African Cocoa Growers Wants to Control Supply-chain

www.bloomberg.com

Ghana and Ivory Coast combined grows about 60 percent of the world’s cocoa, yet do not control the price of cocoa, instead, the prices are set daily by commodity traders in London and New York. Both countries have now outlined plans to cooperate together to regulate the global supply and grab more of the profit from the chocolate-making value chain, by coordinating production levels and their sales policies to make sure that more of the cocoa crop is processed locally before it’s shipped out. 

Cocoa is the best-performing commodity in 2018 thus far, yet its volatility tends to be sharply felt in its local economies where over-production can cause farmers incomes to plunge as a result of the commodity market prices lowered as a result of supply and demand. Although Ivory Coast influence on global cocoa supply is massive, it’s mostly limited to unprocessed beans, as the bulk of West Africa’s production is shipped elsewhere for grinding and processing. Since most of chocolate’s value is added during processing and marketing, farmers in Ivory Coast and Ghana earned only about 5.5 percent of a global supply chain - far less than the 15 percent governments in consuming countries receive in value-added tax on the sale of chocolate products. 

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