MEAGUI, Ivory Coast (Reuters) - Cocoa farmers in Ivory Coast are selling beans at below the government guaranteed minimum price as a global price decline squeezes revenues for buyers and exporters, farmers and buyers told Reuters.
To shelter farmers from steep price dives, the Coffee and Cocoa Council (CCC) regulator in the world’s top cocoa grower sets a minimum price for cocoa beans. But enforcing the base price in the sprawling industry is difficult in practice.
The April-to-September mid-crop opened with a guaranteed price of 700 CFA francs ($1.19) per kilogramme, already a 36 percent cut from the previous season. Farmers said they have been selling beans for about 500 CFA francs/kg.
Buyers who serve as intermediaries between farmers and exporters are normally paid in advance by export companies to purchase cocoa and deliver it to port, but this season they have had to finance the purchases themselves, some told Reuters.
If a cocoa delivery is then rejected due to poor quality, which has been a problem this season due to a lack of rain, the buyers take the loss.
“Since exporters aren’t financing, they easily reject deliveries when the quality is not good. So as not to lose, it’s better if we buy cocoa below the guaranteed price,” said Sylla Mohamed, a buyer in Divo.
Another buyer said farmers were offering cocoa at a reduced price because there are so few buyers in the market.
Buyers used to come through villages in the main cocoa-growing regions at least once a day to make purchases but now there are fewer opportunities to sell beans, farmers said.
“Now buyers only come through the village every week or 10 days, and if you don’t sell at a good price, no one will buy it,” said Bakary Diakite, a farmer near Soubre.
More than two dozen cocoa farmers across Ivory Coast’s main production regions told Reuters a similar story.
“Either you sell at 450 or 500 CFA francs or you watch your cocoa rot in your house,” said Kouassi oi Kouassi, a farmer in the southwestern town of Meagui.
($1 = 585.8700 CFA francs)
Reporting by Ange Aboa; Writing by Nellie Peyton; Editing by Edward McAllister