In response to concerns about a potential supply shortage and record-high cocoa futures driven by production forecasts, Ivory Coast’s cocoa sector regulator is taking action.
They will not permit bean grinders to accumulate stocks exceeding authorized limits during the primary October to March harvest period.
The cocoa industry is grappling with reduced production, particularly in Ivory Coast and Ghana, the world’s top two cocoa producers, responsible for over 70% of global output. Poor weather conditions are expected to cause Ivory Coast’s main crop to decline by approximately 25% this season compared to the previous year.
Ivory Coast’s cocoa exporters and bean grinders are typically subject to annual purchasing limits aligned with their export contracts.
However, an exemption is granted by the regulator, the Coffee and Cocoa Council (CCC), allowing grinders to stockpile enough beans to cover 45 days of grinding operations. This exemption traditionally gives them a competitive edge, ensuring a consistent bean supply to maintain their operations without disruptions.
In the current context, the CCC recognizes that this exemption could disadvantage exporters who might struggle to access the necessary volumes to fulfill their export agreements. Yves Brahima Kone, the managing director of the CCC, conveyed this concern, emphasizing the need for equitable access to cocoa resources.
“We will not allow bean processors to purchase beyond the purchase limit this year because everyone may not be able to get the cocoa they need,” Kone said.
“We are forced to make this difficult decision. There won’t be enough cocoa for everyone,” he added.
Grinders express concerns that the inability to stockpile beans may lead to shortages, affecting their capacity to meet export contracts. Some Ivory Coast grinders have conveyed to Reuters that this decision will have an impact on their production. Over the past two seasons, they have been running at full capacity, driven by a decline in cocoa grinding in Europe due to operational costs.
European bean grinders have scaled back their grinding capacity and have requested their branches in Ivory Coast to substantially increase their monthly grinding volumes to compensate.
Consequently, the monthly average of cocoa grinding in Ivory Coast has seen a steady rise, reaching nearly 60,000 metric tons per month in September, compared to around 45,000 tons in the 2019/2020 period.
This data is based on information from the Ivory Coast exporters association, GEPEX, which includes major bean processors such as Cargill, CEMOI, OLAM, and Barry Callebaut.
“With the gas and electricity crisis in Europe, it has become much more profitable to grind cocoa locally in Ivory Coast, which had led us to accelerate the pace here since 2021,” said a director of grinding plant in San-Pedro, who requested anonymity to speak candidly.
712,000 tonnes of grinding capacity can be found in Ivory Coast. It competes with the Netherlands to be the world’s top grinder. Ivory Coast has seen record highs in grinding over the last two years, with last season’s record of over 700,000 tons being reached.
712,000 tonnes of grinding capacity can be found in Ivory Coast. It competes with the Netherlands to be the world’s top grinder. Ivory Coast has seen record highs in grinding over the last two years, with last season’s record of over 700,000 tons being reached.