Ivory Coast's Cocoa Sector in Crisis as Unsold Stocks Mount
The world's largest cocoa producer, Ivory Coast, is confronting a severe agricultural crisis with an estimated 200,000 metric tons of unsold cocoa beans expected to accumulate by the end of March. This alarming situation arises as the government's state-regulated farmer prices, set last October, remain significantly above current global market rates, rendering purchases unprofitable for international traders.
Price Misalignment Deters Global Buyers
Industry experts and global trading executives warn that this stockpile stems directly from the price disparity. Ivory Coast, alongside neighbouring Ghana—which together supply approximately 50% of the world's cocoa—has seen world prices plunge by 50% this year to a near three-year low. Consequently, many international traders ceased buying Ivorian main crop beans months ago, exacerbating the unsold inventory piled up inland and at ports.
Local traders have defaulted on at least 100,000 tons of cocoa purchases from the main crop, according to two executives at global agricultural commodity trading houses, who requested anonymity due to media restrictions. Farmers are set to harvest an additional 100,000 tons of main crop beans by March's end that remain unsold, with sales unlikely unless prices are reduced.
Government Interventions and Regional Pressures
In a bid to alleviate the crisis, Ivory Coast pledged in late January to purchase 100,000 tons of unsold cocoa at a cost of about $500 million to provide cash to unpaid farmers. However, trade executives indicate the required volume may be substantially larger. Meanwhile, Ghana recently slashed its farmer price by almost a third after cocoa farmers reported not receiving payments since November, increasing pressure on Ivory Coast to align its prices.
The Abidjan-based Coffee and Cocoa Council (CCC), responsible for overseeing the sector, dismissed market estimates of unsold stocks as "erroneous" without providing further details. Ivory Coast's agriculture minister announced that farmer prices for the upcoming April-September mid-crop will be declared by end-February, over a month earlier than usual, signalling potential adjustments.
Mid-Crop Sales Offer Limited Relief
Despite the main crop challenges, local sources reported last week's sale of 200,000 tons of the upcoming mid-crop to international traders. The mid-crop, typically processed locally and considered lower quality, offers some respite but does not address the core issue of unsold main crop stocks. This development highlights the complex dynamics between government pricing policies, global market fluctuations, and the livelihoods of cocoa farmers in West Africa.
