Major cocoa buyers have agreed to pay a premium and back a price floor on cocoa sold by Ivory Coast and Ghana as part of an agreement reached on Friday to combat poverty among farmers.
Cocoa industry players will back a fixed “living income differential” (LID) of $400 a tonne on all cocoa contracts sold by Ivory Coast or Ghana, two top global cocoa producers.
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Buyers will also pay a country premium that will enable cocoa regulators in both countries to reach a target floor price of $2,600 per tonne which should allow farmers to earn a minimum of 70% of the target floor price.
Signatories include Hershey (HSY.N), Mars, Blommer Chocolate, Nestle (NESN.S), Sucden, Mondelez (MDLZ.O), Touton, Barry Callebaut (BARN.S), Cargill, Ferrero, Olam and Ecom Trading.
Both countries have struggled to achieve that price target, prompting the Cote d’Ivoire-Ghana Cocoa Initiative (CIGCI) to work with the industry on a price mechanism.
