Ivory Coast's Cocoa Crisis: Unsold Stocks and Price Adjustments

Ivory Coast, a leading cocoa producer alongside Ghana, is facing a significant crisis with an estimated 200,000 metric tons of unsold cocoa expected by the end of March 2023. This situation arises from the government's decision to set farmer prices for the main crop last October significantly above current global market rates, rendering purchases unprofitable for traders. As a result, many international traders have ceased buying Ivorian cocoa beans, leading to a backlog of unsold stocks both inland and at ports.

The Independent

The high farmer prices established by the Ivorian government have contributed to a 50% decline in world cocoa prices this year, reaching a near three-year low. Local traders, who typically purchase cocoa from farmers to sell to international markets, have defaulted on at least 100,000 tons of cocoa purchases from the main crop. This accumulation of unsold cocoa is not only affecting local farmers, who have not received payments for their beans, but is also weighing heavily on the global cocoa market.

The Independent

In response to the crisis, the Ivorian government pledged in late January to purchase 100,000 tons of unsold cocoa at a cost of approximately $500 million to provide immediate cash to farmers. However, industry experts suggest that the volume of unsold cocoa may be much larger than anticipated. The Coffee and Cocoa Council (CCC), which oversees the cocoa sector, has disputed market estimates regarding unsold stocks, labeling them as "erroneous" without providing further details.

The Independent

The Ivorian agriculture minister announced that a decision regarding farmer prices for the upcoming mid-crop would be made by the end of February 2023, which is earlier than usual. This announcement follows Ghana's recent decision to reduce its farmer price by nearly a third, a move prompted by similar issues of delayed payments to farmers.

The Independent

Critics argue that the government's price-setting policies have exacerbated the crisis, leading to financial strain on both farmers and traders. The lack of alignment with global market prices has resulted in a significant drop in sales, raising concerns about the sustainability of the cocoa industry in Ivory Coast.

The Independent

As the situation develops, the Ivorian government is expected to announce new farmer prices that may align more closely with those of Ghana. This adjustment could potentially unlock sales and alleviate some of the pressure on the cocoa market. However, the effectiveness of these measures remains to be seen, as the industry grapples with the consequences of the current pricing strategy.

The Independent

• “Farmers will harvest another 100,000 tons of main crop beans by the end of March that have not yet been sold to global traders and will not be sold if Ivory Coast doesn't drop its prices, the two executives said.” — Global cocoa trade executives

The Independent