Top producer Ivory Coast is looking to reform its cocoa marketing system by aligning government-set farmer prices more closely with international prices, two government sources told Reuters.
The move follows a sharp drop in global cocoa prices, which sparked a cocoa sales crisis in the country and resulted in a pile-up of unsold beans both inland and at the West African country’s ports.
After nearly tripling to record levels in 2024, world cocoa price futures have lost three-quarters of their value and are currently trading at around $3,300 per ton due to a global surplus of beans.
Ivory Coast last October set the fixed price paid to cocoa farmers well above current world price levels, meaning global traders faced steep losses on cocoa purchases in the country.
They stopped buying beans as a result, leading to a stockpile and prompting the government, in a bid to get cash to farmers, to step in and pledge to buy unsold cocoa stocks at a cost of more than 500 billion CFA francs ($892.06 million).
“We have a clear and precise idea of what we are going to do (with) both the external and internal marketing systems,” one of the sources said. “We need to be more responsive and realistic in an extremely volatile market.”
The government abandoned a decades-long system of spot buying in the 2012/13 season that left farmers at the whims of volatile global prices, selling forward its anticipated crop a year in advance and, on the basis of those sales, setting a fixed price for farmers at the season start in October.
“We need to be more agile and responsive,” another government source said, without specifying how the new system would work in practice.
Ismael Kone, a member of the Ivorian regulator’s advisory board and chief executive of Ecorigine, said that the government should reduce its dependence on multinational companies, which control 80% of cocoa purchases and exports in the country.
“A reform should focus on two objectives: the direct sale of cocoa to chocolate makers to reduce the influence of traders and the development of more powerful and efficient local players to create healthy competition with multinationals,” the Ivorian exporter said.
Tedd George, a commodities expert and founder of Kleos Advisory, said international traders are the only means of getting beans from upcountry to chocolate makers in Europe and North America, and that they would be difficult to replace.
A veteran cocoa industry trader and consultant who didn’t want to be named told Reuters the proposed reforms are unlikely to happen, and even if they do, they are unlikely to improve the situation.
“The pizza pie is only so big and whether you sell half direct to (the chocolate) industry and half to traders or whether you sell nothing to industry and 90% to traders it doesn’t improve consumption,” the consultant said.
“The problem will more or less go away if chocolate demand comes back, (but) we could find ourselves in a position where demand rebounds sluggishly.”
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
Source: www.myjoyonline.com