By Olivier RogezPosted on 17-07-2019Modified the 17-07-2019 at 19:00

Côte d'Ivoire and Ghana lift the suspension of their sales of cocoa beans for the 2020-2021 season. This announcement was made Tuesday, July 16 in a statement by the Ivorian Coffee Council Cacao and Cocoa Bord Ghana, after a month of discussions with the chocolate industry and traders. The two countries, which together account for 65% of world production, wanted to weigh on world prices and obtain better compensation from their producers. The resumption of sales comes as manufacturers have accepted the principle of a premium of four hundred dollars per ton of cocoa.

Revolutions are sometimes won by half victories. This is probably what cocoa industry players in Côte d'Ivoire and Ghana are dreaming about, since the alliance sealed in March 2018 in Abidjan, to set up a cocoa OPEC, a cartel in to impose its law on the market. For several months now, the Ivorian Coffee Cacao Council and its Ghanaian counterpart, the Cocoa Board, which together account for 65% of the world's bean production, have been working hand in hand to try to better control the market and ensure better remuneration for their farmers.

A compensation mechanism for producers

The cocoa industry is worth $ 100 billion worldwide, but producers only receive six. The agreement, unprecedented in recent history, between Accra and Abidjan aims to promote the income of planters. On June 12, the two countries announce not wanting to sell their beans below a floor price of 2,600 dollars per ton of cocoa . In the process, the forward sales of the 2020/21 harvest are blocked. But manufacturers and traders balk. Ivorians and Ghanaians then propose a compensation mechanism , dubbed "differential income decent", a premium of four hundred dollars on the purchase price of cocoa, to pay to producers if prices fall, and a stabilization fund s they climb beyond a certain price.

A half-victory for the two giants of cocoa who could not impose all their conditions, but a real breakthrough for small producers. In Côte d'Ivoire, half of them live below the poverty line with less than $ 1.2 a day, according to World Bank figures. This measure will come into effect in one year on the 2020/21 harvest.

Increase value creation

The agreement between Ghana and Côte d'Ivoire also requires a better synchronization of cocoa farming, by agreeing in particular on the volumes of cocoa to be put on the market. The two neighbors are also trying to harmonize their respective guaranteed producer price in order to avoid cocoa smuggling along their common border.

For now, there is still a slight difference in favor of Ghanaian planters. But the future, and the two partners are aware of it, goes through a stronger creation of wealth in the sector. Both countries are multiplying projects in cocoa processing. Côte d'Ivoire, which produces around two million tonnes a year, expects to achieve a milling capacity of one million tonnes in the next three years.

The fact remains that in this industry, 80% of the gains are obtained during the second stage of processing, that of making cocoa paste, in this respect Abidjan only transforms 500 000 tonnes and Accra much less. Progress margins are therefore important.

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