COTE D’IVOIRE – Ghana and Cote D’Ivoire, the world’s leading cocoa producers accounting for 65% of global cocoa output, have firmed up on their decision on the cocoa floor with a follow-up meeting in Abidjan.

Having already agreed to a minimum price for a tonne of cocoa, the two countries have announced a US$400 per tonne (Living Income Differential) to be paid to cocoa farmers, as part of a set of measures they believe will further cushion cocoa farmers.

“Following series of engagement with key stakeholders, Cote D-Ivoire and Ghana have established a new pricing mechanism for the trading of cocoa beans which, we believe, would help provide a remunerative price for the Farmer.

The Mechanism which was introduced to industry players was understood. This system takes into consideration a fixed living income differential which would provide farmers with a decent income.”

A $400 per tonne (Living Income Differential) has been instituted to guarantee the floor price,” the cocoa regulators said in a statement.  

Following the development, farmers will get an addition US$400 for every tonne of cocoa sold. Cote D’Ivoire and Ghana have however promised to engage industry on issues of sustainability.

Stakeholders agree on floor price

Ghana and Cote d’Ivoire are co-operating to tackle common challenges in the production and marketing of cocoa.

Earlier last month, Ghana and Ivory Coast succeeded in getting an agreement with global processors and marketers for the floor price of cocoa beans to be pegged at US$2,600 per tonne.

The two major cocoa producers also agreed to “suspend the sale of the 2020/2021 cocoa beans to pave way for the implementation of the floor price”.

This will also enable creation of a conducive platform for effective engagement with traders, processors, manufacturers, and retailers on all relevant issues of mutual interest, including farmers’ income.

There are fears that the sustenance of the new cocoa floor price could be tampered by low consumption rate of cocoa especially in Africa which accounts to just 4 per cent of global consumption rates.

In the latest development, U.S. food processor Mars Inc. says it supports the decision by the two countries to set a floor price for their cocoa exports, becoming one of the first major chocolate companies to back the initiative.

“We believe cocoa farmers should earn sufficient income to maintain a decent standard of living. “The reality today is that many are a long way from this,” John Ament, Global Vice President of Cocoa for Mars, told Reuters.

“We support moves by governments to intervene to achieve a higher price that leads to a sustainable increase paid to the farmer and is supported with governance to ensure there is no further expansion of land use to grow cocoa,” Ament said.

Though farmer advocacy groups have applauded the decision, major players in the chocolate industry have largely not responded since the decision was announced in June.