Ghana and Ivory Coast, the world’s top cocoa producers, are looking at introducing a cocoa production ceiling to support global prices and discourage overproduction, the countries’ industry regulators said on Wednesday.
The move comes after the West African nations, who produce two-thirds of the world’s cocoa, imposed a fixed “living income differential (LID)” or premium of $400 a tonne in July on all cocoa sales for the 2020/21 season.
Many cocoa buyers say the LID, which represents a major overhaul of how cocoa is priced globally, could lead to excess production and eventually, to lower prices.
“We’ve put in (place a) mechanism which sets production ceilings,” Joseph Boahen Aidoo, CEO of the Ghana Cocoa Board (Cocobod) told industry representatives at the European Cocoa Forum in Lisbon.
He declined to say at what level the production ceiling would be set, saying that parliament had to approve it first.
The director general of Ivory Coast’s Conseil Cafe Cacao (CCC), Brahima Yves Kone, said lawmakers in Ivory Coast and Ghana would likely approve the production ceiling. “According to the figures they gave us, we expect them to agree,” he said.
Cocoa prices on ICE Futures Europe hit a one-year high of 1,939 pounds ($2,424) in July, in anticipation of the move by Ivory Coast and Ghana to introduce the premium, their latest attempt to combat pervasive farmer poverty.
Speaking on how the West African nations would implement a production cap in practice, Kone said Ivory Coast had begun mapping and registering the country’s farmers, and should complete the project by 2020.
SOURCE : REUTERS