Ghana & Côte d'Ivoire
Ghana and Côte d'Ivoire appreciate high cocoa prices

afrol News, 19 April - As cocoa prices have hit a 14-year-high this season, two of the world's biggest producers, Ghana and Côte d'Ivoire, are cashing out the revenues. The bad news is that harvests are somewhat lower and that Ghanaian producers do not receive extra revenues as prices were set prior to the price hike. 

According to earlier reports by the International Cocoa Organization (ICCO), there will be a 160,000-tonne cocoa supply deficit in 2001/02, adding to a greater deficit last year. As demand already cannot be reached, world market cocoa prices have been up. Between September 2001 and March 2002, cocoa prices went up almost 70 percent and have staid at almost this level throughout the last month. 

Cocoa was traded at £ 1156 in London yesterday. Cocoa futures are quite similar to current prices and are climbing, indicating that investors believe prices are continuing to be high. The world's biggest cocoa producers are Côte d'Ivoire, followed by Brazil and Ghana. 

Côte d'Ivoire had a relatively good cocoa harvest this year, selling off over one million tonnes of cocoa beans after the first harvest. This number is however only better than forecasted, and far from a record harvest. The political unrest 1999-2001 had decreased cocoa production at large. 

In Ghana, cocoa has been the mainstay economy for decades, although the country has sought to industrialise and loosen its dependence on the sector. Production has fluctuated between 300,000 and 500,000 tonnes over the last five years, mostly depending on climatic conditions. 

This year's Ghanaian production is relatively low, due to lack of rain in many parts of the country. The trade of cocoa beans is managed by the Ghana Cocoa Board, which agrees prices with producers at the beginning of the season. The outcome this year is that the Cocoa Board, although production is low, will make substantial profit. Producers are however stuck with the low prices they agreed to last year. 

There are therefore ongoing reports of cocoa bean smuggling to neighbouring Côte d'Ivoire, where prices are set by the market. While Ghanaian authorities call the smugglers "economic saboteurs" that are "supporting the economies of other countries," farmers are tired of low prices and face substantial revenues marketing their products in Côte d'Ivoire.

Also in East Africa, farmers are satisfied with the increased prices. In Uganda, another major African cocoa producer, the high prices are reaching each and every producer as the buyers are competing to purchase their harvests. Production in Uganda is also relatively high, although not reaching record levels due to fighting in some producing areas.

Last year, cocoa prices were record low and had been falling for several years. Cocoa production by normal farming means barely paid off and especially in Côte d'Ivoire, many commercial farms had begun to employ child labour or even child slaves. Ivorian Prime Minister Affi N'Guessan last year stated that farmers needed US$ 1.20 to US$ 1.80 a pound for their cocoa – "almost 10 times what they currently get." N'Guessan maintained the prices for cocoa have contributed to farmers’ reliance on child workers from impoverished neighbouring countries.

The main reason for the drop in cocoa prices until 2001 was the decreasing demand in Western Europe, which accounts for 40 percent of the world consumption. The European chocolate directive that allows the use of vegetable fats in place of cocoa butter resulted in a reduced use of cocoa and in the collapse of the market in the 1990s. Côte d'Ivoire, Ghana, Nigeria and Cameroon embarked on a massive destruction of cocoa and plantations in 2000 to turn the negative market trends.

Sources: Based on ICCO, press reports and afrol archives

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