18/06/2021 | Ingredients

Ivory Coast sells 950,000 t of cocoa at a discount to offset LID

Ivory Coast sold 950,000 t of cocoa by the end of May at a discount instead of collecting its usual country premium, according to regulators. The Living Income Differential (LID) of USD 400/t had been added to the price from the world’s largest supplier of cocoa, but the country normally is also able to attach a country premium of USD 99/t to USD 212/t to reflect its quality.

As a result of the premium allocated for farmers, known as LID, buyers have been applying pressure for the country premium to be reversed, to become a discount. This would enable the farmers to receive extra cash but at the expense of the overall price paid, making it more globally competitive according to some buyers.

The sales contracts for May appear to show discounts of USD 212/t to USD 283/t, which would cut the governments’ revenue, but still leave the farmers technically with their premium. Buyers have complained that, given the current soft market, they’re finding it hard to pay both the LID and the country premium. Negotiations have been ongoing as the country continued to add cocoa beans to the stockpile as supply continued to outstrip demand caused by global lockdowns from the pandemic.

As of the mid-May period, sales figures were confirmed to be 560,000 t with a further 390,000 t that are subject to the outcome of the price negotiations between the chocolate companies and the Cocoa and Coffee Council (CCC) in Ivory Coast. Therefore, expected sales for next season are 950.000 t, which is considered reasonable under the current conditions.