Only a day after its first and historic joint-decision to halt the sales of cocoa on the international market until fair prices are agreed on, the top producers of cocoa globally, have won big.
On Wednesday, Ghana and Cote d’Ivoire announced in a joint statement that they had won concessions from stakeholders in the cocoa industry including the acceptance of a $2,600-floor price for a tonne of cocoa.
Over the years, buyers of the cash crop have always been the ones to determine the price for suppliers and this was one of the main items on the agenda of a two-day meeting of stakeholders, producers and consumers in the sector, held in Accra.
More about this
“This is the first time the producers have called consumers and the first time whereby suppliers have called buyers to come and engage on price,” Joseph Boahen Aidoo, Chief Executive of the Ghana Cocoa Board said.
The top two cocoa producers, who together account for over 60% of the world’s production, have called this a historic move. According to Joseph Aidoo, a follow-up meeting will be held to work out how to implement the agreement.
Globally, the chocolate market is worth around $100 billion, of which only $6 billion go to cocoa producers.
Ghana, Ivory Coast halt sales
Face2Face Africa reported on Tuesday that the world’s top producers of cocoa, Ghana and Cote d’Ivoire had jointly suspended the global sale of cocoa beans until farmers get a fair price.
This was announced in Accra by the two countries to a gathering of about 300 stakeholders in the cocoa value chain, comprising, traders, processors and chocolate manufacturers.
This gesture is the first of its kind by the world’s top two cocoa growers and meant to put pressure on stakeholders to adopt a floor price for the soft crop.
Currently, the producer price of cocoa stands at US$1,808 per tonne in the face of the free fall of the commodity in the international market.
The decision is as a result of the fact that the international market price is a few dollars lower than what is being given to cocoa farmers, forcing the governments of these countries to resort to borrowing in order to settle local farmers.
Also, this forms part of efforts by the two countries, which supply more than 65 per cent of global cocoa figures, to get stakeholders in the value chain to give farmers a fair price that reflects their contribution to the sustenance of the cocoa industry.
Under the arrangement for a floor price, the two countries had agreed that none of them will sell their produce in the international market below the agreed minimum price.
In recent times, the price of cocoa at the international level has depreciated by some 40 per cent, resulting in the International Monetary Fund (IMF) calling on Ghana to also reduce the producer price paid to its farmers.
Last year, Bloomberg reported that these farmers make “only about 5.5 per cent of a global supply chain worth more than $100 billion”. This is even less than the 15% governments take as value-added tax on the sale of chocolate products in Western countries where chocolate is most consumed.