Ivory Coast’s cocoa regulator has forecast that the nation may lose a fifth of its cocoa crop to smuggling during the next harvest if neighboring Ghana refuses to cut payments to farmers after international prices fell, according to reports by Bloomberg
The prediction by Le Conseil du Cafe-Cacao comes after the world’s biggest cocoa producer cut farmers’ pay by 36 percent to the equivalent of about 700,000 CFA francs ($1,251) per metric ton in April to cope with global prices that dropped more than a third in a year on expectations of oversupply.
On the other hand, Ghana, its neighbor and second-biggest grower, has kept farmer payments at the equivalent of 7,600 cedis ($1,708) per ton since October and has ruled out any cuts for the main harvest that starts next month. Cocoa is harvested twice a year in West Africa.
The Ivorian regulator expects losses of as much as 400,000 tons of cocoa next season, said the person, who asked not to be identified because he’s not authorized to speak publicly about the matter. One of the nation’s biggest exporters has a similar forecast, according to a separate person familiar with the matter.
Businessamlive gathered from reports that Ivory Coast President Alassane Ouattara indeed conveyed his concern about the pay discrepancy to his Ghanaian counterpart, Nana Akufo-Addo recently.
Reports also indicate that the two countries agreed in May to cooperate on plans to counter volatile prices and officials of their regulators were locked in talks about the partnership at a meeting Wednesday and Thursday this week in Ghana’s capital, Accra.
Farmer prices are on the meeting’s agenda, Ghana Cocoa Board Deputy Chief Executive Yaw Adu-Ampomah told Bloomberg Tuesday.
“Each one will have their ideas and we marry them together to see which is the way forward,” Adu-Ampomah is reported to have said, adding that “this year Ghana is not going to reduce the producer price to the farmer.”
Bruno Kone, Ivory Coast government spokesperson however maintained that Ivory Coast will continue to adjust farmer payments according to international prices.
“Ivory Coast’s government has a responsible approach and when you have a responsible approach, you can hardly afford to buy higher than what you sell,” he told Bloomberg.
Cocoa accounts for about a fifth of Ivory Coast’s exports and, according to the IMF, a one percent change in revenue from exports of the beans can lead to a 0.63 percent shift in government spending.
Ivory Coast will probably harvest 1.98 million tons in the current season, while Ghana’s crop will be 950,000 tons, according to forecasts by the International Cocoa Organization.