- Ghana & Ivory Coast to engage buyers, producers
- Countries seek a say in cocoa price determination
The two largest cocoa producers in the world, Ghana and Ivory Coast, are meeting major cocoa beans buyers and manufacturers in Accra today, in what is the largest-ever gathering of cocoa industry players to discuss major concerns about pricing of the commodity.
Chocolate companies attending the Accra meeting include: Mars Wrigley Confectionery, Nestlé, Pladis, Mondelēz International, Ferrero Rocher and Lindt & Sprüngli AG.
The Accra meeting, called at the instance of the two countries which control 60 percent of world’s cocoa, follows several concerns raised over the unfair ‘take-it-or-leave-it’ approach to setting cocoa prices by buyers in mainly Europe and the Americas.
The thrust of today’s meeting, according to B&FT sources, is to collectively agree on modalities for setting cocoa prices which will be mutually beneficial to farmers in the two countries – enabling them to obtain a living wage, improve on their standard of living, and help them save something decent for the future.
The West African neighbours about a year ago formally started talks to collaborate and together have a say in the determination of cocoa prices. A charter has already been agreed on, and a permanent secretariat to handle cocoa trade issues of the two countries is to be set up in Accra. The trading platforms of the two countries have now been harmonised for the said purpose.
Producing countries have relied heavily on cocoa beans sales to Europe and North American buyers to earn much-need foreign exchange and stabilise their currency as well as boost foreign reserves.
However, with unfavourable prices offered by these main markets and growing demand from the east – mostly China – the producers are seeking new markets that will offer them better prices for the cash crop.
Although China’s individual chocolate consumption is considered still low, less than 5% of what major lovers munch in the west, market research firm Ebrun reports that the market for chocolate in China is expected to grow in value to 40 billion yuan (US$6.2billion) by 2020.
Ghana’s main export destinations are the Netherlands, with a market share of 12.88%, France 11.6% and USA 10.9%.
France and USA grew significantly during 2012-2016. Exports to France, especially, reached high growth rates. With an average annual growth of +23% over 2012-2016, the country became the second-largest Ghanaian export destination.
Exports to Spain and Belgium remained quite stable during 2012-2016, with export values between US$5-40million.
Total exports of cocoa products from Ghana amounted US$542million in 2016.
Exports to the Dutch market dropped from US$205million in 2012 to only US$70million in 2016, a decrease of 24% on average per year.
Ghana’s exports to China, on the other hand, is dominated by traditional or primary exports such as unprocessed cocoa, raw metals, wood products and petroleum oils, which account for 96 percent of exports to the Asian nation, statistics from the Ministry of Trade show.
Ghana’s cocoa output
Ghana’s cocoa output for this season is projected at 850,000 tonnes according to sources at the country’s cocoa sector regulator, COCOBOD. Mid-crop production is estimated at 160,000 tonnes.
Reuters, quoting a COCOBOD source, said the farm-gate price of the cash crop is expected to rise next season from the current season’s GH¢7.6 (US$1.48) per kilogramme of cocoa.
Meanwhile, COCOBOD says it has sold around 380,000 tonnes of export contracts for the 2019/20 season.
The cocoa industry has contributed significantly to Ghana’s economic development over the years. Cocoa contributes about a quarter of Ghana’s Gross Domestic Product (GDP).
The industry has over the years created employment for millions of Ghanaians and serves as a major source of foreign exchange for the country.
One of the main functions of the Ghana Cocoa Board (Cocobod) is to purchase, market and export cocoa and cocoa products produced in Ghana. In recent years, the price of cocoa on the international market has been fluctuating.
The average free-on-board (fob) price of cocoa recorded in the 2017/2018 season was US$2,080 – a drastic fall from US$2,950 per tonne in the previous year.
This decline in price coincided with a significant rise in cocoa production – by over 120,000 tonnes above the projected 850,000 tonnes for 2016/17 season, which remained above 900,000 tonnes for the subsequent 2017/2018 season.