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ABIDJAN/LONDON, Oct 25 (Reuters) - The Cocoa Coffee Council (CCC) has signed a block deal with food group Olam for the sale of 100,000 tonnes of cocoa export contracts for the 2020/21 season that includes a premium to support farmers, sources at CCC told Reuters on Friday.
Ivory Coast and Ghana announced in July that all cocoa purchases for the 2020/21 season must include a Living Income Differential (LID) of $400 a tonne in a bid to tackle pervasive farmer poverty.
The move was a major overhaul of how global cocoa was priced and buyers initially responded cautiously, with only a few deals concluded in the period immediately following the announcement.
Last week, in a joint statement, the two countries threatened to end cocoa industry certification and sustainability programmes in their countries if purchasers did not start buying LID contracts.
The threat was lifted after a meeting in Berlin on Tuesday attended by both chocolate makers and representatives from the West African neighbours.
“I can confirm that we signed a block deal of 100,000 tonnes of cocoa export contract including the LID with Olam last week before the Berlin meeting,” a source at CCC said.
Singapore-based Olam is the second largest cocoa buyer and exporter in Ivory Coast behind Cargill with purchases estimated at 250,000 tonnes.
It also has processing plants in Abidjan and San Pedro, in the country’s south-west, with capacity of 86,000 tonnes and 75,000 tonnes respectively.
The company confirmed it had purchased cocoa, although it declined to specify the exact tonnage or timing.
“We share the belief of the governments of Ghana and Cote d’Ivoire that raising incomes and living standards for cocoa farmers is vitally important,” Manoj Vashista, global head of Olam’s cocoa beans business, said.
“We can confirm that we have some time ago purchased significant quantities of cocoa from both Ghana and Ivory Coast for the 2020/21 season.”
Another source at the CCC, who confirmed the sale of the 100,000 tonnes of contracts with Olam, added that negotiations were underway to sign other block deals with members of the “big five” cocoa buyers and exporters, Cargill, Sucden, Barry Callebaut and Touton.
“The goal for us is to reach between 700,000 and 800,000 tonnes of sales at least before the end of this year,” the source said.
Ivory Coast must sell between 1.8 million and 2 million tonnes of export contracts including the LID before September 2020 to set a guaranteed price for cocoa farmers for the 2020/21 season.
Before Ghana and Ivory Coast said it would re-examine company sustainability schemes, only about 150,000 tonnes of export contracts including the LID had been sold.
“We need to go quickly by signing sales very quickly,” a CCC source added.
Ivory Coast is the world’s largest cocoa exporter with annual production of about 2.2 million tonnes. Ivory Coast and Ghana together represent about 60% of the world cocoa supply. (Reporting by Ange Aboa and Nigel Hunt; Editing by David Evans and Jan Harvey)
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