Ivory Coast’s 11% farmer pay increase falls short of industry’s hopes

The Ivory Coast has confirmed it is set to raise farmgate prices for cocoa by 11%, following calls from farmers for a significant rise in light of crop prices reaching sustained highs on global commodity markets, reports Neill Barston.

As reported by Reuters, government minister Kobenan Kouassi Adjoumani made the announcement at a press conference, though the decision falls far short of the 44% increase that farmers’ organisations had demanded in response to the soaring pressures of inflation impacting on fertiliser costs and other key agricultural inputs.

The price paid to cocoa farmers will now be 1,000 CFA francs ($1.62) per kg for the main 2023/24 crop season, which comes after commodity prices hit a reported 46-year high on commodity markets, as supplies around the world tightened.

Significantly, there has been a reported 20% drop of cocoa production for the present season, amid challenging weather conditions, and supply chain issues that have affected the industry, with considerable sector concern being raised regarding a deficit in crops affecting ability to meet global confectionery demands.

Moreover, the 11% rise in Ivory Coast follows swiftly on the heels of a 63% increase in cocoa farmgate prices in neighbouring Ghana – where the grades of cocoa are generally considered by industry observers to have an overall greater quality.

The news last month of the major price rise in Ghana was greeted with scenes of jubilation from farmers in Ghana, who, together with their neighbours in Ivory Coast account for more than 60% of the entire cocoa trade serving the confectionery sector.

But with many agricultural workers remaining on substandard wages of less than $1 day, there has been an ongoing fight for greater pay and delivering a living income for communities.

In the past few years, Ghana and Ivory Coast governments have worked together in attempting to secure a better deal for cocoa exports through the creation of the Living Income Differential, which added a premium of $400 per tonne on to cocoa prices.

However, concerns have persisted that some major cocoa and chocolate companies had failed to uphold the spirit of the new initiative in seeking to buy crops through the ICE stock market instead of conventional purchasing methods in order to gain a reduced buying rate on harvests.

As the Ivory Coast Ghana Cocoa Initiative, which was established recently to jointly further cocoa trade in the region has noted, the move within Ghana in particular is especially welcome to improve livelihoods.

Speaking at the announcement last month for the major uprating in prices for farmers, President Akufo-Addo said: “Government, in keeping with our promise to the gallant cocoa farmers, increased cocoa prices from GHS12,800 per tonne to GHS20,943 per tonne or GHS1,308 per bag. This price is 70.5% of the Gross FOB price and is equivalent to USD 1,821 per ton.”

“With the predicted stable prices above $2600 threshold, Government will continue to honour our farmers with good prices in the years ahead. Indeed, better days are ahead.”

Alex Assanvo, Executive Secretary of the Ivory Coast-Ghana Cocoa Initiative, who was among speakers at our 2022 edition of the World Confectionery Conference, was also at the event.

He noted: “Current market prices show that we were right to fight for higher incomes for producers. Now we must all work together under the economic pact to achieve sustainable cocoa that will ensure long-term supply. The status quo is not an option.”

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