Ivory Coast plans cocoa market overhaul to manage surplus

Ivory Coast is exploring a reform of its Cocoa (commodity) marketing system to better align government-mandated farmer prices with international market trends. The move follows a sharp decline in global prices that has triggered a sales crisis and left a significant surplus of beans across the West African nation.

After surging to record highs in 2024, world cocoa futures have since lost three-quarters of their value, currently trading at approximately $3,300 per ton. This volatility created a disparity between the fixed prices set for Ivorian farmers last October and the lower global market rates, prompting international traders to halt purchases. In response, the government has stepped in with a pledge of more than 500 billion CFA francs ($892.06 million) to buy back unsold stocks and provide liquidity to producers.

Government sources indicate that the current system, which involves selling the anticipated crop a year in advance to set a fixed price, may be replaced by a more flexible model. One official noted that the state needs to be more agile in its approach to the market.

"We have a clear and precise idea of what we are going to do (with) both the external and internal marketing systems."

Another official emphasized the necessity of adapting to market shifts to avoid future surpluses.

"We need to be more responsive and realistic in an extremely volatile market."

Ismael Kone, chief executive of Ecorigine and a member of the regulatory advisory board, suggested that the reform should focus on reducing the influence of multinational companies, which currently manage 80% of the country's cocoa exports. He advocated for direct sales to chocolate manufacturers and the development of stronger local players to encourage competition.

However, some experts question the feasibility and impact of these changes. Tedd George, founder of Kleos Advisory, pointed out that international traders remain the primary link between inland farms and global manufacturers. An industry consultant further noted that structural changes might not address the core issue of global consumption.

"The pizza pie is only so big and whether you sell half direct to (the chocolate) industry and half to traders or whether you sell nothing to industry and 90% to traders it doesn’t improve consumption."

While the government seeks a more responsive system, the long-term stability of the sector may ultimately depend on a recovery in global demand for chocolate.