Ivory Coast set to raise farmer price on successful cocoa auctions

Cocoa plantation

Top cocoa producer Ivory Coast is aiming to increase its guaranteed farmer price next season after it sold forward over 1.05 million tonnes of its 2014/15 crop, a source at the West African nation's finance ministry said.
The government abandoned a decade of sector liberalisation at the start of the 2012/13 season and began auctioning its anticipated crop in order to guarantee a minimum price for farmers.
That price was fixed at 750 CFA francs ($1.57) per kg at the start of the country's main crop harvest in October and was maintained into the April-to-September mid-crop.
"As of the end of April, we're already at over 1.05 million tonnes of export contracts sold for next season," the source told Reuters, asking not to be named.
Ivory Coast had finished selling its 2013/14 cocoa crop by early January, auctioning off more than 1.45 million tonnes of beans, taking advantage of world cocoa prices that rose 20 percent last year on fears of a global supply deficit.
Forward sales for the 2014/15 season were already at 780,000 tonnes at that point. [ID:nL5N0L21GE]
"The volumes sold are in line with our projections and that allows us to be 90 percent sure that we will fix the farmer price above 800 CFA francs per kg," he said.
A high farmer price for next season's Ivorian crop is likely to pile pressure on neighbouring Ghana, the world's number two cocoa producer, where a steep drop in the value of the local currency has spurred smuggling of beans into Ivory Coast.
As much as 100,000 tonnes of Ghanaian cocoa have been trafficked into Ivory Coast so far this season, according to exporters, traders and analysts, and the situation could worsen if the price gap between the two countries widens further.
The finance ministry official said annual production was set to increase from the last decade's average of 1.4 million tonnes. This was despite fears of a long-term decline in Ivorian cocoa output due to a drop in yields on the country's ageing plantations.
"According to the studies we've done, our production will increase and that will expand the (financial) resources that we get from the sector," the finance ministry source said.
"We think production could be above 1.5 million tonnes in two to three years once the new plantations mature," he added.