Cote d'Ivoire: Cocoa Reform Still Not Achieved

In guaranteeing a price floor to cocoa planters, Cote d'Ivoire proved its capacity to better distribute the wealth of the network.  But the yields are decreasing and the local transformation is reaching its limit.

En garantissant un prix plancher aux planteurs de cacao, la Côte d'Ivoire a prouvé sa capacité à mieux répartir les richesses de la filière. Mais les rendements diminuent et la transformation locale plafonne.

This article has been translated from French. Click here to read the original version on Jeune Afrique.

On Wednesday, October 2, Lambert Kouassi Konan, president of the Coffee-Cocoa Council (CCC) of Cote d'Ivoire, officially launched the new harvest.  By truck, but also through the help of mopeds, bikes, and sometimes even simple wheelbarrows, nearly 1.4 million tons of cocoa beans will be filtered through the factories and ports of the country by June 2014.  Cote d'Ivoire alone will put about 36% of the global harvest of cocoa beans on the market.

But after twenty years of progression, the production of the global leader of cocoa beans should have reached a new level.  The aging of the fields and the increasing scarcity of available land leaves hardly any optimists among agriculturalists.  Suffice to say that the state's reform plan since October 2012 to maintain this level of production and to assure the sustainable development of the industry is a posing major challenges.  Cocoa remains one of the principle contributors of PIB (14%) and fiscal revenues (16.3%) of the country.

The winners of the reform

For the second consecutive year, the 800,000 local planters are the true winners of the reform.  Less submissive to the laws of the market, they receive at least 60% of the CAF price (cost, insurance, and freight) – as compared to less than 50% on average between 2003 and 2011.  Edward George, director of the research on the first agricultural materials at Ecobank, posits that the attention given to the producers is legitimate.  "They had been sacrificed to the profit of the exporters, to the point that many abandoned the cocoa culture," he said regretfully.

Their share had been fixed at 750 F CFA (1.14 euros) per kilo just up to the end of the major campaign in January (compared to 725 F CFA last year).  This is slightly higher than the rate set by the CCC on the basis that the sale to bidders was anticipated to be 70% of the harvest.

Two and a half years after the post-electoral crisis, the national cohesion remains the priority of the leaders of Cote d'Ivoire.  "The social dimension of the cocoa sector is so important that decisions are more responsive to political and economic concerns," confirms an operator.

Consequently, so that the buyers achieve an acceptable margin, the state will have to give up 40 billion F CFA in fiscal revenues, and still support them – at the most around 10 billion F CFA – by dipping into reserve funds.  Since the 2012-2013 campaign, the government had to cut back on their revenue share, bringing its debit down from 22% to 18% in order to assure the sector's profitability.

Better quality

The other notable impact of the reorganization of the sector is the quality of the beans brought to the factories.  "Before, no one respected the time it took for the beans to ferment and dry, because the customers wanted to obtain the cocoa quickly," explains Mamadou Bamba, director of the cooperative Ecookim.  From now on, the anticipated sale of the majority of the harvest limits the rush of the exporters and allows the planters to perfect their products.  At the same time, the Council educated about 180,000 producers and mandated that the humidity level of the cocoa that is ready to be sold does not surpass 9%, compared to the previous 12%.  "Even if there is more progress to make, we hope to achieve the same quality as Ghana [often used as a reference] within two or three years," assures Mamadou Bamba.

Productivity

Even with all of the improvements to the industry, the cocoa situation is far from being entirely satisfactory.  The first worry: the state of the cocoa fields in Cote d'Ivoire, close to 3.3 million hectares, is 10% of the national territory.  The land sustains on average about 25 years old and its productivity – 450 kg per hectare – is lower than half of the best yields (one ton per hectare).  Additionally, cultivated land will soon diminish due to the decision to expel the planters who illegally live in the forests and the worrisome spread of swollen shoot, a viral disease that destroys the plants.

Conscious of the stakes at hand, the CCC invested 6.83 billion F CFA in 2012-2013 to distribute plant sanitation products and new varieties of the plant – Mercedes cocoa – developed by the National Center of Agricultural Research (CNRA), whose interest is to produce the first boom in 18 months, as opposed to the prediction of five years.  One insufficient effort was observed by the planters.  "Our members cultivate 24,000 hectares, but we haven't received the necessary materials," laments Mamadou Bamba.

"The materials mobilized for the renewal of the industry are not sufficient to meet the expressed needs," recognizes Djibril Fadiga, general director of the CCC.  "We envision the creation of a direct subsidy on the price of material input sales in order to allow more planters to acquire them."  However, the regeneration of the cocoa fields, abandoned for a decade, will take from five to ten years – at best.

Competitiveness

The second drawback of the reform is the underestimation of the transport fees between the field and the factory as defined by the CCC, who reduces the profit margin of the technicians.  Consequently, many business and trade societies, such as the British Armajaro, decided to boycott Ivorian cocoa this year.

But this is worse for the national economy: this shortfall could have a disastrous impact on local industry.  "We are encountering a problem of competitiveness.  For two years, my accounts have been negative," confirms a factory owner.

This could create an obstacle against the goal of transforming 50% of the local harvest (compared to about 30% today).   The bankruptcy of Ivorian entrepreneurs results in the de facto strengthening of a coalition of multinational corporations – Cargill, Barry Callebaut, Cemoi, Touton, and soon Olam International – who are already largely in control of about 80% of the crops through their milling operations and exports.  "As the reform continues, these questions are heavily debated," responds Djibril Fadiga.

As the first global producer of cocoa, Cote d'Ivoire also intends to have more influence on international trade.  To reach this objective, Abidjan engaged in a common policy with its Ghanaian neighbor, the number two world producer.  "Theoretically, this should be easier than for the twelve countries of OPEP [the Organization of petrol-exporting countries, who represented 42% of the global production of crude oil in 2011].  With the two of us [Cote d'Ivoire and Ghana], we would control about 60% of the global production," explains Djibril Fadiga.  The last meeting had been canceled due to the death of the Ghanaian president John Atta Mills.  The next round of negotiations is set for November in Accra.  Even before the end of its reform, the cocoa of Cote d'Ivoire is already preparing for a revolution.

Article translated by Allie Stauss, Staff Intern for the Program on Leadership and Building State Capacity at the Wilson Center.

Photo attributed to Nestle via Flickr Commons.