Côte d’Ivoire and Ghana have reached an agreement that they believe will help farmers earn more but will not now be implementing a recently agreed price floor for cocoa.
In a 3 July 2019 statement, the Ghana Cocoa Board said that, following engagement with key stakeholders, Côte d’Ivoire and Ghana have established a new pricing mechanism for trading cocoa which, they believe, will help to ensure ‘a remunerative price for farmers.’
The mechanism takes into consideration what they described as ‘a fixed living income differential’ that will provide farmers with “a decent income.”
Instead of the US$2,600/tonne floor price that was proposed in June 2019, which was to be introduced for the 2020/21 season, a US$400 per tonne differential will be instituted, and written into export contracts. The differential would kick in if market prices falls below US$2,600.
On 12 June the countries said a floor price of US$2,600 has been “accepted by all stakeholders,” but that processors, manufacturers and traders had requested for a technical meeting to fine tune the mechanism for the implementation of the floor price.
It was agreed that a technical meeting would be held on 3 July 2019 in Abidjan to fine tune the modalities for implementing the floor price, and that issues of sustainability relating to traceability, the environment and child labour would be decoupled from the floor price and discussed at another forum.
Industry sources said doubts remain about the living income differential and that further meetings would be needed to provide clarity.