TOP cocoa producers Ivory Coast and Ghana need to control supplies and join forces with other producing countries if they want to achieve higher prices, the head of the International Cocoa Organisation (ICCO) said.
Speaking at the Chocoa sustainable cocoa conference, Michel Arrion said Ivory Coast and Ghana recently acknowledged the need to control cocoa supplies, but they could be scuppered if other producers increase output.
“Ivory Coast and Ghana with 65% of world production are still price takers, if they were 90% they wouldn’t be price takers, so we need more producers (on board),” Michel told Chocoa participants via a virtual platform.
The head of the intergovernmental organisation said that to this end, he would work towards getting other producers, as well as consumers in Asia and the United States to join the recently launched European Union cocoa dialogue with Ghana and Ivory Coast.
The global cocoa market is expected to record a surplus of more than 200,000 tonnes this season, with output in Ivory Coast and Ghana set to grow and demand still under pressure from the coronavirus pandemic.
Seeking to tackle farmer poverty, Ivory Coast and Ghana have added a fixed ‘living income’ premium to their cocoa sales, but their efforts have not been wholly successful and they have been forced to offset the premium by cutting other parts of their sales price.
Also, producers like Nigeria, Cameroon, Ecuador are not involved in the scheme so their cocoa is both cheaper than that of the top growers, and plentiful given surplus global supplies.
The cocoa sector remains blighted by widespread ethics abuses like child labour and deforestation despite years of industry, government and civil society efforts to produce the chocolate ingredient sustainably.
Although agricultural commodity prices have rallied this year on economic recovery hopes, cocoa prices are little changed. Michel said the sector will never be sustainable without higher prices.
The EU has launched its cocoa dialogue this year with Ivory Coast and Ghana ahead of the introduction of due diligence laws aimed at preventing the import of commodities like cocoa linked to deforestation and human rights abuses.
The laws could come into effect as early as 2024, forcing companies and producing countries to clean up their supply chains.