Ivory Coast, Ghana team up to hike global prices of Cocoa
Ivory Coast and Ghana, who together produce about two-thirds of the world’s cocoa, are insisting that traders pay a higher price for their beans.
That’s due to a hefty $400 Living Income Differential over futures prices to boost the amount of money farmers take home, as well as additional quality surcharges.
A world hit by the coronavirus, and the consequent slump in demand, has traders fighting back against the country-quality premiums, and some have compared the two nations to the OPEC oil cartel as they team up on prices.
Already some foreign shippers in Ivory Coast have stopped buying cocoa for future delivery, asking for a lower country differential.
The governments are considering countering that by suspending sustainability programs, likely making it more difficult to sell the beans to buyers who demand an ethically sourced product.
While that’s a tactic that has worked before, this year many traders and their customers are under unprecedented strain due to the economic fallout from the pandemic.
In the latest twist in the standoff, Bloomberg reported that Hershey is taking the unusual step of directly sourcing a large amount of cocoa through the ICE Futures U.S. exchange. That allows the chocolate giant to obtain cheaper supplies that don’t incur the premium, saving millions of dollars.
For Ivory Coast and Ghana, cocoa represents a key source of foreign exchange for both countries and a livelihood for millions of their people. The governments may have to accept that at the moment there is just too much cocoa to enforce higher prices.
~With Bloomberg report