CIGCI publishes cocoa differential levels in a bid for cocoa price transparency

The governments of Ghana and Ivory Coast, through its joint initiative organisation (CIGCI), have made a combined move designed create greater transparency in cocoa pricing through plans to publish origin differential prices for the sector on a monthly basis, writes Neill Barston.

These figures reflect the minimum level at which the countries would sell their crops, and have been designed as additional premiums paid to support key supply chain nations in West Africa to move towards gaining a living wage, amid major ongoing agricultural financial challenges.

However, both Ghana and Ivory Coast noted that the existing differentials have decreased sharply over the past two years, 150% in the past two years, to a level that is down significantly against other cocoa producing countries.

Consequently, the two governments have agreed that via the recently established Ivory Coast Ghana Cocoa Initiative (CIGCI), the organisation is set to place a continued spotlight on pricing, amid concerns that farmers are still earning wages well below UN-defined poverty levels.

Under the industry-backed differential payment scheme introduced within the past couple of years, companies paid an additional premium paid per tonne of cocoa – but the scheme has come under renewed scrutiny amid claims that some businesses were bypassing the venture through buying cocoa directly on commodity markets rather than at the origin countries.

As CIGCI noted, the origin differential is a key factor in the determination of cocoa prices and together with the Living Income Differential (LID), as well as the Intercontinental Exchange Europe Price (the London Futures market for cocoa), the origin differential guarantees a higher income for farmers in Ivory Coast and Ghana.

The country differential is a key factor in determining cocoa prices. Thus, with the Decent Income Differential (DRD), and the price of the London Stock Exchange, the country differential allows, according to the pricing mechanisms in Côte d’Ivoire and Ghana, to guarantee a better income for farmers.

Significantly, the the country differentials in Côte d’Ivoire and Ghana have fallen sharply to more than 150% over the past two years, compared to the differentials paid in other cocoa producing countries.

In view of the above facts, the governments of Ivory Coast and Ghana, through the Ivory-Ghana Cocoa Initiative (CIGCI), have decided to publish the country differentials practiced monthly in order to guarantee transparency. towards market players. These figures are indicative and reflect the minimum level at which countries would sell their cocoa.

The country differentials for Ivory Coast and Ghana for the month of December 2022 are as follows: Ivory Coast: £/MT 0, Ghana: £/TM 20 above the ICE EU Terminal Market.

As recently reported, both Ghana and Ivory Coast governments recently boycotted the World Cocoa Foundation annual partnership meeting, amid their ongoing concerns that confectionery and cocoa companies, and wider sector, were not, in their eyes, focused enough on raising farmer pay to sustainable levels.