The current peak in cocoa futures has prompted President Nana Akufo-Addo to call on regulators of the cocoa sector in Ghana and neighbouring Ivory Coast to “devise new strategies” to cope with volatile global prices.
Due to limited supplies, global cocoa grinders are paying up in the cash market to secure cocoa supplies this year, with concerns that West African cocoa suppliers may default on supply contracts, according Barchart.
Supply concerns have witnessed cocoa prices surge to all-time highs.
President Akufo-Addo spoke at the inauguration of the permanent headquarters for the Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) in Accra.
The two West African nations, which produce about 65 percent of the world’s cocoa beans, established the CIGCI in 2019 to exert more control over pricing and supply chains long dominated by international traders and processors.
The introduction of a Living Income Differential (LID) premium of US$400 per metric tonne paid to local farmers on top of the market price starting in the 2020/2021 crop season was an outcome of this intervention.
“With cocoa futures trading at record highs, revisions may be needed to sustain or prevent a decline in prices”, the President suggested.
Meanwhile, Bloomberg reported the Ghana Cocoa Board is negotiating to postpone the shipment of 150,000 to 250,000 metric tonnes until next season due to a lack of beans.
The supply shortage is driven by a production slump in the top grower Ivory Coast, where the 2023/2024 harvest is projected to be 21.5 percent lower than the previous year, reaching an eight-year low of just 1.75 million tonnes.
Cocoa prices have rallied sharply since the beginning of the year, driven by the worst supply shortfall in 40 years. Lower production in the Ivory Coast remains a major bullish factor for prices.
No doubt, collaborative efforts between Ghana and Côte d’Ivoire are essential to safeguard the interests of cocoa farmers and the wider industry.
