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Chocolate Industry’s Scaling Down on Purchases Hurting West African Farmers

Côte d’Ivoire and Ghana’s move to combat farmer poverty with a living income premium for their cocoa sales is being undermined by chocolate makers scaling down purchases and negotiating discounts on other parts of the price, sources said.

Confectioners publicly backed a move by the two countries, which together account for 60% of global cocoa supply, to introduce a $400 a ton living income differential (LID) or premium in July on cocoa sales for the 2020/21 season.

But trade sources said they have partially offset the new cost by negotiating down another charge paid for West African cocoa – the country premium, or ‘differential’, which covers bean quality differences and is a key element in the cocoa price.

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Ivory Coast beans, some of the highest quality available on the mass market, have over the past few years traded around 65-80 pounds a ton over ICE London cocoa futures.

That premium hit a record 250 pounds over the summer as industry stockpiled spot cocoa available for purchase without the LID, sources said. However, it has since fallen sharply.

Ivory Coast cocoa regulators did not respond to requests for comment, while Ghana regulators said they had no comment.

Chocolate makers Barry Callebaut, Mars Wrigley and Nestle said they support the LID and that their 2020/21 cocoa purchases were at normal levels, though they did not comment on differentials.

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Written by How Africa

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