Top cocoa producers to influence world prices by creating buffer stock

desmond frimpong

September 22, 2017 10:04 AM

The two West African countries produce over 60 percent of the world's supply

The worlds top cocoa producing countries Ivory Coast and Ghana are putting measures in place to create a buffer stock of beans so as to be a key determiner of world prices.

This was disclosed by a senior Ivorian government.

The two West African countries produce over 60 percent of the world's supply. However, it has been affected by a fall in world prices due to glut resulting from bumper crops this season.

The International Cocoa Organization (ICCO) estimates a global surplus of 371,000 tonnes this season.

“The countries agreed that we needed specialised warehouses to allow us to conserve cocoa so that we can regulate supply and push up prices,” Narcisse Sepy Yessoh, chief of staff to Ivory Coast Trade Minister Souleymane Diarrassouba, told Reuters.

He explained that both governments submitted a request in May to the Abidjan-based African Development Bank for a $1.2 billion loan to pay for the infrastructure.

This they hope to be approved before the end of this year so as to be able to stock in the 2018/19 season.

The plan will see Ivory Coast build six warehouses with a total capacity of 250,000 tonnes near to the main growing areas.

Yessoh states that though Ivory Coast is on track to produce a record 2 million tonnes of cocoa this year, the government plans to limit output going forward and focus on quality improvement.

“Must we continue on this path, flooding the market with beans in abundance and driving down prices to the detriment of our economies and people? We don’t think so,”.

The two nations along with Africa’s third-largest producer Cameroon revealed that they would seek to modify the International Cocoa Agreement, the founding document of the ICCO - the world body of producer and consumer countries.

Reuters report that the ICCO’s Executive Director Jean-Marc Anga says the body would open talks between the producers and the European Union in partnership with the cocoa and chocolate industry to reach a deal on a revised agreement

desmond frimpong