Ivory Coast and Ghana Cocoa Initiative moves to prevent low value crop sales to support farmers
A major move to support farmers in West Africa has been confirmed by the Ivory Coast and Ghana in deciding to no longer sell their cocoa at origin differentials below zero, from as much as 125 pounds below the ICE terminal market, writes Neill Barston.
The step from the Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) was confirmed at a recent meeting in Accra between the two nations, amid concerns from market observers as crop prices faced renewed downward pressure.
Significantly, the origin differential is an additional country quality premium that has traditionally been determined by the market. It is a key factor in determining cocoa prices and together with the Living Income Differential (LID, a payment of $400 per tonne of cocoa), as well as the Intercontinental Exchange Europe Price (the London Futures market for cocoa), guarantees a higher price for farmers in the world’s top cocoa producers.
The new levels are therefore a minimum of zero pounds per ton for Côte d’Ivoire and 20 pounds per ton for Ghana.
The CIGCI started publishing the origin differentials at the end of May 2022 to have more transparency in the sector, after establishing that the effects of the LID were being eroded due to the discount chocolate makers and cocoa merchants were getting on the origin differential. The CIGCI-published origin differential is indicative, and the minimum amount cocoa will be sold at.
“The issue came up during a recent meeting with industry, where our member countries expressed the fact that the quality of their cocoa hadn’t diminished and that they therefore shouldn’t have to settle for discounts on this matter,” said Alex Assanvo, CIGCI Executive Secretary, who will shortly be speaking at the World Confectionery Conference as part of a special panel discussion. “We will therefore no longer accept cocoa sold below this level as we head into positive territory,” he said.
The origin differential was set at minus 125 pounds per ton in Côte d’Ivoire and minus 50 pounds per ton in Ghana for July.