Ivory Coast, the world's largest cocoa producer, is grappling with a growing paralysis in the sector. Warehouses are holding nearly 400,000 tonnes of beans as local exporters have halted purchases. The cause is a drastic 70% drop in global prices, which has made the fixed prices guaranteed to farmers by the state uncompetitive on international markets. The government has announced it will set new rates by the end of February.

Excess bean stocks

Nearly 400,000 tonnes of cocoa are stockpiled in warehouses due to halted exports amid excessively high guaranteed prices.

Consumer price paradox

Despite the drop in commodity prices on exchanges, chocolate in stores is becoming 20% more expensive due to high costs of earlier purchases.

Upcoming government decision

By the end of February, the Minister of Agriculture is to announce new rates for the mid-crop harvest, which will determine the future of planters.

The situation on the cocoa market in West Africa is becoming critical. Ivory Coast, which supplies nearly half of the global production of this commodity, is facing record stocks that no one wants to buy. Exporters have halted purchases because the price guaranteed to farmers by the state is now significantly higher than current quotes on exchanges in London and New York. As a result, around 400,000 tonnes of beans are piling up in warehouses and with intermediaries, which in the hot and humid climate could quickly spoil. Since 2011, the price stabilization system in Ivory Coast has aimed to protect farmers by setting fixed rates for a given season. However, the current mechanism, overseen by the state-run Conseil Café-Cacao, is losing effectiveness in the face of sharp market fluctuations. Global markets present a stunning economic paradox. Despite futures contracts prices plunging by 70%, retail prices of chocolate products in Europe and the USA have risen by nearly 20%. The food industry explains this by the fact that the beans currently being processed were bought at last year's record-high prices. The Minister of Agriculture, Kobenan Kouassi Adjoumani, announced that the new price for the smaller harvest, the so-called mid-crop, will be announced by the end of February. 400 000 t — cocoa is currently stockpiled in warehouses The lack of financial liquidity for the state fund and farmers could lead to the collapse of the entire sector next year. Planters, deprived of income, are cutting spending on fertilizers and plant protection, heralding a radical deterioration in the quality of future yields. The government is backed into a corner: either drastically lower rates for farmers, risking social unrest, or find a way to finance losses resulting from the difference between the purchase price and the market price of products for export. „La situation actuelle ne laisse pas beaucoup de choix sur les prix au Conseil café-cacao” (The current situation does not leave much choice on prices at the Conseil café-cacao) — Kobenan Kouassi Adjoumani Cocoa vs Chocolate Price Dynamics: Cocoa futures prices: -70, Chocolate price (stores): 20

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