High cocoa prices affect farmers, markets
Date
6/24/2024 4:06:41 AM
(MENAFN) Cocoa prices have been on the rise in financial markets, creating a complex web of benefits for farmers, manufacturers, speculators, and chocolate makers, each experiencing varying degrees of advantage. In March, cocoa prices surged to over USD10,000 per ton in New York, driven by declining crops in West Africa, attributed to adverse weather conditions and diseases ravaging aging farms. Although prices have since retreated from their peak, they remain three times higher than they were the previous year.
In major cocoa-producing countries like Ivory Coast and Ghana, authorities set cocoa prices in October based on the preceding months' market conditions. However, by this time, most of the harvest has already been sold, as noted by Tancred Vaurier from the French Agricultural Research and Cooperation Organization (CIRAD). This timing constrains the impact of price fluctuations, whether upward or downward, and the benefits of this price boom do not directly reach small producers, whose earnings are typically minimal, barely covering their basic needs.
Furthermore, in April, the authorities raised the price of medium crops by 50 percent to between USD2,300 and USD2,500 per ton. This increase, though significant, is modest compared to the prices farmers could potentially achieve on global stock exchanges. In contrast, farmers in less regulated markets such as Cameroon, Nigeria, Ecuador, and Brazil have reaped greater benefits from the rising prices. These farmers have the flexibility to sell their cocoa to buyers willing to pay prices closer to those on financial markets. However, this unregulated approach also brings inherent risks.
David Gonzalez, coordinator of the Peruvian Coffee and Cocoa Chamber, remarked to Agence France-Presse that high cocoa prices have made production more attractive, highlighting the appeal and potential pitfalls of engaging in a market where prices are less controlled. This dynamic environment underscores the varied impact of rising cocoa prices, with some farmers enjoying significant gains while others continue to struggle with limited profits amidst fluctuating market conditions.
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