Following the entry into force of the first export contracts incorporating a « subsistence income differential (SIR) », the two national cocoa sector regulators announced on Wednesday 20 September their intention to cap production in parallel in order to support world prices.
Many cocoa traders believe that the DRS, by providing financial incentives to farmers, could cause surplus production and therefore lower world prices. It is to avoid this black scenario that the Ivorian-Ghanaian authorities wish to set a maximum production threshold. In fact, as reported in our columns, the idea of limiting cocoa production had already been raised in July by the Coffee-Cocoa Council (CCC), the Ivorian regulatory body for the sector, when it presented the World Bank’s latest report on the Ivorian economic situation (« In Cocoa Country – How to Transform Côte d’Ivoire »).
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Joseph Boahen Aidoo, Director of the Ghana Cocoa Board (Cocobod), attended the European Cocoa Forum in Lisbon, Portugal, from 17 to 19 September, confirming « the establishment of a mechanism to set production caps ». However, he did not specify the maximum level of production envisaged, essentially indicating that « Parliament must first approve it ». A legislative endorsement that should nevertheless, according to Yves Brahima Koné, Director General of the CCC, be easy to obtain. « According to the figures they provided us, we expect them to agree, » the leader predicted.