Top cocoa producer Ivory Coast is considering reforms to its cocoa marketing system, aiming to better align government-set farmer prices with international market levels, two government sources told Reuters.
The move comes after a sharp fall in global cocoa prices triggered a sales crisis in the country, leaving large quantities of unsold beans at inland storage sites and ports.
World cocoa futures, which nearly tripled to record highs in 2024, have since lost about three-quarters of their value and are trading near $3,300 per ton due to a global surplus.
Last October, Ivory Coast set fixed prices for farmers above current world market rates. This led global traders to face heavy losses on cocoa purchases, prompting them to halt buying.
To support farmers, the government pledged to purchase unsold stocks at a cost exceeding 500 billion CFA francs ($892.06 million).
“We have a clear and precise idea of what we are going to do (with) both the external and internal marketing systems,” one source said. “We need to be more responsive and realistic in an extremely volatile market.”
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Since abandoning a decades-long spot buying system in 2012/13, the government has sold forward its anticipated crop a year in advance and set fixed prices for farmers at the season start in October.
“We need to be more agile and responsive,” another government source said, without providing specifics on how the new system would function.
Ismael Kone, an advisory board member of the Ivorian regulator and CEO of Ecorigine, suggested reducing dependence on multinational companies, which control 80% of cocoa purchases and exports.
“A reform should focus on two objectives: the direct sale of cocoa to chocolate makers to reduce the influence of traders and the development of more powerful and efficient local players to create healthy competition with multinationals,” he said.
Tedd George, founder of Kleos Advisory, warned that international traders remain the main channel for moving beans to chocolate makers in Europe and North America and would be hard to replace.
An anonymous veteran cocoa trader told Reuters that the proposed reforms are unlikely to happen and, even if implemented, may not improve the situation.
“The pizza pie is only so big and whether you sell half direct to (the chocolate) industry and half to traders or whether you sell nothing to industry and 90% to traders it doesn’t improve consumption,” the consultant said.
“The problem will more or less go away if chocolate demand comes back, (but) we could find ourselves in a position where demand rebounds sluggishly.”
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Image Credit: Vesper
