Ivory Coast could see about 200,000 metric tons of unsold cocoa by the end of March, when its main crop concludes, unless the government lowers state-regulated farmer prices to unlock sales from farmers to traders, industry experts and global trading executives said, according to Reuters.
The country and neighbouring Ghana, which together produce roughly half of the world’s cocoa, are confronting a growing crisis as unsold stocks from the main crop have built up both inland and at the ports over recent months.
The backlog has resulted from farmer prices set last October well above current world prices, leaving traders facing steep losses on purchases.
The accumulated stocks are weighing on global prices, which have plunged 50% this year, hitting a near three-year low.
Although many international traders stopped buying Ivorian beans from the main crop months ago, local trade and government sources said last week that the country managed to sell 200,000 tons of its upcoming April-to-September mid-crop to international buyers.
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The mid-crop is typically processed locally and is generally cheaper, as it is considered lower quality.
In late January, Ivory Coast pledged to buy 100,000 tons of unsold cocoa at a cost of about $500 million to provide cash to farmers who had not yet been paid for their main crop beans.
However, global cocoa trade executives and experts say the volume of main crop cocoa the government may need to purchase could be far larger.
Ivorian traders, who buy cocoa from farmers and sell it to international traders, have defaulted on at least 100,000 tons of main crop purchases, two executives at global agricultural commodity trading houses said, speaking on condition of anonymity.
Farmers are also expected to harvest another 100,000 tons of main crop beans by the end of March, which may remain unsold if Ivory Coast does not lower its prices, the executives added.
Abidjan-based cocoa regulator, the Coffee and Cocoa Council (CCC), responsible for overseeing the sector and setting farmer prices, told Reuters that the market estimate for unsold stocks is “erroneous,” without providing further details.
Ivory Coast’s agriculture minister said on Monday that the country will announce farmer prices for the upcoming mid-crop by the end of February, more than a month earlier than usual.
Last week, Ghana slashed its farmer price by almost a third after cocoa farmers said they had not been paid since November, and sources told Reuters that Ivory Coast is considering adjusting its prices to a level aligned with Ghana.
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Image Credit: Kuueza
