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Two African Nations Are Fixing Cocoa Farmers Living Income Differential

The International Cocoa Organization (ICCO) has governed sustainable cocoa trade since 1973, but a new international cocoa agreement, named the “Abidjan Declaration,” between Ghana and Ivory Coast presents dynamic changes in the cocoa industry by giving some control to top  producers.Cocoa beans are the leading source of foreign currency earnings, but less than a quarter of the crop is processed domestically. To end a situation where cocoa producers make only $6 billion in a global chocolate market worth around $100 billion. Ivory Coast and Ghana, have teamed together in the hopes of establishing a new price floor for cocoa. Although the chocolate industry generates $10-20 billion in profit every year, Western African farmers see very little of this profit president Akufo-Addo says  “is already paying off. Our cocoa farmers get less than 10 percent of the value of a bar of chocolate and yet cocoa is the main ingredient in chocolate. That is why we have embarked on a strategic partnership with our good neighbour, Ivory Coast and it is evident in our joint cocoa production and marketing policy,” he said.

In 2018, Ivory Coast and neighbouring Ghana which together account for 65 percent of global production created a joint sales mechanism. Then, Cocoa has gained 1.97 per cent to $2,533 per metric tonnes. Both Ivory Coast and Ghana agreed to charge a premium of $400 per metric ton. Experts  says the new agreement will affect the entire cocoa value chain (from cocoa bean farmers to chocolate consumers).

Cocoa farmers in West Africa face poor productivity due to the constraints of the crop, field, farm and sector level. Ghana and Ivory Coast contribute 60% of the world’s cocoa output, but fluctuations of cocoa prices on the international market, has impacted negatively on the revenues accruing to them. The two West African countries have adopted an implementation plan to concretise the Abidjan Declaration, which seeks to address challenges in cocoa production within the framework of the Strategic Partnership Agreement. Similarly, the framework will protect the cocoa sector and forest reserves set a fixed price for cocoa.

To protect farmers, the world’s top two cocoa producers agreed to coordinate with 2020-2021 cocoa bean prices by selling the $2,600 per tonne or Ivory Coast would get $400 premium per every tonne of cocoa beans they sell during the 2020-2021 harvest season in both countries. Buyers of Ghana and Ivory Coast cocoa has recently agreed on a minimum price of $2,600 per tonne, as proposed by the two governments to address a perceived imbalance between farmers’ incomes and money made by big commodities traders. While some traders expect others to explore alternate sources of cocoa beans. Several smaller cocoa-producing countries are considering their own premiums, looking to the heavyweights as an example. Officials in Ghana and Ivory Coast must convince local farmers that regulating output will mean a boost in pay to help them survive.

The move will now allow the two countries to enact common laws and use workable strategies to improve cocoa yields. The signed agreement which will see the two take steps to boost production by closer collaboration in the areas of cocoa production, marketing, conducting joint research, reduce smuggling, enforce standards, including a ban on use of child labour in cocoa production, reward farmers, bargain together in as much as the cocoa industry is concerned.

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