Cocoa-producing nations are planning a change that would allow them to control market prices the same way the Organization of the Petroleum Exporting Countries (OPEC) has done for oil-producing nations.
Ivory Coast with its 40 percent of the world’s market share in cocoa, and Ghana, in second place with more than 20 percent, have formed a coalition to oversee the global crop that has been in excess of its demand one year in every two, to the benefit of buyers seeking to push prices down even as cocoa farmers struggle to meet their basic needs.
Whereas the state of the cocoa market is like a blessing for buyers, it’s a curse for farmers in tropical countries, who receive only 6 percent of the $100 billion generated from the global cocoa and chocolate industry each year.
Meanwhile, stakeholders are concerned about the recent move by the two highest-producing countries following the failure of the Alliance of Cocoa Producing Countries founded in 1962 by Ghana, Nigeria, Brazil, Ivory Coast and Cameroon.
Philippe Fontayne, former chairman of the International Cocoa Organization, asserted that to establish an OPEC equivalent for cocoa, all the producer countries should participate, rather than the two partnering West African countries alone, which account for two-thirds of the world’s cocoa supply.
Patrick Poirrier, chairman of the French chocolate group Cemoi and president of a producers’ syndicate, remarked that the coordination of Ivory Coast and Ghana is a very positive factor, adding that it’s in their interest to expand their power so as to act on the market.
While agreeing that the decisions of Ivory Coast and Ghana count, Jonathan Parkman, an analyst from the brokerage company Marex Spectron, cautioned that there is a slight overproduction of cocoa and that the coronavirus crisis is reducing demand.
The analyst noted that cocoa prices are speculative like certain other agricultural products, with prices that are partially disconnected from the real economy.