Cocoa Farmers in Top Producer May Miss Out on Surging Prices

  • Farmgate price seen stable at around 700 francs a kilogram
  • Output for the season’s smaller crop could reach 500,000 tons

Cocoa prices have surged by a third this year, but that’s still unlikely to translate into big gains for farmers in top producer Ivory Coast.

The West African nation uses forward sales to determine the minimum farmer price, so recent gains may have come too late for the smaller of two annual harvests that starts next week. That will limit President Alassane Ouattara’s ability to boost farmer rates.

Ivory Coast’s cocoa sector is also recovering from a crisis last season, when plunging prices led exporters to default on thousands of tons of contracts, pushing prices even lower and costing the nation more than $500 million in support payments.

Read a Quicktake about Ivory Coast’s cocoa sector and last year’s crisis

Ivory Coast will probably announce the minimum farmer price for the mid-crop, which runs from April through September, on Thursday. Compared with the larger main crop, the harvest usually provides smaller beans that are mostly used for local processing.

Ivory Coast and neighboring Ghana, the No. 2 producer, plan to start setting producer prices together from the next annual harvest that starts in October.

The case for holding:

The most likely outcome is for the government to keep the price stable, at about 700 CFA francs ($1.30) a kilogram, especially after last year’s crisis, said Stephen Yeboah, a researcher at the University of Lausanne and co-founder of Commodity Monitor, which studies commodities…

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