Neighbors Ivory Coast (IC), to the west, and Ghana, to the east, have enjoyed admirably amicable relations in recent years. More recent maritime border disputes, for example, are being sorted through the UN. And in the last year, these top two cocoa origins have made overtures towards forming a united cocoa front. Just a few months ago, the African Development Bank (AfDB) announced that it would consider supporting a joint IC-Ghana initiative to reform their cocoa sectors and stabilize the cocoa market.

Going into 2017/18, however, the two countries revealed significant differences on pricing policy. Faced with pressure from sustained weakness in world cocoa pricing, IC was fiscally conservative, sticking with the lower price from the previous season’s midcrop, while Ghana went the populist route, supporting its growers by keeping a minimum price some 30 percent higher than that in IC. Neither side moved to trim the price difference.

Analysts were quick to suggest that this 30-percent-plus effective premium would continue to encourage the smuggling of Ivorian beans into Ghana as was reported last season. Four weeks into the main crop, what can we say? Arrivals of beans at Ivorian ports are down more than 18 percent as of Oct. 29, while unofficial reports have purchases of Ghanaian beans faring better. (Ghana’s 2016/17 crop is now estimated up 25 percent from 2015/16, gains that are widely accepted as partly due to smuggling.)

Is smuggling playing a role now? The picture is far from clear. The Red Cross is reporting outflows of internally displaced people (IDP), an estimated 7,000 individuals, from some IC growing regions due to disputes between alliances of native and immigrant groups. Weather, too, has hampered harvest in some parts of IC. Finally, smugglers could be not just outbidding but also discouraging the licit purchase of Ivorian beans: Ivorian buying agents may be giving up entirely in some areas near Ghana, making smuggling the only choice for some IC growers.

Will the neighboring cocoa powers still find a way to cooperate? Perhaps. Or perhaps they will continue to go it alone. According to Reuters, Ghana’s Cocobod entered talks with China’s EXIM Bank, seeking half a billion dollars to reform its cocoa sector and equip it to respond to volatile prices. Did Ivory Coast’s invitation to that party get lost in the mail?

Ivory Coast/Ghana cocoa production

Source: ICCO
Posted by: Information Services
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