Ivory Coast Faces New Cocoa Standoff with Buyers Over Premium


Ivory Coast is encountering challenges in securing cocoa export contracts for the 2024/25 season, as multinational companies insist on reducing prices due to elevated costs caused by a supply shortage, according to the head of the nation’s cocoa regulator. Ivory Coast, the world’s leading cocoa producer and a key contributor to global chocolate production along with neighboring Ghana, is grappling with a 25% decline in cocoa arrivals for the current October-to-March main crop due to adverse weather conditions, as reported by Yves Brahima Kone, the director general of the Coffee and Cocoa Council (CCC). This decline is even more substantial than industry insiders had previously predicted, with a projected 20% reduction in production for the 2023/24 season.

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Speculators have intensified their bets on increasing cocoa prices, driving London cocoa futures to record highs, further complicating the situation. The CCC has initiated the sale of export contracts for the 2024/25 season, but sales are progressing slowly due to many companies being unwilling to meet the current pricing demands.

One of the mechanisms Ivory Coast employs to improve the income of cocoa farmers is the “origin differential,” which compensates for variations in bean quality from different sources. Presently, this premium stands at zero, but corporations are pressing for it to become a negative figure.

“We began selling export contracts for the 2024/25 season at the prevailing market price, but multinational corporations approached us to request a reduction in the origin differential, which has already remained at zero for many months,” explained Kone. He added, “We want to convey to the cocoa and chocolate industry that we will not lower the differential. We have already exerted considerable effort and made sacrifices for them.”

Major players in the industry, including Hershey, Nestle, Mondelez, and Barry Callebaut, purchase cocoa from Ivory Coast. This latest standoff echoes the previous year when Ivory Coast and Ghana boycotted industry meetings in Brussels over a similar pricing dispute.

Five exporting companies informed Reuters that they cannot afford to acquire contracts for the 2024/25 season at current prices. One anonymous director of a multinational export firm stated, “No one can buy the 2024/25 contracts without a reduction in the origin differential. Prices are much too high, creating excessive risk for us if the market takes a downturn and prices decrease.” Another director from a European export firm noted that they might be compelled to purchase contracts for the 2024/25 season but would wait as long as possible, possibly until early next year.

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