Author: Michael

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FLO Increases Cocoa Floor Price and Social Premium

Here’s a bit of welcome news. For the first time since 1997, the Fairtrade Labelling Organization (FLO) has increased the minimum fairtrade price for cocoa. Starting January 1, 2011, the minimum price will be $2,000/ton up from $1,600/ton. The social premium will also increase from $150/ton to $200/ton.

FLO is the global umbrella organization for all national fairtrade certifiers. It sets the fairtrade standards for the wide variety of goods now available on fairtrade terms. The increase in cocoa prices is long overdue as input costs of farmers have increased over the past thirteen years.

On a practical level, the increase of the minimum price won’t have any input as the market price continues to hover around $3,000/ton. But the increase in the social premium will have an immediate impact as cocoa farmer cooperatives will receive the social premium irrespective of the world market price.

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Twin Trading is 25 Years Old

Twin Trading is not well known in the U.S., but it should be. Since 1985,  it has done more than any  agency to make fair trade real for ordinary farmers around the world. Starting with importing the first fair trade coffee to the UK to creating CafeDirect to helping found Kuapa Kokoo to launching Divine Chocolate, it has been a powerful force in support of fairtrade world wide. Check out this nice tribute on the Divine Chocolate Blog.

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Ghana Increases Producer Prices

With the new cocoa season underway, Ghana’s Cocoa Board (COCOBOD) announced a 33 percent increase in farm gate prices. The new price of GH¢200 per bag lifts the per ton price to GH¢3,200 ($2,238) from last year’s GH2,400. The new prices recognizes the increases in the world market price over the past year.

More importantly, however, it recognizes the prevalence of smuggling which has cut into Ghana’s exports. With some estimates as high as 100,000 tons smuggled to the Côte d’Ivoire last year alone, stopping this outflow has become a top priority of the COCOBOD. Last year’s harvest amounted to 632,024 tons, 10 percent below the 700,000 tons of the 2008/2009 cocoa year.

COCOBOD seems hopeful that the price increase will lift this years total exports above the 700,000 ton level.

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Uganda Aims to Expand Cocoa Production

More and more countries situated in the magic band of 20 degrees north and south of the equator are giving cocoa another look. The high prices of the moment are probably an important factor.

Uganda is not a name usually associated with cocoa. But the country has been busy expanding its cocoa acreage over the past eight years. According to Bloomberg, the state-run Cocoa Development Project expects next year’s harvest to increase by 13 percent. The expansion of cocoa is an attempt to diversify its agricultural exports that currently depend mostly on coffee and tea. These commodities contribute 22% to the GDP.

The total is still a miniscule 17,000 tons. But the trend is upward and the country expects to reach 50,000 tons by 2015/16. By comparison, the Côte d’Ivoire exported 1.2 million tons last season.