The world’s largest producer of Cocoa, Ivory coast has switched from selling its cocoa through auction to selling directly to the world’s top traders through a system that was already being used by its neighbouring country Ghana. This was made known to Reuters by two senior sources at the country’s Coffee and Cocoa Council (CCC).
“After a meeting with the Cocobod board in December in Abidjan, we’ve decided to merge our sales systems, favouring the Ghana one that seems more fit to market fluctuations,” a CCC source told Reuters.
According to the sources, the CCC in Ivory Coast and Ghana’s Cocobod agreed to harmonise the sales system used in the world’s top two cocoa growers, in a bid to exert more influence on international prices, which have stayed low in recent years due to overproduction.
Previously, Ivory Coast’s CCC had been selling to exporters through a system of auctions on its platform twice a day and this practice introduced since 2012 is gradually being abandoned. In the first week of February, Ivory Coast sold 400,000 tonnes using the new system. In Ghana, the crop is traded in direct sales to exporters, depending on the international price. The news also comes just six years after Ivory Coast reformed its cocoa sector, creating the auctions. However, the system has been marred by local companies purchasing and later defaulting.
Ivory Coast, the world’s top cocoa grower, produced 2 million tonnes last season and expects to produce about 2.2 million tonnes this season, a level that would be an all-time record high.
According to Bloomberg, while the shift toward direct sales has raised concerns about reduced market transparency, it may also help avoid default by exporters, a situation that plagued the market and caused a cocoa crisis in 2016/2017, when prices tumbled about 40 percent.