Ivory Coast agreed to pay cocoa farmers more for their beans, heeding calls for a price hike after futures surged to more than $10,000 a ton.
The world’s top producer of the chocolate ingredient will disburse 1,500 CFA francs ($2.46) a kilogram for the mid-crop harvest that runs to Sept. 30, Minister of Agriculture Kobenan Kouassi Adjoumani said Tuesday in Abidjan. That’s a 50% increase on payments for the main-crop season that just ended.
The decision may help ease the global cocoa shortage as growers now have a greater incentive to hand over beans for processing and export. There’s been concern that some are holding back deliveries in the hope of higher prices. More generous payments may also spur much-needed investment in farms, where the tree stock is aging and vulnerable to disease.
Still, the sum remains well below levels on the world market and more will be needed to buck the legacy of low farmer pay in the West African industry.
The dwindling output in Ivory Coast and No. 2 producer Ghana has driven cocoa prices to multiple records this year. New York futures reached a fresh intraday high Tuesday at $10,324 a ton — up from less than $3,000 a year ago.
Farmers had anticipated a hike in payments following the blistering rally.
The Conseil Cafe-Cacao, the industry regulator, “has enough reserves to set a price above that of the main-crop season,” Jacques Kouakou, who heads a cocoa cooperative, said before Tuesday’s announcement. This year’s bean shortage prompted a bidding war, which “did not really benefit the farmers.”
Meanwhile, Cocoa futures extended their rally to a fresh record as adverse weather in West Africa adds to the supply shortage stalking the market.
While some rain reached cocoa areas in parts of the region over the weekend, more will be needed to ease dryness facing crops, forecaster Maxar said in a note. Ivory Coast has just begun collecting its mid-crop harvest, the smaller of the two gathered annually, and it’s expected to be at least 17% below the prior season.
The lack of moisture — and above-average temperatures — could further weigh on production and has given an “additional boost” to prices, the Hightower Report said in a note.
Most-active cocoa futures in New York rallied as much as 2% on Tuesday to $10,324 a ton. They have more doubled this year.
