Ivory Coast traditionally relies on cocoa export but a new policy to cap output and boost prices from next year jeopardize the local small businesses. As Reuters reports, cocoa farmers in the African country say they plan to ramp up production and even establish new plantations, potentially threats the adopted new policy for 2020/2021.
Ivory Coast has more than 2.5 million hectares of cocoa, the crop always was a base of the national economy’s health. The sector accounts for 15% of GDP and 40% of exports.
Last month, the Cote d’Ivoire cocoa regulator (CCC) said it would reduce production from 2.2 million tonnes to 2 million tonnes from 2020 season. That unpopular move aimed at the deter farmers from overproducing after Ivory Coast and Ghana introduced a plan to raise farmers’ income.
The local farmers aren’t happy with a new CCC’s policy for the next season because of the potential cut of the revenues. According to Ivory Coast’s farmers, the authorities needed to do more to encourage diversification in the agricultural sector.
According to the framers, a lack of business alternatives outside the cocoa industry leaves them with little choice but to expand output and make the most of improved prices.
Cocoa plantations in Ivory Coast should be decreased, CCC said
The global top two cocoa producers set a fixed $400 a tonne ‘living income differential’ (LID) in July on all their cocoa contracts for the 2020/21 season. In addition, they pledged to use the money raised to guarantee farmers 70% of a $2,600 a tonne target price.
This should equate next season to a price for farmers of at least $1.70 per kilo, that could be well above that if international prices rise. The farmers’ comments raise questions about whether Cote d’Ivoire (No. 1 cocoa producer) can implement production cuts in a country that relies on a million small farms who operate independently and have little incentive to cut back.
In fact, those farmers from Daloa, Issia, Divo, Gagboa, Soubre and Meagui account for nearly 70% of the Ivorian crop. Ivory Coast’s protected forests produce 500,000 tonnes of cocoa annually, the official report said.
Meanwhile, the CCC did not say how it would be implemented and enforced its new policy announced in October.