On September 30, 2022, Ivory Coast increased its cocoa producer price from 825CFA to 900CFA ($1.33) per kilogram for the 2022/23 cocoa season.
The new price announced in Abidjan by Vice President Tiemoko Meyliet represents 9% raise over that of the just-ended season’s producer price paid to cocoa farmers.
In Ghana, Minister for Agriculture, Dr. Owusu Afriyie Akoto on behave of the government increased the producer price for cocoa beans from GHS660 to GHS800 per bag for the 2022/2023 cocoa crop season.
The new farmgate price which represents a 21% enhancement of the 2021/22 rate takes effect Friday, 7 October 2022.
Dr. Akoto said the 21 percent rise in the producer price of cocoa is a testament to the government’s resolve to ensure farmers earn a decent income and make cocoa farming lucrative.
This is lower compared to Ivory Coast which pegged its price at about ¢858 for the same season.
Some Cocoa farmers in Western North Region threatened to ‘smuggle’ their cocoa products to Ivory Coast if the government failed to increase the cocoa producing price for the season.
The Government of Ghana has listened to their plea but couldn’t meet their desired 100% increment in farm gate prices, beginning the 2022/23 season.
With this move, will the cocoa farmers smuggle their cocoa products to Ivory Coast in return for Ghc 58 difference per bag?
However, the global cocoa market recorded a supply deficit in the 2021/2022 season, which ends on September 30, largely due to strong winds and lack of rain in the world’s top two producers Ivory Coast and Ghana.
Cocoa authorities in Cote d’Ivoire and Ghana have in recent times had to contend with heavy discounting of their origin premiums into negatives, completely erasing the effect of the $400 LID designed to tackle extreme poverty among cocoa farmers.
Ghana and Ivory Coast, the world’s two largest producers of cocoa have reversed the earlier decision to sell cocoa beans at origin differentials below zero.
The origin differentials were previously set at minus 125 pounds per ton of cocoa beans for the Ivory Coast and minus 50 pounds per tonne of cocoa beans for Ghana on the ICE cocoa futures market.
The origin differential is an additional country quality premium that has traditionally been determined by the market.
It is a key factor in determining cocoa prices and together with the Living Income Differential (LID), as well as the Intercontinental Exchange Europe Price (the London Futures market for cocoa), guarantees a higher price for farmers in the world’s top cocoa producers.
Making the disclosure during the joint Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) meeting in Accra, CIGCI Executive Secretary Alex Assanvo, averred the new levels of origin differentials are a minimum of zero pounds per tonne for Côte d’Ivoire and 20 pounds per tonne for Ghana.
“The issue came up during a recent meeting with industry, where our member countries expressed the fact that the quality of their cocoa hadn’t diminished and that they, therefore, shouldn’t have to settle for discounts on this matter. We will therefore no longer accept cocoa sold below this level as we head into positive territory,” he said.
The CIGCI started publishing the origin differentials at the end of May 2022 to have more transparency in the sector, after establishing that the effects of the LID were being eroded due to the discount chocolate makers and cocoa merchants were getting on the origin differential.
The CIGCI-published origin differential is indicative, and the minimum amount of cocoa will be sold.
In June, the origin differential was set at minus 125 pounds per tonne in Côte d’Ivoire and minus 50 pounds per tonne in Ghana for July.
