Moody's Investors Service have produced a report on Côte d'Ivoire and Ghana, stating that the nations are remaining resilient against credit pressures bought upon by the drastic fall in cocoa price
The report states that 'the price of cocoa futures fell to a low of US$1,889/ton in mid-February 2017, the lowest price in 10 years. The current average cocoa prices reflect a drop of around 30 per cent compared to mid-2016.'
'Such a large drop will place pressures on all stakeholders in the cocoa sector, but particularly on leading global producers Côte d’Ivoire and Ghana via the current account, fiscal and economic channels. That said, we [Moody's] expect support for the cocoa sector from the government, and minimum farm gate prices have protected farmers in Côte d’Ivoire's from the short-term fluctuation in prices, whilst Ghana's burgeoning oil sector will help to offset the impact on its credit profile.'
Moody's state four key findings from their study. First, the recent sharp drop in cocoa prices is significant but it is underpinning historically volatilities. The second is that farmers and producers are more exposed in the supply chain. Third, the credit impact on Côte d’Ivoire and Ghana will be felt via deteriorating current account deficits, fall in government revenue that could inflate budget deficits, and slowing growth via falling household incomes and finally, Credit strengths and government development strategies underpin credit profiles.
The full report can be viewed on Moody's website here.