Cocoa stakeholders accept $2,600 as maiden floor price for tonne of cocoa

Cocoa buyers, traders and processors of cocoa beans have agreed in principle to buy the commodity from Ghana and Cote d’Ivoire at $2,600 or above per tonne.

This will be the first time, since the country started cocoa production in the 18th century, that a floor price has been agreed on.

The consensus was reached at a conference with cocoa stakeholders in Accra on Wednesday.

Ghana and Cote d’Ivoire, which supply more than 65 per cent of global cocoa beans, called the meeting.

In a communique read to the media at the end of the two-day stakeholder engagement on cocoa farmer income in Accra, the Chief Executive Officer (CEO) of Ghana Cocoa Board (COCOBOD), Mr Joseph Boahen Aidoo, said $2,600 per tonne was the maiden floor price (the price below which no sale would be made) that was proposed by the two top cocoa growers and accepted by the stakeholders, made up of buyers, traders, processors and manufacturers.

He, however, explained that the stakeholders requested a technical meeting between them and the two countries to fine-tune the modalities for the implementation of the floor price, a request the two sides agreed to.

Suspension of sales

The communique was jointly issued by COCOBOD and Le Conseil du Cafe-Cacao — the two state agencies that regulate  cocoa businesses in their respective countries — and read by Mr Aidoo.

He said as a prelude to any engagement on the issue of floor price, Ghana and Cote d’Ivoire had also jointly “suspended sales of the 2020/21 crop”.

He explained that the suspension, which was in preparation for the implementation of the floor price, would remain “until further notice”.

Mr Aidoo later explained, during a question and answer session, that the suspension of sale of the 2020/21 crop season was “a signal to the market that we mean business”.

Asked when the sales will resume, he said until the price of the 2020/21 crop hit $2,600 per tonne, “we are not selling”.

“That is the message we are sending, and with that there was no question,” he said, in reference to the stakeholders.

‘Missing dollar’

The adoption of a floor price means that neither of the two countries will sell its produce below $2,600 per tonne, although they are at liberty to sell when the price is above the minimum set price.

Mr Aidoo explained that in the event that a cocoa buyer wanted to buy beans from Ghana and/or Cote d’Ivoire at a time when the price was below $2,600, that buyer would have to make up for the difference to equate or exceed the floor price.

He said “if it goes above $2,600, the question of floor price does not arise”.

However, he said neither Ghana nor Cote d’Ivoire would sell its cocoa beans “even if the price is $2,599”.

“But even if it is $2,599, the buyer will add. That is the essence; until the buyer tops up with that one dollar, we are not going to sell,” he emphasised.

Historic decision

The inception of a floor price for the sale of cocoa beans brings to an end the old structure of selling cocoa beans according to the whims and caprices of what is loosely described as market conditions, something Ghana and Cote d’Ivoire have always criticised as a recipe for unfair prices for their produce and meagre incomes for farmers.

It ushers in a new regime where the producers are now active participants in determining how much their produce is sold for.

Mr Aidoo said the consensus was historic and a plus for the fight for a fair price for cocoa.

Genesis

In 2017, President Nana Addo Dankwa Akufo-Addo and his counterpart from Cote d’Ivoire, Mr Alassane Outtara, instituted a Ghana-Cote d’Ivoire cooperation to pool resources and synergise their efforts to tackle the common challenges confronting both countries in cocoa production.

Since then, the cooperation, which is spearheaded by the management of the COCOBOD and Le Conseil du Cafe-Cacao, has zoomed into work, resulting in the signing of the Abidjan Declaration in March 2018.

The declaration is meant to, among other things, “find a sustainable solution for the improvement of prices obtained by cocoa producers in their respective countries”.