Initiatives from the Ivory Coast and Ghana aim to benefit farmers by preventing the selling of low-value crops.
NewsReport gathered that the Ivory Coast and Ghana’s decision to stop selling their cocoa at origin differentials below zero, from as much as 125 pounds below the ICE terminal market, confirms a significant move to support farmers in West Africa, according to Neill Barston.
At a recent meeting between the two countries in Accra, Ghana, the Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) confirmed its move, raising fears among market watchers as crop prices came under further downward pressure.
Significantly, the origin differential is an additional country quality premium that has traditionally been determined by the market. It is a key factor in determining cocoa prices and together with the Living Income Differential (LID, a payment of $400 per tonne of cocoa), as well as the Intercontinental Exchange Europe Price (the London Futures market for cocoa), guarantees a higher price for farmers in the world’s top cocoa producers.
The new levels are therefore a minimum of zero pounds per ton for Côte d’Ivoire and 20 pounds per ton for Ghana.
The CIGCI started publishing the origin differentials at the end of May 2022 to have more transparency in the sector, after establishing that the effects of the LID were being eroded due to the discount chocolate makers and cocoa merchants were getting on the origin differential. The CIGCI-published origin differential is indicative, and the minimum amount cocoa will be sold at.
“The issue came up during a recent meeting with industry, where our member countries expressed the fact that the quality of their cocoa hadn’t diminished and that they therefore shouldn’t have to settle for discounts on this matter,” said Alex Assanvo, CIGCI Executive Secretary, who will shortly be speaking at the World Confectionery Conference as part of a special panel discussion. “We will therefore no longer accept cocoa sold below this level as we head into positive territory,” he said.
The origin differential was set at minus 125 pounds per ton in Côte d’Ivoire and minus 50 pounds per ton in Ghana for July.