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What do farmers and the ICCO think of Ghana and Côte d’Ivoire’s minimum cocoa price?


The World Cocoa Farmers Organization (WCFO) is asking Ghana and Côte d’Ivoire to reconsider setting a minimum cocoa price, while the International Cocoa Organization (ICCO) is surprised the price was not higher.

The West African nations last week proposed minimum price of $2,600 per tonne of cocoa beans and suspended forward sales for the 2020/21 season until this floor price is implemented.

Speaking to Lumina Intelligence’s Sustainable Food & Drink Podcast , Sako Warren, secretary general of the WCFO, an 800,000-strong member organization of smallholders and farmer groups, said: “We believe that farmers should be the ones to communicate with their partners on what price they should sell their crop.

“We don’t think having a fixed ceiling is the answer.

“…We are more concerned about how farmers will get that money.”

ICCO expected $3,000

The International Cocoa Organization (ICCO) – a member organisation for cocoa consuming and producing countries, was not part of the floor price discussions.

But also speaking to the podcast, Michel Arrion, executive director of the ICCO, welcomed the move and said he would have expected a higher price.

“I was more expecting something around $3,000,” he said.

The new ICCO executive director, who was appointed in October 2018, said world market prices had declined dramatically since 1972 from around $15,000 per MT to $2,400 today.

“There’s nothing wrong in saying we need an increase,” he said.

“If a farmer produces one ton of cocoa per year the average income will be $2,400 a year, so it’s $200 a month which is well below the poverty line if you consider the cocoa grower is feeding seven or eight people in the household.”

Arrion hopes the minimum floor price will lead to an increased farmgate price that would support farmer income.

‘A manifest injustice’

Warren said any additional money from the minimum floor price should go to farmers as income rather than be invested in infrastructure.

WCFO’s press release is available in full below.

The president of Ghana said in a press release the minimum price protection aims to address “a manifest injustice”,   a $100bn chocolate industry where less than 5.75% of the value goes to the hard work of farmers, who often live in poverty.

WCFO calls for the world price for farmers

WCFO suggests farmers should receive the floor price for cocoa rather than the farmgate price.

Côte d’Ivoire’s farmgate price for the main crop last year equates to $1,281 per MT – representing 58% of the average world market price ($2,207 – Average of ICCO’s monthly averages of daily prices from October 2018 to end of March 2019).

In Ghana the main crop farmgate price was $1,407 per ton or 64% of average world market prices.

“Farmers are the business people who produce what they produce and have to sell it. So why should they have the farmgate price and not the actual price?” Warren asked.

WCFO is calling for governments to tax farmer income rather than to set a farmgate price.

“When farmers are better off they will improve the economies of their countries ,” said Warren.

Cocoa economies

Cocoa is a big contributor to the Gross Domestic Product (GDP) of Ghana and Côte d’Ivoire.

Cocoa beans – excluding cocoa butter, power and finished chocolate – generated $3.8bn for Côte d’Ivoire in 2017 making it the country’s top export, accounting for 37% of exports by value, according to OEC figures.

In Ghana, cocoa beans are the third largest export by value, making up 10% of exports or $1.8bn.

Next steps

WCFO will publish a roadmap on how farmers can be part of discussions in September at its conference, the Second Global Cocoa Farmers Conference (GCFC2), which runs from 25 to 26 September 2019 in Abidjan, Côte d’Ivoire.

The Ghana Cocoa Board (Cocobod) said in a press release , a technical meeting will be held on 3 July 2019 in Abidjan to fine tune how the floor price will be implemented.

The release also said other issues, such as traceability, the environment and child labour will be decoupled from the floor price discussions.


Cocoa prices soar as Cote d’Ivoire , Ghana threaten supply cut

Cocoa prices rose sharply on Wednesday after key producers Ivory Coast and Ghana threatened to stop selling their products to buyers unwilling to meet a minimum price.

The threat pushed the September forward contract for the commodity, listed in New York, to $2,540 a tonne, up 1.4 percent on the day.

The two African nations, which together account for 60 percent of the world’s cocoa production, summoned buyers to Accra for a two-day meeting demanding a price of $2,600 per tonne.

At the end of the meeting, Joseph Boahen Aidoo, chief executive of the Ghana Cocoa Board, told a news conference that their demands had been accepted in principle by the participants, but that there would be a follow-up meeting to work out how to implement the agreement.

“Ivory Coast and Ghana have suspended the sale of the 2020/2021 crop until further notice for preparation of the implementation of the floor price,” he said.

Calling the move “historic”, he said that “this is the first time when the producers have called consumers and the first time whereby suppliers have called buyers to come and engage on price,” he said.

“Over the years it has been the buyers who have determined the price for the suppliers.”

Earlier, on the sidelines of the meeting, the chief of Ivory Coast’s coffee and cocoa council, Yves Kone, said the industry needed a price that amounted to “a decent compensation” for workers’ efforts.

The world’s chocolate market is worth around $100 billion, of which only $6 billion go to cocoa producers.

But Casper Burgering, commodities analyst at ABN Amro, told AFP that the current price rise may turn out to be temporary, as supply was more than sufficient to meet world demand.

Another analyst, at Commodafrica in Paris, said however that drought in Ivory Coast could lead to a shortfall in the coming cocoa harvest, putting upward pressure on prices.

Source: Dailymail (UK)

Fair Trade USA raises cocoa price minimums

Fair Trade USA will increase the floor price and fixed premium it requires companies to pay cocoa farmers under its certification system, the organization said on Tuesday.

The increase is designed to improve livelihoods in a sector that has long grappled with farmer poverty, child labor and deforestation

The nonprofit will increase its minimum price for conventional cocoa to $2,400 per tonne from $2,000. For organic cocoa, the price will be $300 over this minimum or the market price, whichever is higher at the time. The premium, which is used to fund community projects, will increase to $240 per tonne from $200.

The new pricing structure will take effect on Oct. 1, 2019.

The 20% increase in prices puts Fair Trade USA in line with the minimums set by Europe-based Fairtrade International in December, with these newly announced minimums impacting U.S.-based brands and manufacturers.

In 2018, over 22,000 tonnes of cocoa beans were sold by Fair Trade certified cocoa farmers, according to the press release. Nearly 4.8 million tonnes of cocoa were produced worldwide in 2018/19, data from the International Cocoa Organization shows.

Representatives from Ivory Coast and Ghana, the world’s top cocoa producers, are meeting in the Ghanaian capital of Accra on Tuesday and Wednesday to discuss farmer incomes. The two countries are working to better harmonize their pricing systems.

For the 2018/19 main crop, Ivory Coast set its guaranteed farmgate price at 750 CFA per kilogram (about $1.29 per kg, or $1,290 per tonne) while Ghana set its guaranteed price at 7.6 cedis (about $1.41 per kg, or $1,410 per tonne).

On Tuesday, New York futures prices settled at $2,539, an 11-month high for the contract, but prices have fallen to as low as $1,901 this year.

Source: NEW YORK (Reuters)