«No one can buy the 2024/25 contracts without a reduction in the origin differential. Prices are much too high and this creates too much risk for us if the market turns around and prices fall,” said the director of one multinational export company who requested anonymity to speak freely.
This bring us to a few reflection points:
1) The country differential known as country premium is a market tool known as a premium associated to each origin of cocoa and its based on quality, availability and accessibility. This discount strategy has already created last year some tensions between Côte d’Ivoire/Ghana and the industry.
2) “The market” is used as the ultimate argument for everything as we always hear from most trading houses. We are all part of the market. I am always amused when I hear that the market “set” the price, the market will adapt or the market is the market. So the market has determined the price and now again all is about discounting or lower the price.
During this past 40 years the price of Cocoa has reached this record level and it means it’s possible. The current market trend shows that we as governments were right to fight for a higher price and to build a mechanism that should help.
Despite all fallacies the LID is there and we will continue to be strengthen to protect farmers. Protecting farmers against market downswings is our priority.
Prices are high now. It’s shows that it is possible and also when we were told with a living Income Differential (LID) our cocoa prices were too high and we see it was a distraction. The 23/24 season price cannot reflect it as it is based upon forward sells made during last winter, when prices were not as high as they are today, and average prices were not even closer to 2600$.
The key thing is that there will be a fall as prices historically goes up then down and we know that activities are ongoing to bring the price down – we simply do not know when.
If we all want the cocoa sector to be sustainable and as also all consumers are expecting. We have to start reflecting how best this should happen and stop blaming or fingers pointing to each other.
Together, lets us work towards a sustainable cocoa economy that delivers increasing and continuous benefits to these great farmers as a priority and all stakeholders in the value chain.
THERE IS NO CHOCOLATE WITHOUT COCOA. AND NO COCOA WITHOUT FARMERS MAKING A LIVING OUT OF THEIR FARMING
