West African cocoa growers are struggling; retail chocolate prices are likely to rise and FNQ has an opportunity to become a world class cocoa growing area if more farmers substitute cocoa for sugar cane.
Ghana and Cote d’Ivoire usually produce 60-70% of the world’s cocoa. But production has been down in the past 3 years with yields affected by the usual problems plus weather events. The global cocoa market is in deficit; estimated at 25% of usual production. In Ghana the 23/24 harvest is nearing completion. On 16th July Cocobod reported the harvest was 429,323 metric tonnes, less than 55% of Ghana’s average seasonal output.
Confectionary News 2 Oct Jane Byrne provided an update on the farmgate price for a tonne of beans from Ghana and Cote d’Ivoire. She reported that the Cote d’Ivoire farmgate price will increase by 20% from 1,500 CFA francs to 1,800 CFA francs per kilogram, effective October 1, 2024. This is equivalent to US$3,060 per tonne while Ghana’s regulated price is US$3,039
Struggling West African cocoa farmers
Farmgate prices are set by government in Ghana and Core d’Ivoire. Other countries operate a free market. The set prices are recognised as not providing a viable living for small holding cocoa farmers (majority of farmers)
Compound the weather with lack of funds for pest control, tree management etc and Ghana and Cote d’Ivoire cocoa farmers remain in the vicious cycle of poor yields, declining incomes, resulting in some farmers giving up or growing something else. Is the industry in decline? Is global warming against them?
So, does the announced price rise ensure a liveable income given the reduction in crop size. Here is a basic analysis that confirms the price rise has not compensated for the crop reduction. Even at a 50% price rise at farmgate, a living wage is elusive.
| Cote d'Ivoire prices | Price rise | Crop reduction | Productivity Kg / hect ** | Farmgate price / tonne US$ | No hectares | Annual income US$ | Oxfam living wage |
| Before price rise | 0 | 0 | 550 | 2550 | 2 | $2,805 | |
| Price at 1/10/24 | 20% | 0% | 550 | 3060 | 2 | $3,366 | $5,455 |
| 20% | 20% | 440 | 3060 | 2 | $2,693 | ||
| 20% | 40% | 330 | 3060 | 2 | $2,020 | ||
| 20% | 55% | 198 | 3060 | 2 | $1,212 | ||
| A viable price? | 50% | 0% | 550 | 3825 | 2 | $4,208 | |
| 50% | 20% | 440 | 4590 | 2 | $4,039 | ||
| 50% | 40% | 330 | 3825 | 2 | $2,525 |
Notes - ** accepted international cocoa production /hect * farms range from 2 - 5 hectares
The global cocoa price was as high as US$11,000, while in prior years average price was US$2,500 to $3,000 per tonne. NY and London futures prices as 11 Oct 2024 are London £5,564 and NY-US $6,250.
Oxfam May 2023 report
‘The average cocoa farmer in Ghana produces about one ton of cocoa annually. They need to earn US$2,600 more per year to get a living income. During the same time period, the average productivity of cocoa farmers in our sample decreased by almost 25%, from 373kg/ha to 281kg/ha.’
Chocolate price rises
The media is all over the increasing price of chocolate. The recent Rabobank report said that record-high cocoa prices are set to sharply increase the cost of chocolate for consumers, saying ‘Due to the lag in the supply chain and existing contracts, the steepest price hikes are anticipated in the second half of 2024 and into 2025.’
‘This would inevitably lead to higher prices for consumers, particularly for dark chocolates with higher cocoa content.’
FNQ happenings
The Mossman Sugar Mill is / has closed. This means 65 cane farmers are looking for other crops. The Queensland Government are providing funds for transition. Is this the time for additional cocoa plantings. My October BLOG, ‘Is Cocoa farming for you’ talked about this.
What makes Australian cocoa price competitive. It’s about yield and input costs. Australian Chocolate research suggests we can be competitive. High yielding cocoa trees are now available. Australian farmers are low cost produces at scale.
References
Confectionary News 2 Oct Jane Byrne Cote d'lvoire raises prices above Ghana