Ghana and Cote d’Ivoire to create buffer stock to mitigate fluctuations in global cocoa prices
(Ecofin Agency) - To mitigate fluctuations in global prices of cocoa, Ghana and Cote d’Ivoire plan to, together, create a buffer stock. This was told Reuters by Narcisse Sepy Yessoh, chief of staff to the Ivorian trade minister.
“The countries agreed that we needed specialised warehouses to allow us to conserve cocoa so that we can regulate supply and push up prices,” said the official highlighting that Cote d’Ivoire will for its part install six warehouses having a total capacity of 250,000 tons.
Also, Yessoh said the two nations have since last May submitted to AfDB a request for a $1.2 billion loan which they will use to finance the infrastructures. According to him, they expect a positive feedback by the end of the year and will begin storing the beans in 2018/19.
Let’s recall that the creation of a buffer stock had been planned under the first International Cocoa Agreement signed in 1973 (effective the same year) and which aimed to stabilize global prices within a set range.
However the clause was removed under the fifth International Cocoa Agreement which took effect in February 1994. Truly, it could not be effective during the implementation periods of the first (1973-1976) and second (1976-1980) agreements, as actual prices at the times did not fit the initially fixed range.
According to ICCO’s recent forecasts, oversupply by the two leading producers will cause an 18.1% surge in global output (4.7 million tons) and a surplus of 371,000 tons of cocoa in 2016/17.