Ivory Coast, the largest cocoa producer in the world, is set to increase its cocoa farmgate price by 50%, Reuters reported.
President Alassane Ouattara will raise the current price of 1,000 CFA francs ($2.47) per kilogram to 1,500 CFA francs ($2.47) per kilogram, according to sources from five different export companies.
The decision was made during a government meeting on Saturday, but the government and the Coffee and Cocoa Council (CCC) have yet to comment on the matter.
This move comes as a response to the significant increase in global cocoa prices, which have more than tripled in the past year due to disease and adverse weather conditions. However, the previous farmgate price in Ivory Coast has not reflected this upward trend in the global market.
The decision to raise the cocoa farmgate price holds both benefits and challenges for the Ivory Coast cocoa industry and its stakeholders. On one hand, this increase will provide much-needed relief to cocoa farmers, who have been struggling with low prices for their produce. It will improve their income and living conditions, as well as incentivize them to continue cocoa production amidst the challenges they face.
According to the director of a European export company, there were multiple proposals being discussed, but as a last resort, the president of Ivory Coast decided to set the price at 1,500 CFA per kg instead of the previously validated 1,200 CFA.
The president’s intention was to secure the highest possible price for the producers. The director explained that in the current context, this price was considered the best that the CCC (Cocoa and Coffee Council) could afford to pay. It was also noted that changing prices during the season is challenging due to the sales system in Ivory Coast.
Another director from an international export company supported the president’s decision, stating that he believed the world market situation was exceptional and warranted an exceptional reaction.
Furthermore, the raise in farmgate price could potentially attract more farmers to the cocoa industry, boosting production and ensuring a stable supply of cocoa. This is crucial for the Ivory Coast, considering its position as the leading cocoa producer globally, and the increasing demand for cocoa in the market.
However, there are concerns that this price increase may have unintended consequences. One of the main concerns is the potential for inflationary pressure on the overall economy.
The increased farmgate price could lead to higher prices for cocoa-based consumer products, such as chocolate, which could impact consumption and demand. It may also affect international buyers who may opt for alternative cocoa sources if prices become too high.
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