LONDON, Feb 24 (Reuters) – Ivory Coast will have accumulated about 200,000 metric tons of unsold cocoa by end-March when its main crop concludes unless the government cuts state-regulated farmer prices in order to unlock sales from farmers to traders, industry experts and global trading executives said.
Ivory Coast and neighbouring Ghana, which together produce some 50% of the world’s cocoa, are facing a growing crisis as unsold cocoa stocks from the main crop have piled up both inland and at the ports over the past months.
The unsold cocoa has accumulated because the country set farmer prices for the main crop last October some way above current world prices, meaning traders face steep losses on purchases.
The stocks are weighing on world prices, which have plunged 50% this year alone, hitting a near three-year low earlier.
SOME MID-CROP SALES AGREED
Many international traders stopped buying Ivorian beans for the main crop a few months ago, although local trade and government sources said the country did manage last week to sell 200,000 tons of its upcoming April to September mid-crop to international traders.
The mid-crop tends to be processed locally and is generally cheaper as it is considered to be of lower quality.
In a bid to get cash to farmers who had not been paid for their main crop beans, Ivory Coast in late January pledged to buy 100,000 tons of unsold cocoa at a cost of about $500 million.
But the volume of main crop it will need to buy is likely to be much larger, according to global cocoa trade executives and experts.
Ivorian traders – who buy cocoa from farmers and sell it to international traders – have defaulted on at least 100,000 tons of cocoa purchases from the main crop, two executives at global agricultural commodity trading houses said.
They asked not to be named because they are not authorised to speak to media.
Farmers will harvest another 100,000 tons of main crop beans by the end of March that have not yet been sold to global traders and will not be sold if Ivory Coast doesn’t drop its prices, the two executives said.
IVORY COAST SAYS ESTIMATE OF UNSOLD STOCKS ‘ERRONEOUS’
Abidjan-based cocoa regulator, the Coffee and Cocoa Council (CCC), responsible for overseeing the cocoa sector and setting farmer prices, told Reuters the market estimate for unsold stocks is “erroneous”, without giving further details.
Ivory Coast’s agriculture minister said on Monday the country will make an announcement on farmer prices for the upcoming mid-crop by end-February, more than a month earlier than usual.
Ghana last week slashed its farmer price by almost a third after cocoa farmers said they had not been paid since November. Sources told Reuters last week that Ivory Coast is considering cutting prices to a level that aligns with Ghana.
(Reporting by May Angel; Additional reporting by Ange Aboa in Abidjan; Editing by Louise Heavens and Jan Harvey)
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