[ad_1]
The 100,000 cocoa farmers that Frank Okyere represents at the head of the Ghanaian cooperative Kuapa Kokoo have lost their lives despite producing the raw material for a global chocolate industry worth $ 100 billion in retail sales annually.
The two largest cocoa-producing countries in the world, CĂ´te d’Ivoire and Ghana, have added a supplement to the sale price to reduce poverty. But a dispute over whether global buyers were willing to pay shows just how difficult it will be for both countries to control and raise prices in an industry dominated by millions of smallholders.
“We don’t ask too much of the industry, we just cover our production costs and help us support something small,” Okyere said. “I don’t think that’s too much to ask, because once they do, they can still make big profits.”
the disagreement centered on a “living income differential” (LID) of $ 400 per tonne added to the price of cocoa harvested this season, purchased from CĂ´te d’Ivoire and Ghana, which account for 60 percent of world production. Over the past few years, they have collaborated to try to increase the share farmers earn – barely 6.6% of the selling price of a candy bar, according to the Cocoa barometer, published by Voice Network, an umbrella group for 17 non-governmental organizations.
In letters circulated in the industry, the Ivorian CafĂ©-Cacao Council and the Ghana Cocoa Board this month accused the chocolate producers to try to avoid LID after the American group Hershey took the rare step of sourcing cocoa beans from the New York futures market. Analysts said that meant he didn’t have to pay the supplement, although Hershey said he supported improving farmers’ livelihoods. Buyers normally buy the products from traders who source directly from Ghana and CĂ´te d’Ivoire.
Authorities in both countries have responded by banning the company from implementing sustainability programs on their soil – initiatives companies want to support in an increasingly sustainability-driven global context and issues such as deforestation and child labor. While the chocolate producer’s commitments to pay the LID ended the dispute, they demonstrated the limited leverage held by the producers.
Cote d’Ivoire and Ghana have sought to punish Hershey by suspending programs despite their benefits to farmers, said Kobi Annan, Accra-based consultant at Songhai Advisory, a business intelligence firm.
By canceling the initiatives, they wanted to hold more cards “when we sit down and solve this big problem: why don’t the countries that produce 60% of a product have no real power to set its price?”
But at the end of the day, said a Ghanaian official speaking on condition of anonymity: “Your negotiating position is not that strong, so you are entirely dependent on public sentiment, concerns about environmental sustainability, child labor issues, income inequality, to make the other side feel. a little guilty so they contribute more.
Part of the problem is that rising producer prices – set by the government – and an increase in sustainability programs have encouraged millions of smallholder farmers who are in desperate need of money to produce more, weighing on market prices. .
This year, an election year in both countries, governments jointly raised the price by around 20 percent to $ 2,600 per tonne, still $ 500 less than what the Cocoa Barometer estimates farmers need to make. win their life.
Global cocoa production has increased by 18 percent over the past five years to 4.7 million tonnes, with the leading Ivorian producer producing 2.1 million tonnes in the last crop year, or nearly a third, according to the International Cocoa Organization of producing and consuming countries. Ghana produced 800,000 tonnes, up 3 percent.
“If you want [world] when prices rise, you don’t produce much more than the market needs, ”said Derek Chambers, former cocoa manager at French trader Sucden.
There are now growing fears that CĂ´te d’Ivoire and Ghana are holding unsold cocoa in a year when the harvest is expected to reach record levels, analysts say.
Consequently drop in global demand and LID, sales agreements in both countries for this crop year and the next are well below normal, said Jonathan Parkman of commodity brokers Marex Spectron.
Transactions covering around 70-80% of their harvest for the current year and around 5% for the following year compared to normal years, where the two would have sales agreements for all their cocoa in the current year and about 20 to 25 percent for the following year’s harvest, he says.
Mr Parkman said buyers were frustrated with the lack of transparency and accountability around the LID operation. “The LID will have to be reformed. It is not sustainable as it is over time, ”he added.
Antonie Fountain of the Voice Network said some of the confectionery groups put profits before the welfare of farmers.
But brokers and analysts said CĂ´te d’Ivoire and Ghana’s efforts to collaborate and control prices would be difficult – in part because of smallholders’ desire for cash and the capacity of rival producers. to increase their market share.
“It’s a very difficult situation,” said Bright Simons, a researcher at Ghanaian think tank Imani. “At the end of the day, the cartels are fighting for raw materials,” he added. “This is the lesson of the last two decades.”
[ad_2]