Ivory Coast, the world’s largest cocoa producer, has officially restarted selling its cocoa beans after a tense standoff with international buyers. The local regulator, Le Conseil du Café-Cacao (CCC), agreed to drop the extra fees it was previously charging, allowing prices to align with the current global market.
This move comes as a relief to the industry after hundreds of thousands of tons of cocoa were left sitting in warehouses because traders found the regulated asking prices too expensive to justify.
What is not clear is whether the Ivorian government will absorb the price difference to copy its neighbour Ghana and reduce its farmgate price.
Why Sales Stopped: The “Premium” Problem
For months, Ivory Coast attempted to charge buyers an extra $250 to $470 per ton on top of world market prices. These premiums were originally designed to account for the high quality of the beans and to boost the earnings of local farmers.
However, as global cocoa prices crashed from their record highs of nearly $13,000 in late 2024 to around $3,100 today, international chocolate companies and traders balked at the additional costs. The standoff resulted in a significant backlog, with beans piling up on farms and in coastal warehouses.
The Government’s Strategic U-Turn
To break the deadlock and clear out the mounting inventory, the CCC has now allowed forward purchases for the upcoming mid-crop harvest, which begins in April, without applying these quality premiums. By selling at “par” with global futures, the regulator is essentially adjusting to the inescapable reality of the market.
While the Ivorian Agriculture Minister, Bruno Nabagné Koné, has stated that the government remains committed to the $400-a-ton Living Income Differential intended to fight farmer poverty, the removal of the quality premium marks a major policy shift necessary to keep exports moving.
A Market in Turmoil
The global cocoa market has experienced a dramatic boom and bust, with prices plunging roughly 75% from their peak. This sharp correction has squeezed the profit margins of exporters and triggered a “demand destruction” where buyers simply stopped placing orders.
The crisis is not unique to Ivory Coast; Ghana, the world’s second-largest producer, recently cut its own farmgate prices and announced a total overhaul of its price-setting mechanism to better align with the global market. Both nations are now facing intense pressure to support farmers while staying competitive in a volatile environment.
The Bottom Line
The decision to drop the premium underscores the reality that even the world’s top producers cannot control prices when global demand shifts so drastically. This adjustment is expected to clear the way for the 400,000 to 450,000 tons of cocoa expected from the mid-crop harvest. For now, the focus has shifted from maximizing the price per ton to ensuring that the cocoa actually reaches the global market, preventing further financial ruin for both traders and local farmers.
Source: Bloomberg
