ghana and Cote d’Ivoire) have agreed that we offer the farmer a fair share of the wealth that the industry generates. We must do this for good reason,” he added.

With 65% of global production, Ghana and Cote d’Ivoire are co-operating to tackle common challenges in the production and marketing of cocoa, and to create a conducive platform for effective engagement with traders, processors, manufacturers, and retailers on all relevant issues of mutual interest, including farmers’ income.

There are fears that the sustenance of the new cocoa floor price could be tampered by low consumption rate of cocoa especially in Africa which accounts to just 4 per cent of global consumption rates. Joseph Boahen argues a new strategy to curb this trend will be included during the July 3 implementation meeting.

“We have to manage production to ensure we economize land. In the supply chain, there is a sort of equilibrium and people are worried about the price letting people produce more than is necessary. It’s a matter of production and consumption. If we can address the issue of sugar we could penetrate the markets. 

The fixed minimum price, to be known as ‘floor price’, is to address income disparity in the cocoa value chain, as well as derive more value from growing the chocolate ingredient. This is to help farmers, the backbone of the cocoa industry, to make a reasonable income to take care of family and get some margin to invest.