Ivory Coast, the top cocoa producer globally, has raised the price it offers farmers for cocoa, now outpacing Ghana, despite both countries’ growers still receiving considerably lower payments than international market rates.
The Ivorian government announced a 20% increase in the farmgate price to 1,800 CFA francs (approximately $3.06) per kilogramme, effective from the harvest starting on October 1, as stated by Agriculture Minister Kobenan Kouassi Adjoumani in Abidjan.
This updated price translates to $3,060 per tonne, slightly higher than Ghana’s rate of $3,039 per tonne for its farmers this cocoa season.
The increase may discourage the smuggling of cocoa from Ivory Coast to Ghana, which is the second-largest producer in the world.
However, it might not entirely address the issue of illegal cocoa exports to neighbouring countries such as Liberia and Guinea, where prices are closer to global market values.
During the previous cocoa season, West Africa’s production was significantly hindered by unfavorable weather conditions, pest outbreaks, and insufficient agricultural resources.
This led to a sharp increase in cocoa futures, which surpassed $11,000 per tonne earlier this year. However, prices have since dropped, with futures trading at approximately $7,700 per tonne in New York as of Monday.
Despite this rise in global prices, the pricing structures enforced by both the Ivorian and Ghanaian governments have prevented farmers from fully capitalising on the market upturn.
This situation has deterred investment in cocoa farming and has also encouraged smuggling to neighbouring nations, where market regulations are less stringent and prices tend to be higher.
According to a Bloomberg report from September 19, Côte d’Ivoire is estimated to have lost between 150,000 and 200,000 tonnes of cocoa due to smuggling during the crop year ending Monday.
To tackle these issues, Côte d’Ivoire plans to align its output control, pricing, and marketing systems with Ghana starting from the 2024-25 season as part of a “strategic cooperation” initiative between the two nations, as announced by Adjoumani.