FAIRTRADE EXPRESSES CONCERNS OVER KEY DROP IN PRICES FOR IVORY COAST AND GHANA COCOA CROPS

FAIRTRADE EXPRESSES CONCERNS OVER KEY DROP IN PRICES FOR IVORY COAST AND GHANA COCOA CROPS

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Fairtrade has expressed key concerns at a ‘disastrous’ cocoa prices within key West African markets of Ivory Coast and Ghana, with potential impact on future sustainability for the industry, reports Neill Barston.

Significantly, cocoa production levels in both key producing nations remained higher than in the previous cocoa year – but with prices being comparatively low, the abundance of supply had not helped the situation.

As we reported last month, the ICCO cocoa body noted the mid crop season beginning in April resulted in the Ivorian government reducing payments to farmers by 25%, to $1.35 per kg of cocoa, with volumes standing at 1.78 million tonnes for the 20/21 year, up 2.8%. Furthermore, linked to this, the ICCO’s latest report has highlighted that unlike in Europe, grindings data for the first quarter of 2021 showed a year-on-year increase in North America and Southeast Asia, revealing uneven market patterns.

Consequently, as the ICCO studies revealed, exports of beans during October 2020-February 2021 were 882,852 tonnes, down 12% year-on-year, with latest figures for April revealing that prices on the futures stock market in London and New York both recorded declines. This impacted on prices further, and according to latest data from the ICCO for Ivory coast, the value of cocoa in Ivory Coast slumped 4% to $2,181 per tonne.

In the wake of this, speaking in an exclusive video interview with Confectionery Production ahead of our World Confectionery Conference tomorrow (Tuesday, 1 June), Jon Walker, senior advisor, cocoa, of Fairtrade, noted the severity of the situation.

He said: “We’re really concerned by the situation. The price of cocoa is an absolute disaster – it’s far too low. If we expect to see sustainable cocoa, that is just a complete fantasy without farmers being able to earn a living income. The last time we did research on this several years ago, 52% of farmers in Ivory Coast were living in extreme poverty. We have to change that situation – one of the ways we can do that is by addressing price.

“The majority of the farmers’ income comes from cocoa, so pricing is critical. I think we need to shift away from as a sector is that supply and demand define prices. The reality is that cocoa farmers, brands and retailers are in a long-term relationships. So let’s shift this, so that now includes long-term contracts, pricing and security for farmers so they can plan for the future.”

Walker added that on pricing specifically, Fairtrade operates a minimum pricing system – delivering a farmgate price of $1340 a tonne, and when this is at this rate, a further sum of around $318 is also paid to supplement farmers’ income directly. He added that the spring/early summer was the ‘light season’ for cocoa production in the region, meaning little of its certified cocoa was in fact sold compared agains core crops later in the year.

ICCO cocoa results

In terms of the market performance, latest data from the ICCO showed that since the start of the 2020/21 cocoa season, cumulative arrivals of cocoa beans in Ivory Coast are higher year-on-year. Additionally, the Conseil Café Cacao announced that the country’s cocoa production for the 2020/21 season is expected at 2.225 million tonnes.

As at 16 May 2021, cumulative arrivals at Ivorian ports were established at 1.916 million tonnes, up by 7% compared to 1.790 million tonnes recorded a year earlier – which placed pressure on the market further.

In Ghana, purchases of graded and sealed cocoa since October 2021 were reported at 849,266 tonnes by 29 April 2021; corresponding to a 19.6% increase year-on-year. Moreover, April, data for the first quarter of 2021 published by the main regional cocoa associations indicated that grindings fell in Europe while an increase was recorded in South-East Asia and North America.

Results from the European Cocoa Association (ECA) published data indicating a year-on-year decrease of 3% from 368,934 tonnes to 357,815 tonnes in grindings. On the contrary, the Cocoa Association of Asia (CAA) announced a year-on-year increase of 3.14% from 207,356 tonnes to 213,858 tonnes. In the same vein, processing activities improved in North America during the first quarter of 2021, with the National Confectioners’ Association (NCA) reporting a 2.05% increase from 115,591 tonnes to 117,956 tonnes of cocoa beans ground.

Source: confectioneryproduction.com