Ivory Coast struggles to sell cocoa
The introduction of the US$400 per tonne premium this season, known as a living income differential (LID), has driven up prices.
03 December 2020 | Economics
Chocolate makers can always buy stocks from elsewhere like Ecuador, Brazil, Nigeria or Cameroon that are less expensive. Toure Sone, Director: Ivory Coast export company.
Ivory Coast has not sold up to 15% of cocoa from its ongoing main crop, while the vast majority of the upcoming mid-crop remains unsold as the Covid-19 pandemic drives down chocolate demand.
The performance is the worst in decades for the world's top cocoa producer and comes amid an escalating standoff with industry buyers over a premium aimed at combating farmer poverty.
Ivory Coast normally sells export contracts for all of its main crop and 30-40% of its mid-crop before the season begins in October. The last time the country did not sell all of its harvest was the 1988/89 season.
Exporters say the introduction of the US$400 per tonne premium this season, known as a living income differential (LID), has driven up prices for Ivorian cocoa just as demand is depressed because of the economic impact of the pandemic.
A source at the Ivorian Coffee and Cocoa Council (CCC), which regulates the industry, said the country had between 200 000 and 250 000 tonnes of unsold cocoa from the main crop.
Industry sources said traders and grinders were not playing their usual role of buying up excess beans and stockpiling them to sell later because the higher prices associated with the LID meant exporters were increasingly looking to buy beans from countries besides Ivory Coast and neighbouring Ghana.
The two countries, which are jointly implementing the LID, produce two-thirds of the world's cocoa.
"Chocolate makers can always buy stocks from elsewhere like Ecuador, Brazil, Nigeria or Cameroon that are less expensive," said Toure Sone the director of an export company operating in Ivory Coast.
The LID has led to an increasingly public spat between authorities, and chocolate companies and cocoa traders. - Nampa/Reuters