How is the price of cocoa determined?

The cocoa price is not just an interplay of supply and demand, but is determined by several factors. In a country like Ghana, the government determines the minimum price to be paid to a farmer. Then the value of cocoa is determined on the stock market. In exceptional cases, chocolate manufacturers buy cocoa directly from the farmer. How exactly this works is explained below. 

The price paid for cocoa comes about in different ways. In Ghana, for example, the government determines seasonally what the minimum price is for 1 ton of cocoa beans (1000 kg). Because of the sharp rise in cocoa prices on the New York and London stock exchanges, the Ghanaian government raised the minimum cocoa price. Normally the minimum price is set in September, but this year the price was revised as early as April. From April 5, 2024, a minimum of GHS 33,120 must be paid in Ghana for 1 ton of cocoa beans. This is converted to EUR 2,364. Per 64-kg bag of cocoa beans, this amounts to EUR 151. Broker The cocoa farmers do not trade their beans themselves on the exchange. Often they are affiliated with a local cooperative. 

Buy the cocoa beans from different cooperatives. Depending on how fragmented the trade chain is in a country, there may be as many as 10 traders operating between the cocoa farmer and the exchange. They all need to earn a living from cocoa. Hence, the price paid to the farmer has been under pressure for years and is not sufficient for a livable income. 

• cocoa beans are only purchased from the farmer or local cooperative if the origin is known and the cocoa is grown according to strict environmental requirements; 
• the cocoa price is negotiated with both the farmer and the local cooperative on an equal basis; the cocoa price is far above the price determined on the exchange, because good working and living conditions of the cocoa farmer require a fair price; 
• there is no child labor; 
• the purchase of cocoa beans and the price is fixed for two to three years; 
• and the cocoa farmer is helped to grow cocoa beans in harmony with nature. 

By adopting these principles, Felchlin is mindful of social and environmental issues in the country of origin. In addition, it is important that a cocoa farmer can actually make a living from the proceeds. Whereas Fairtrade certification only looks at a fair price for the cultivation of cocoa beans, Felchlin looks at a living income for the cocoa farmer. A living wage is defined as having enough money to provide a family with all its basic needs. This includes shelter, sufficient food and drink, but also school fees for children and health insurance. In addition, cocoa farmers must also have sufficient means to continue investing in their cocoa plantation. For example, to make it resistant to extreme weather conditions. This is why Felchlin pays 30% to 40% more for the cocoa beans compared to the cocoa price determined on the exchange. And again directly to the cocoa farmers! Only then is there a living income.