Ivory Coast cocoa price up in new season, Ghana’s flat

Ivory Coast, the world’s top cocoa grower, raised the guaranteed price it pays farmers by 7 percent to 750 CFA francs ($1.34) per kilogramme for the 2018/19 main crop, while Ghana kept its price flat, the two countries announced on Monday.

Ghana’s government said it would not change the farmgate price it pays cocoa farmers, maintaining it at 7.6 cedis ($1.53) per kg, Minister of Agriculture Owusu Akoto Afriyie told the industry in the capital Accra.

The rare move by the West African nations — which between them produce about 60 percent of the world’s cocoa — to announce their prices on the same day was the first step towards an eventual harmonisation of prices they hope will enable them to run an OPEC-like cartel.

“The guaranteed price for the whole territory is fixed at 750 CFA per kilogramme for this season. No changes will be tolerated,” cocoa board (CCC) chairman Lambert Kouassi Konan announced at a ceremony to mark the start of the season.

Output this season is expected to be unchanged from the 2017/18 season at just under 2 million tonnes, Konan said. Figures from the CCC on Friday showed arrivals at ports had reached 1.938 million tonnes between Oct. 1 and Sept. 16 this season, down 2 percent from 1.978 million tonnes in the same period last season.

PRICE DIFFERENCE

Farmers in both countries cautiously approved the prices.

“We would have liked to have an increase but we understand what the government is saying and we will accept to continue with the current price for now,” Kwadwo Manfo, 58 year-old farmer from Abirem, in the eastern region, told Reuters.

“However, it is our expectation they will increase it for us next year.”

But Felix Abi, a cocoa planter in the Aboisso, southeast Ivory Coast, said that even after the increase, Ghana paid better, which would encourage smuggling over the border.

“It’s still a significant difference in price,” he said.

A glut of cocoa coming out Ivory Coast in 2016/17 caused prices to slide on the London and New York exchanges and Ivorian exporters to default on 80,000 tonnes of export contracts.

But it is not clear whether longer-term plans by Ivory Coast and Ghana to influence prices will work. A study by Fitch suggested it would be unlikely to have much effect on world markets because of differences between their marketing systems and minimal domestic processing.

Konan also said a registration tax on farmers had been reinstated to 1.5 percent of the per-kilo price of insurance and freight paid by buyers. The tax was eliminated during the past two seasons in order to boost farmers’ revenues.

Source: Reuters