The plants are old, the earth is tired, says farmer Kouadio N’Guessan Yves, stamping his foot into the red dirt and running his hand up a gnarled trunk. The rows of cocoa trees stretching towards the sun were planted by the Ivorian’s grandfather or great-grandfather, and no one since then has had the cash to plant new ones.
Down a narrow dusty path, in a tiny village near the town of Daloa, Yves’s neighbours pull apart the yellow cocoa pods and spread the white fleshy beans across tarpaulins by hand. Once the sun has browned and sweetened them, the farmers carry sacks of cocoa down potholed roads to market on rusty motorbikes or on foot. Even four-wheel-drive vehicles struggle with the terrain.
In many such villages in Ivory Coast, which produces 40 per cent of the world’s beans, there is little evidence of a global cocoa bull market that has sent previously subdued prices in London and New York skyrocketing in recent years.
“The global market doesn’t reach the producer,” said Yves. In Daloa, he says, most farmers get the “bocha” price — the rate set by government regulators.
The bocha mechanism, which sets the price for each season in advance and which dates back to the country gaining independence from France in 1960, was designed to protect Ivorian farmers from the volatility of global commodity markets. But the gap between the sky-high prices of recent years and the bocha price has widened sharply, starving farmers of big gains.
Regulated prices are also disrupting the normal self-correcting mechanism within commodity markets, whereby high prices spur greater production. Many producers do not have the cash to reinvest in order to replace ageing trees or buy pesticides or fertiliser. As a result, output in the world’s biggest cocoa producer has stagnated, keeping global prices high, which has meant higher chocolate prices for consumers.
“When prices were at their highest, farmer income [in Ivory Coast] actually went down significantly, not up,” said Jonathan Parkman of broker Marex. As a result, he said, despite high prices, farmers lack the capital to increase inputs and boost production.
Since the start of 2023 cocoa futures in New York and London, which for years had traded in a relatively narrow band, have more than tripled as supply has fallen short of demand. Most of the sector’s problems lie in Ivory Coast and Ghana, which together produce about two-thirds of the world’s cocoa beans.
Swollen shoot virus and black pod disease, a fungal infection that rots cocoa pods, have both swept through plantations. Heatwaves and heavy rainfall, as a result of climate change, have hurt yields by making trees less productive and encouraging the diseases’ spread. Chronic under-investment by cash-strapped smallholder farmers has left ageing plantations vulnerable to both disease and adverse weather.
But the supply crunch has been exacerbated by the two countries’ forward selling policies, say analysts. Instead of linking farm gate prices to prices on global markets, Ivorian and Ghanaian regulators — the Conseil du Café-Cacao (CCC) in Abidjan and Cocobod in Accra — set a fixed price at the start of each growing season. That is based on forward contracts struck with exporters months in advance. Farmers say they have no input in to the process.
In 2022 and 2023, both countries’ regulators were warned by trading houses and processors that there was a problem with swollen shoot but “completely ignored [these warnings] and just went ahead as if nothing had changed”, said Parkman.
As a result, Ivory Coast and Ghana oversold by hundreds of thousands of tonnes. Export companies were left struggling to fulfil obligations based on production that never materialised, pushing up global prices.
“The reason farmers in the Ivory Coast are getting 25 per cent of what every other cocoa farmer in the world is getting is because their government screwed up its forward selling policy,” said Parkman.
With contracts locked in far below spot prices, farmers have lost out.
“Today, the cost of production is higher than the price of cocoa, at least in our area,” said Yves. “To produce one kilogramme of cocoa, we have to spend 1,250 CFA francs [$2.21, or $2,021 per tonne]. So with the national price, once you subtract the production costs, there’s practically nothing left.”
Unable to pay for his children to go to school, a few years ago Yves started selling to the Kapatchiva co-operative. Kapatchiva works with Tony’s Chocolonely, a Dutch chocolate company that pays a premium above the farm gate price, using a so-called Living Income Reference Price model designed to cover basic household costs and farm inputs. In addition to the price premium, farmers in the programme receive support with composting and pest control. However, demand from Tony’s is not enough to offer such deals to all of the country’s more than 1.2mn cocoa farmers.
Such initiatives remain the exception, said Raphaël Felenbok, a cocoa supply chain expert. The large majority of Ivorian farms still yield less than 500kg per hectare and farmers live well below the World Bank’s extreme poverty threshold of $3 per day, he added.
In general, incomes at the farm level remain too low to support replanting or investment in fertilisers and pesticides, he added. The result is a deepening cycle of ageing trees, underused inputs and flat yields, precisely when the global market needs more cocoa, not less.
The CCC, the Ivorian regulator, says that about 60 per cent of export revenues reach farmers. The remainder, it says, is used to finance road-building, as well as inputs — for instance, fertilisers or pesticides — and general support for the sector. But several farmers said they rarely see these benefits on the ground. Fertilisers arrive late or not at all, while pesticides are often unavailable. As a result, productivity has barely improved in decades.
Antonie Fountain, managing director of Voice, which calls for reform of the cocoa industry, points to how unevenly revenues are distributed.
“I think there’s a lot of accountability lacking as well with the Ivorian government. So where are you spending the money?” he said.
The 60 per cent figure is a “terrible percentage”, said Parkman, adding that not all the remainder is spent in the supply chain. “Where does the balance go?”
The CCC and Ivory Coast’s agriculture ministry did not respond to requests for comment.
While Ivorian farmers struggle and production falters, growers in other parts of the world are cashing in on the price surge, Parkman said. The problem for the chocolate industry, hammered by high cocoa prices, is that unlike annual crops such as soyabeans, which can respond quickly to price signals, cocoa trees take years to mature.
“You only go over the borders in any direction other than Ghana, and you’ll find a lot of very happy cocoa farmers,” said Parkman.
For the global chocolate industry, which relies on Ivory Coast for nearly half its cocoa, this means the pain of higher prices will be prolonged. Ivorian producers, meanwhile, risk losing their market share.
“The writing’s been on the wall for the cocoa market for a long time,” said Parkman. “There’s been a way too high a concentration of cocoa production in one geographical area, which makes it risky when it comes to the weather and politics.
“If you want to invest in a country to grow cocoa at the moment, process cocoa at the moment, the bottom of your list is Ivory Coast and Ghana, because of the way they’ve behaved over the last few years. Bottom of the list.”