The cocoa regulators of the world’s two biggest producers are in talks with the African Development Bank over a $1.2 billion loan which will be used to increase output and mitigate against volatile prices, according to two people familiar with the matter.
Ivory Coast and Ghana want to build storage facilities for local processing and for the hoarding and release of stocks based on market demand, said the people, who asked not to be identified because they’re not authorised to speak about the matter.
The West African neighbours also want to pay farmers who need to replace old and diseased trees in order to boost output, the people said.
The initiative follows after Ivory Coast and Ghana said in May they will work together to derive more value from growing beans after a slump in prices hurt their finances and incomes for hundreds of thousands small-scale farmers. Cocoa futures in London fell last month to near the lowest in four years as a rebound in production is leaving the global market oversupplied.
Mariam Coulibaly Dagnogo, a spokeswoman for Ivory Coast regulator, Le Conseil du Cafe Cacao, didn’t return a call seeking comment. Government spokesman Bruno Kone couldn’t immediately comment when contacted by phone.
Noah Amenyah, a spokesman for Ghana Cocoa Board, declined to comment when contacted by phone. Ghana Finance Minister Ken Ofori-Atta and his deputy, Charles Adu Boahen, didn’t answer calls or respond to text messages.
The African Development Bank’s Ghana country office declined to comment on emailed questions.