Ivory Coast Raises Cocoa Price Above Ghana to Curb Smuggling
TLDR
- Ivory Coast, top cocoa producer, raises farmer price by 20% to 1,800 CFA francs per kilogram for upcoming harvest to combat smuggling.
- Global cocoa deficit persists for third year due to poor West African harvest, with only a small surplus of around 90,000 tons predicted for new season.
- Ghana's cocoa price slightly lower than Ivory Coast's, aiming to align prices and reduce illicit exports to neighboring countries.
Ivory Coast, the world's top cocoa producer, raised the price it pays farmers by 20% to 1,800 CFA francs ($3.06) per kilogram for the upcoming harvest starting October 1, Agriculture Minister Kobenan Kouassi Adjoumani said. This new rate is slightly higher than Ghana’s, which set its price at $3,039 per ton for the season that began this month.
The move aims to discourage the smuggling of Ivorian cocoa to neighboring countries like Ghana, Liberia, and Guinea, where prices often reflect closer alignment to global market rates. However, it may not fully prevent illicit exports to these regions.
Last season's poor West African harvest, driven by unfavorable weather and disease, contributed to a global cocoa deficit for the third consecutive year. While production is expected to recover slightly, analysts predict only a small surplus of around 90,000 tons for the new season.
Key Takeaways
Ivory Coast's increase in farmgate cocoa prices underscores the challenges faced by West African producers. While the price hike is aimed at curbing smuggling to neighboring countries, it does little to address the broader issue of farmers receiving less than global market prices. This gap has hindered investments in cocoa farms, exacerbating production challenges such as unfavorable weather and crop diseases. Despite the price hike, Ivorian and Ghanaian farmers still receive significantly less than the global market price, which hit a record high of $11,000 per ton earlier this year. Although global cocoa futures have cooled to around $7,700 a ton, the deficit in supply remains, driven by low production in recent years.
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