Stakeholders accept demands
Ghana and Ivory Coast have announced that they had won concessions from stakeholders in the cocoa industry, including acceptance of a USD2,600 floor price for a tonne of cocoa.
The two nations had threatened to stop selling their production to buyers unwilling to meet a minimum price.
Following a two-day meeting called by the two top cocoa producers who together account for over 60% of the world’s production, Joseph Boahen Aidoo, chief executive of the Ghana Cocoa Board, told a news conference that their demands had been accepted in principle by the participants. Over the years it has been the buyers who have determined the price for the suppliers.
“Ivory Coast and Ghana have suspended the sale of the 2020/2021 crop until further notice for preparation of the implementation of the floor price,” he said.
Calling the move “historic”, he said that “this is the first time when the producers have called consumers and the first time whereby suppliers have called buyers to come and engage on price,” he said.
“Over the years it has been the buyers who have determined the price for the suppliers.”
Aidoo added that there would be a follow-up meeting to work out how to implement the agreement.
The world’s chocolate market is worth around USD100 billion, of which only USD6 billion go to cocoa producers.
Ghana, Ivory Coast suspend sales
Ghana and Ivory Coast, who are the world’s top two cocoa growers recently suspended the sale of cocoa beans to the open market under the 2020/2021 crop season until further notice.
The suspension, announced to stakeholders in the cocoa value chain, including traders, processors and chocolate manufacturers, is part of efforts by the two countries to get a fair price for farmers, according to news channel, Graphic Online.
The two countries had earlier proposed a floor price of USD2,600 for every tonne against the International Cocoa Organisation’s price that is averaging USD2,436.
Ghana and Ivory Coast who account for 65% of global cocoa supplies, argue that the current pricing structure that makes cocoa producers price takers does not reflect their contribution to the sustenance of the cocoa industry.
A formal decision on the floor price is expected, as the two producers take on almost 300 representatives of stakeholders in the cocoa value chain, by categorically agreeing that neither Ivory Coast nor Ghana will sell their produce in the international market below the agreed minimum price.
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Buyers firm up plans to fight deforestation
Two years into a global push to fight deforestation, the world’s top cocoa producers and some of the largest chocolate makers are firming up specific steps they’re taking to meet the goal.
The governments of Ivory Coast and Ghana, which account for about 65% of the global cocoa production, released plans that aim to stop new losses and then begin to rehabilitate forests. The African nations are being joined by 33 companies – from Hershey Co. to Mondelez International Inc. to Cargill Inc. that account for about 85% of global cocoa usage and are unveiling a joint approach to combat deforestation before finalizing their own individual plans.
Cocoa has been the backbone of West African economies for decades, making it harder for nations dependent on export earnings to tackle forest degradation. As cocoa prices beat competing crops in several years through 2015, that fueled more production, in many cases at the expense of protected forests.
“We’ve been realistic about sequencing the activities over time and therefore haven’t made an overly unrealistic claim to end deforestation by a certain date,” said Richard Scobey, president of the World Cocoa Foundation. “It will take time. This is for sure a complex social, economic and environmental challenge and there are no easy quick fixes.”
Ivory Coast is where the issue is most-pressing. Cocoa production there surged more than 50% in the past decade, while forest cover declined by 17% from 2001 to 2017, according to the International Cocoa Organization and World Cocoa Foundation. As part of the plan released, the nation aims to halt deforestation and further degradation in 2018-2020, and then start a second phase that will last at least 10 years.
In Ghana, where forest cover has declined 13% from 2001 to 2017, the government’s newly released plan follows a similar path for the period through 2020. Ghana will at first focus on six areas which have the highest deforestation rate covering 2.5 million hectares. The nation will then roll the initiative out on a national level through 2043.
There are still many questions on how these programs would work and how they will be funded – the cocoa foundation and others estimate the plan still needs USD500 million in financing. The stakeholders also haven’t yet come up with a figure on how much money Ivory Coast, Ghana and each of the companies will invest, although Scobey said that there have been talks with international donors including the World Bank.