Cote d’Ivoire and Ghana, which produce roughly 60% of the world’s cocoa, have announced plans to coordinate their farmers’ price announcements for the new season that starts in October.
Speaking at a press conference earlier this month Joseph Boahen Aidoo, chief executive officer of Ghana’s cocoa regulator, said they will seek to harmonize their marketing systems and officials from each country will visit the other to exchange information,
"So once we’re able to harmonize, then the two countries can decide when to go to the market,” Aidoo said. “Once that decision is taken and what amount or volumes of cocoa that can go to the market, then we can regulate.”
The two neighbors will also work on setting a “decent” floor price for their farmers and will announce the rate at the same time before each harvest from next season, they said in a statement.
Bloomberg reported the Cote d’Ivoire and Ghana have been discussing plans for cooperation to strengthen the West African cocoa sector and exert more influence over global prices, which plunged in the previous two years after harvests were bigger-than-expected, hurting both economies.
Cote d’Ivoire, the biggest grower, was forced to cut the price for its estimated 800,000 farmers by more than a third last year.
Edward George, head of group research at Ecobank Transnational Inc told Bloomberg: “If they get it right, it proves that cooperation can work and, beyond bringing stability and clarity, it would immediately mean that other things that they talked about look more likely to happen.”
Analysts predict the move is unlikely to influence global prices, unless there is ‘some extreme price level’.
Boost to yield
Recent rainfall in Côte d’Ivoire means it is expected to boost yield during the 2017-18 cocoa mid-crop. Reuters reported that rainfall exceeded the five-year average in Daloa (which provides a quarter of national output) and in the heart of the cocoa belt in Soubre, reaching 67.9 mm and 67.2 mm, respectively.
“We are going to finish the mid-crop well. Everything is green and the trees are doing well. From July we will begin to prepare for the (2018-19) main crop,” said Raphael Kouamé, a farmer at Daloa.
According to Lazare Ake, a farmer from Soubre, “there is good sun and rain, that’s what the cocoa trees want. There are enough pods on the trees. This time is good for them”.
In a further development, Cote d’Ivoire is set to grind 50% of its current output locally by 2022, boosted by fiscal measures and incentives given to companies in the sector, Yao N’goran, the country’s deputy head of the Coffee Cocoa Council (CCC) marketing board, told local media.
“It is possible to hit one million tons by 2020-2022 because of the fiscal advantages the government has given to companies to help them to invest massively, and that is what is happening.”
Cote d’Ivoire has an installed grinding capacity of 712,000 tonnes and increasing that capacity and new grinding units will enable it to reach the target within the next four years, N’goran said.
In 2017, multinational companies including Cargill, Olam and Barry Callebaut agreed to increase their bean grinding by 7.5% each, so as to benefit from government incentives.
World cocoa output is forecast to fall by 3.3% to 4.58 million tons in 2017-2018. Bloomberg reported that cocoa for September delivery dropped 2.2% on ICE Futures US in New York earlier this month, to $2,391 a metric ton. Overall, prices are up 26% this year.