Ghana and Ivory Coast, the world’s two largest producers of cocoa have reversed the earlier decision to sell cocoa beans at origin differentials below zero.
The origin differentials was previously set at minus 125 pounds per ton of cocoa beans for Ivory Coast and minus 50 pounds per tonne of cocoa beans for Ghana on the ICE cocoa futures market.
The origin differential is an additional country quality premium that has traditionally been determined by the market.
It is a key factor in determining cocoa prices and together with the Living Income Differential (LID), as well as the Intercontinental Exchange Europe Price (the London Futures market for cocoa), guarantees a higher price for farmers in the world’s top cocoa producers.
Making the disclosure during the joint Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI) meeting in Accra, CIGCI Executive Secretary Alex Assanvo, averred the new levels of origin differentials are a minimum of zero pounds per tonne for Côte d’Ivoire and 20 pounds per tonne for Ghana.
“The issue came up during a recent meeting with industry, where our member countries expressed the fact that the quality of their cocoa hadn’t diminished and that they therefore shouldn’t have to settle for discounts on this matter. We will therefore no longer accept cocoa sold below this level as we head into positive territory,” he said.
The CIGCI started publishing the origin differentials at the end of May 2022 to have more transparency in the sector, after establishing that the effects of the LID were being eroded due to the discount chocolate makers and cocoa merchants were getting on the origin differential.
The CIGCI-published origin differential is indicative, and the minimum amount cocoa will be sold at.
“The issue came up during a recent meeting with industry, where our member countries expressed the fact that the quality of their cocoa hadn’t diminished and that they therefore shouldn’t have to settle for discounts on this matter,” said Alex Assanvo, CIGCI Executive Secretary. “We will therefore no longer accept cocoa sold below this level as we head into positive territory,” he said.
In June, the origin differential was set at minus 125 pounds per tonne in Côte d’Ivoire and minus 50 pounds per tonne in Ghana for July.
