Ghana, I. Coast, add "living income" cocoa premium to fight poverty

Top global cocoa producers Ivory Coast and Ghana have imposed a fixed “living income differential” of $400 a tonne on all cocoa contracts sold by either country for the 2020/21 season, an official letter seen by Reuters shows...


Top global cocoa producers Ivory Coast and Ghana have imposed a fixed “living income differential” of $400 a tonne on all cocoa contracts sold by either country for the 2020/21 season, an official letter seen by Reuters shows.

The premium, which replaces an earlier proposal for a floor price for cocoa contracts, is part of a wider plan to combat poverty among farmers in Ivory Coast and Ghana, which together account for more than 60% of global supply.

Cocoa from Ghana and Ivory Coast already trades at substantial premiums to the futures market due to its quality.

Chocolate makers including Mars, Olam and Hershey’s told Reuters they support efforts to relieve farmer poverty, but traders said the plan could lead to surplus production and might eventually prompt them to seek other sources of supply.

The West African neighbours said last month they would fix a minimum price of $2,600 per tonne free-on-board (FOB) that chocolate companies must pay from the 2020/21 season if they want to access their cocoa.

Cocoa prices on ICE Futures Europe hit a one year high of 1,939 pounds ($2,424) this week amid confusion over a plan that marks the biggest shake-up of the cocoa market in years.

PAYMENTS TO FARMERS
Funds raised by the living income differential (LID) will be used to help increase payments to farmers, with the aim being for them to get 70% of a $2,600 a tonne (FOB) target price, the letter sent by the two governments to a trade federation says.

If market prices rise above $2,900 (FOB), proceeds from the LID will be placed in a stabilisation fund that would aim to ensure the governments can pay farmers 70% of the $2,600 target price when market prices fall.

Ghana and Ivory Coast both guarantee a farmer price at the start of each season.

The LID will apply in addition to the normal country differentials, the letter says.

“Short term they’ll win (on price) but how long will it be before industry reorganise themselves and Ivory Coast and Ghana have too much production they have to control,” said a Europe-based trader.

Ghana and Ivory Coast last month suspended forward sales of cocoa for the 2020/21 season to give themselves time to implement the new pricing mechanism.

Companies at a meeting last week in Abidjan to discuss the plan included Hershey, Mars, Blommer Chocolate, Cemoi, SucDen, Mondelez, Touton, Barry Callebaut, Cargill, Olam and Ecom Trading.

Source: Reuters



Related Posts

Bawumia’s full EMT town hall speech

Man gets tens of thousands of birthday calls after sons post his phone number on billboards

Ghana may auction Eurobonds with or without final IMF review

Judge questions 1-yr delay in prosecuting man who set 11-yr-old boy ablaze

Muntari joins Spanish side Albacete on one-year deal

ROPAA: High Court throws out contempt case against EC Chair

450-seat chamber: Go "double-track" if parliament is too small – Ephson to MPs

6-yr one-term-only presidency'll help fight corruption – Ephson

Leave a reply
your email address will not be published

Featured Posts

StarTimes to broadcast International Champions Cup


NSMQ Quizmistress gets free all-year fuel supply


450-seat chamber: Go "double-track" if parliament is too small – Ephson to MPs


A Castro-like voice called me on my phone to wish me happy birthday – Kofi Kinaata


France passes tax on tech giants despite US threats


NAGRAT fights GES' early recall of SHS2 students for vacation classes


450-seat chamber: Go "double-track" if parliament is too small – Ephson to MPs


NSMQ Quizmistress gets free all-year fuel supply


A Castro-like voice called me on my phone to wish me happy birthday – Kofi Kinaata


France passes tax on tech giants despite US threats


450-seat chamber: Go "double-track" if parliament is too small – Ephson to MPs


France passes tax on tech giants despite US threats


NAGRAT fights GES' early recall of SHS2 students for vacation classes


NAGRAT fights GES' early recall of SHS2 students for vacation classes