Ivory Coast and Ghana maintain ‘origin differential’ cocoa premiums to support farmers
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The Ivory Coast-Ghana Cocoa Initiative (CIGCI), has confirmed that the two West African nations have determined that they will retain the established origin differentials – additional payments for cocoa crops from a specific country), in a bid to ensure support for farming communities, reports Neill Barston.
As CIGCI noted, the key decision agreed with its input between the two cocoa regulators for the region, Le Conseil du Café-Cacao, and the Ghana Cocoa Board, was made amid crop prices reaching their highest level for decades on commodity markets in New York and London.
This has seen both Ghana and Ivory Coast raise farmer pay in the past month, but market observers have noted that many within the core agricultural sector serving the confectionery industry have been paid at an especially low level over a long period – with many typically earning under $1 day, below UN poverty defined conditions.
As reported by Confectionery Production, the situation has been boosted in recent weeks, with Ghana agreeing a 63% pay rise for farmers this year in light of record-high crop prices, while concerns have been raised regarding Ivory Coast’s much smaller pay rise of 11% for agricultural workers.
“The indicative levels for origin differentials have traditionally been determined by the market, but with the countries taking ownership of this, we want the current high market prices to be reflected in what farmers are receiving,” said Alex Assanvo, CIGCI Executive Secretary. “The objective of the publication is to bring transparency and we want all stakeholders to play their role and respect their commitment to ensure a higher income to farmers,” he said.
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), guarantees a higher income for farmers in Côte d ‘Ivory and Ghana.
As CIGCI added, it made the decision to publish origin differentials, on a monthly basis, in May 2022, to show more transparency in the sector, in a bid to deliver greater levels of transparency within the sector, which has experienced major challenges amid unfavourable weather conditions, increases in fertiliser costs and the unstable geopolitical conditions that have placed pressure on logistics and wider supply chains.
“Indicative levels of origin differentials have traditionally been determined by the market, but as countries take ownership of this, we want the current high market prices to be reflected in what our countries’ cocoa farmers perceive “, said Alex Assanvo, executive secretary of CIGCI. “The aim of the publication is to bring transparency and we want all stakeholders to play their role and fulfil their commitment to ensure a higher income for the planters,” he said.
As the organisation added, the origin differential premium has proved instrumental in determining cocoa prices, and added to the Living Income Differential (LID), amounting to $400 a tonne of coca as a further premium, plus the London Cocoa Futures market, were also key factors in overall pricing, affecting the ultimate farmer payments made within the region.