Ivory Coast and Ghana, the world's top cocoa producers, plan to create a buffer stock of beans with the aim of exerting more influence over world prices, a senior Ivorian government official told Reuters on Thursday.
The two West African neighbors produce over 60 percent of the global supply of the chocolate ingredient but have been hit hard by a sharp drop in world prices caused mainly by a glut resulting from bumper crops this season.
The International Cocoa Organization (ICCO) forecasts a global surplus of 371,000 tons this season.
"The countries agreed that we needed specialized warehouses to allow us to conserve cocoa so that we can regulate supply and push up prices," Narcisse Sepy Yessoh, chief of staff to Ivory Coast Trade Minister Souleymane Diarrassouba, told Reuters.
He said the two governments submitted a request in May to the Abidjan-based African Development Bank for a $1.2 billion loan to pay for the infrastructure. They hope the financing will be approved before the end of this year to allow for stocking in the 2018/19 season, he added.
Under the plan, Ivory Coast will build six warehouses with total capacity of 250,000 tons near to the main growing areas. Yessoh declined to comment on the infrastructure planned for Ghana.
Ivory Coast is on track to produce a record 2 million tons of cocoa this year, but Yessoh said the government planned to limit output going forward and focus its efforts on improving quality.
"Must we continue on this path, flooding the market with beans in abundance and driving down prices to the detriment of our economies and people? We don't think so," he said on the sidelines of an ICCO meeting.
The two nations, along with Africa's third-largest producer Cameroon, said on Thursday they would seek to modify the International Cocoa Agreement, the founding document of the ICCO — the world body of producer and consumer countries.
The ICCO's Executive Director Jean-Marc Anga said the body would open talks between the producers and the European Union in partnership with the cocoa and chocolate industry to reach a deal on a revised agreement.
The declaration made by the three nations at the ICCO meeting did not offer details. But Yessoh said the countries would seek to reinstate a clause creating a buffer stock that was included in the original agreement signed in 1973 but later removed.
"How much are we going to stock? These are quotas to be defined between producer countries. These questions are still with the politicians. We're waiting for them to decide," he said.