Unsold cocoa stocks in Ivory Coast could swell to around 200,000 metric tons by the end of March if a standoff over state-set farmgate prices persists, traders and industry executives said, deepening strains in the world’s top producer.
Ivory Coast and neighbouring Ghana together account for roughly half of global cocoa output. Both countries are grappling with mounting inventories from the current main crop, as elevated domestic producer prices clash with sharply lower world market rates.
Cocoa prices on international markets have plunged about 50 percent this year, hitting a near three-year low, weighed in part by the accumulation of unsold Ivorian beans inland and at ports.
The impasse stems from a decision by Abidjan last October to set farmgate prices for the main crop above prevailing global levels. As prices on futures markets fell, international traders faced the prospect of heavy losses on purchases at the higher state-mandated rate, prompting many to halt buying.
Industry executives said around 100,000 tons of main crop cocoa purchased by local intermediaries – who buy from farmers and sell to international traders – have already gone into default. Another 100,000 tons expected to be harvested by end-March may also struggle to find buyers if prices are not adjusted.
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“If the government does not cut the farmgate price, the volume of unsold beans will continue to rise,” said one executive at a global agricultural trading house, speaking on condition of anonymity because he was not authorised to comment publicly.
The growing stockpile is adding pressure to global benchmarks, with traders pointing to abundant nearby supply despite earlier concerns about tight global balances.
In a bid to ease tensions and ensure farmers receive payment, the Ivorian government in late January pledged to purchase 100,000 tons of unsold cocoa at a cost of roughly $500 million.
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However, trade sources say the eventual bill could be significantly higher if more beans remain stranded.
Abidjan-based regulator the Coffee and Cocoa Council (CCC), which oversees the sector and sets farmgate prices, dismissed estimates of 200,000 tons in unsold stocks as “erroneous” when contacted by Reuters, but did not provide alternative figures.
The government has signalled that adjustments may be imminent. Ivory Coast’s agriculture minister said this week that an announcement on farmgate prices for the upcoming mid-crop – which runs from April to September – would be made by the end of February, more than a month earlier than usual.
The mid-crop is generally smaller, of slightly lower quality and largely processed locally, making it less exposed to international pricing swings. Industry sources said Ivory Coast last week managed to secure sales of around 200,000 tons of the forthcoming mid-crop to international buyers.
Pressure is also mounting regionally. Ghana last week slashed its producer price by nearly a third after farmers complained of delayed payments dating back to November. Sources told Reuters that Ivory Coast is considering a similar reduction to align prices with its neighbour and restore competitiveness.
For farmers such as those in the southwestern cocoa belt around San-Pedro, the uncertainty has left beans drying in village courtyards as payments stall and buyers hesitate.
Analysts warn that prolonged disruption in the world’s largest cocoa producer risks unsettling supply chains for chocolate makers globally, even as benchmark prices remain under downward pressure from the current glut.
Much now hinges on whether Abidjan moves swiftly to recalibrate prices – or opts to absorb rising stockpiles in an effort to shield farmers from the full force of the market downturn.
