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Africa Business News of Wednesday, 31 March 2021

Source: bloomberg.com

Ivory Coast cuts farmers’ pay by 25% for smaller harvest

Ivory Coast reduced cocoa farmers’ pay by a quarter for the smaller of two harvests due to dwindling global demand for chocolate.

The world’s top producer, which increased pay rates to 1,000 CFA francs for the main harvest amid a commitment to improve the income of farmers, was unable to sustain the raise for the smaller harvest, which begins April 1. While the mid-crop harvest tends to attract a lower price than the main-crop, this still represents a 9% drop from last year’s mid-crop price.

“I’ve appealed to our growers and they understand,” Yves Kone, the managing director of the regulator, le Conseil Cafe-Cacao, told journalists in Abidjan Wednesday. “When market demand drops, we struggle to sell our beans and prices have dropped considerably.”

Ivory Coast and Ghana, which account for almost 70% of world supplies, expanded output just as the pandemic locked down cities from Paris to Los Angeles, hurting demand. That’s affected their ability to raise farmers’ pay despite an agreement to charge the $100 billion chocolate industry a premium of $400 per metric ton to boost growers’ income.

“If we had applied the normal standards, we would have set the price paid to farmers at 500 CFA francs,” Kone said. “It is thanks to the Living-Income Differential premium that we were able to reach 750 CFA francs.”

The regulator urged farmers to curb production to boost prices.

“If we want attractive farmgate prices, our growers must listen to us and stop planting cocoa,” Kone said. “They are bringing the price down by flooding the market.”

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