Latin America eyes price floor akin to West Africa’s stymied attempt
The president of the Peruvian Association of Cocoa Producers (APPCACAO), Luis Mendoza, has suggested raising the minimum price of cocoa to $3,200 per ton, Reuters reported. His group will discuss the idea with the event’s host country plus Ecuador and the Dominican Republic.
After weeks of back and forth this summer, Côte d’Ivoire and Ghana failed to reach an agreement to instill a similar price floor of $2,600 per ton. Instead, they would demand a $400 per ton ‘Living Income Differential’ to compensate for volatile pricing – a reality in recent growing seasons that led to the initial brainstorm. The two governments intend to include a clause in export contracts that would require the fee when market prices fall below $2,600.
Earlier in August, Ghana’s COCOBOD announced a 5.2% hike in farmgate pricing for the 2019/20 season; Côte d’Ivoire could follow.
In Peru, Mendoza told Reuters the minimums in West Africa would not suffice in Latin America due to the higher quality of their region’s beans.
Some worry that a higher floor price on either continent would lead to overproduction, in turn compelling a drop in market price.
Peru’s cocoa has gained global respect in recent years for its high quality – and availability. Several producers – Cacosuyo and Elemento Chocolates – earned top honors at the International Cocoa Awards.
Jamaica jumps, too
The agricultural commissioner of Jamaica also announced a 15% price hike earlier this month – from $2,600 per box to $3,000.
The Caribbean island exports at least 1,500 tons of cocoa annually, according to Jamaica Trade and Investment, much of which producers blend with commodity beans.
Fine Cocoa Production
According to the ICCO, Bolivia, Nicaragua, Venezuela, and Trinidad and Tobago produce only fine cocoa, as do Costa Rica, Dominica and Saint Lucia. Three-quarters of beans from Peru and Ecuador are such quality, while elsewhere in Central America – Guatemala, Belize and Panama – about half of the beans are of that caliber.
The International Cocoa Association (ICCO) considers 95% of Jamaica’s supply as ‘fine or flavor cocoa,’ which it defines as a ‘relatively small, highly-specialized and separate market, with its own supply and demand characteristics.’
Demand – and thus the price premium – for fine beans has dropped in the 20th century as technique and technology altered how manufacturers could improve the taste of lower-quality cocoa, according to the ICCO. Latin America has long been recognized for its fine cocoa, and though it has always retained domestic intrigue, it has begun permeating craft producers around the world – especially in the US, Europe, and more recently Japan.