Ivory ​Coast has given assurances it will continue a programme to buy a ‌residual stock of 100,000 metric tons of cocoa at the guaranteed price, the head of cocoa producers’ organisation said on Tuesday, in an effort to calm tensions among farmers and cooperatives.

Farmers ​had voiced concern in recent days that the stock-buying programme, launched in late ​January to clear unsold beans and provide cash to farmers after ⁠a slump in global cocoa prices, could be halted as the mid-crop harvest ​gets under way earlier than usual.

Around 23,000 tons have been purchased since the start ​of the operation, according to data provided by the Agricultural Interprofessional Organization for Cocoa.

“I would like to reassure our fellow farmers and cooperative presidents that the government has given us guarantees that ​the programme will continue and that all the stock inventoried by the Coffee ​and Cocoa Council on January 15 and 16 will be fully purchased,” Siaka Diakite, president of ‌the ⁠Agricultural Interprofessional Organization for Cocoa, told journalists on Tuesday at CCC headquarters in Abidjan. He said the remaining stock will be bought at the guaranteed price of 2,800 CFA francs ($5.00).

DEEP CUT TO FARMGATE PRICES?

Government and regulator sources told Reuters last week that ​authorities were considering cutting the ​mid-crop farmgate price ⁠to between 800 and 1,000 CFA francs per kilogram from 2,800 CFA francs for the main crop.

Several farmers and cooperatives, including ​in the western town of Duekoue and the port city ​of San ⁠Pedro, had threatened to strike and park trucks loaded with cocoa outside regional administrative buildings in protest over a possible suspension of the stock-buying programme.

On Monday, Diakite criticised what ⁠he ​described as administrative blockages by the CCC, which ​he said had refused to validate bills of lading allowing cooperatives to deliver cocoa to Abidjan.

($1 = 559.7500 CFA ​francs)

The producers of half the world’s cocoa – Ivory Coast and Ghana – have struggled to sell beans and pay farmers this year due to ample global harvests, lower cocoa prices and falling demand from chocolate makers for the ingredient.

Why did the two countries fare worse than rival producers and what are they doing to address the problem?

HOW DID WE GET HERE?

Cocoa is not freely traded in Ivory Coast and Ghana.

Rather, the two countries’ cocoa regulators – appointed by the government – sell some 80% of their beans to global traders a year in advance and, on the basis of those sales, set a fixed price for farmers at the season start in October.

Farmers then sell their beans to local collectors at this price, and the collectors in turn sell them on to licensed buyers. After receiving the cocoa, licensed buyers either sell directly to global traders or to local traders who sell on to global traders.

The fixed farmer price set in October usually covers the October to March main crop as the countries’ cocoa regulators tend to adjust the farmer price for the April to September mid-crop – considered to be of lower quality.

Last October, Ivory Coast set its main crop price at about $5,000 a metric ton while Ghana set it at nearly $5,300 per metric ton.

World cocoa price futures have plunged to around $3,100 per ton, however, having lost half their value this year alone.

For global cocoa traders, the price plunge had the immediate impact of landing them with steep losses if they purchased Ivorian and Ghanaian beans and sold them at futures market rates. As a result, they mostly stopped buying them.

Ghanaian farmers said last month they had not been paid for their beans since November, while industry sources told Reuters the situation was similar for Ivorian farmers. They noted that unsold cocoa stocks have piled up across Ivory Coast.

WHAT HAVE IVORY COAST, GHANA DONE SO FAR IN RESPONSE?

To try get cash to farmers, Ivory Coast’s government launched a programme late last month to buy 100,000 tons of unsold, main crop cocoa stocks from farmers at a cost of half a billion dollars.

In Ghana, the cocoa regulator on February 12 cut the fixed farmer price, opens new tab by nearly a third to around $3,580 per ton after it estimated the country had about 50,000 tons worth of unsold cocoa stocks.

Ivory Coast is also planning, from March 1, to lower its fixed farmer price by about a third in the hope of providing an incentive for sales to international traders, sources told Reuters.

The government said earlier this week it will announce a new farmer price by the end of February, a month earlier than usual.

WHY DID WORLD COCOA PRICES PLUNGE?

After nearly tripling to record levels in 2024, world cocoa prices have since lost about three quarters of their value.

The plunge came about in part because demand fell as high prices led chocolate-makers to reduce bar sizes, increase non-cocoa additives, such as wafers or nuts, and substitute products like cocoa butter with alternative fats.

At the same time, favourable weather has led to bigger and healthier crops, leaving the global market set to record a surplus of around 300,000-400,000 tons this season, according to global traders.

Much of that surplus is in Ivory Coast and Ghana which, unlike global traders or processors, do not have the financial means or the capacity to store beans in warehouses.

There is a roughly year-long lag between the price of cocoa on futures markets and any impact on chocolate sold to retail consumers.

HOW IMPORTANT IS COCOA TO IVORY COAST’S AND GHANA’S ECONOMIES?

Cocoa accounts for nearly 40% of Ivory Coast’s export revenue and nearly 15% of Ghana’s, making the crop one of the biggest sources of foreign exchange earnings for the two West African nations.

Unlike Ivory Coast, Ghana is also struggling to recover from its deepest economic crisis in a generation after it defaulted on and then restructured much of its $30 billion overseas debt.

The crisis has made it much harder and more costly for Ghana’s cocoa regulator to get financing for cocoa purchases.

Nearly 2 million Ghanaian and Ivorian cocoa farmers and their dependents, most of whom live below the poverty line, rely on the chocolate ingredient for their livelihoods.