Cocoa slumps

The price of cocoa beans has fallen by $1,000 in just one year after record harvests. Growing stockpiles are adding further strain on plantations in Africa.

Cocoa futures in London are trading near the lowest in four years as a rebound in production is leaving the global market oversupplied. Plummeting prices are hurting the finances of producing nations and incomes for hundreds of thousands small-scale farmers.

Ivory Coast, the top grower, had to reduce the price paid to farmers by 36 percent for the smaller harvest which started last month and trimmed its 2017 budget by a 10th. Ivory Coast cut its budget after the slump in cocoa prices cost the West African nation’s economy 1 billion euros ($1.1 billion) in lost export earnings over the past year, President Alassane Ouattara said. Annual spending is being reduced by 250 billion francs ($413 million), Ouattara said on state television Thursday in the commercial capital, Abidjan. “This is a considerable amount,” Ouattara said. “Ivory Coast is going through very, very difficult times.”

Ghana lost almost $1 billion in export value because of lower prices, Joseph Boahen Aidoo, the chief executive officer of the country’s cocoa regulator, said in April.

Cameroon’s plans to more than double the nation’s production of cocoa beans by 2020 will not be achieved as falling prices are dissuading farmers from planting new crops, according to the state’s support company for growers. Producers in the world’s fifth-biggest cocoa producer have seen farm-gate prices slump by more than a third in the past year as London future contracts declined on forecasts of an oversupply. Cameroon, which produced 269 495 metric tons in the year through July, is in the third year of a strategy to increase annual output to more than 600 000 tons by 2020.

Despite Africa accounting for a massive 75% of global production, exporters wield little to no influence over where the price goes.

This is not to mention the continent’s paltry 2% share of the estimated $98bn global chocolate market, dominated by companies in non-cocoa producing countries like Switzerland and the US. It is a familiar African story – the exporting of precious materials, with all their value extracted elsewhere.

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