Ivory Coast – Souleymane Diarrassouba: “We cannot sit back and suffer the market”
Ivory Coast – Souleymane Diarrassouba: “We cannot sit back and suffer the market”
With 47% of world production, Côte d’Ivoire is comfortably seated in the driver’s seat of the global cocoa market. Each of its declarations, its initiatives, each climatic, social or political event is felt on the market. Yet, it believes that it does not have a hold on the market. A situation that Abidjan intends to change.
For the second consecutive season, Côte d’Ivoire is heading towards a record harvest of around 2 million tonnes (Mt), becoming more than ever the world leader on the cocoa scene. But as the fate goes on commodity markets, the weight of Ivorian cocoa is such on the world supply that this success, as a corollary, contributes to the fall in world prices, even if they have recovered since the end of January. A fall that impacts both the Ivorian producer and public finances at a time when Ivory Coast is undergoing deep economic changes requiring much investments.
So what can Côte d’Ivoire do ? According to some, it would aim for a production that goes down and stabilizes around 1.8-1.9 Mt. Over the last 10 years, it has increased from 1.6 Mt to more than 2 Mt in 2016/17; it is expected by the Coffee and Cocoa Council (CCC) to be at 1.9 Mt this 2017/18 campaign.
That said, the Minister of Agriculture Mamadou Sangafowa Coulibaly, interviewed by CommodAfrica (read his interview), denies having quantified objectives. «Over the next 5 years, it is all about producing but producing better. We do not dare to give volume targets, our objectives will always take into account the international demand for cocoa.» But he clarifies, «Our production will stay in the trend it has experienced in the last 5 years, but it will be reduced because of the vast programs we are conducting.»
A short-term automatic impact
These programs include, first of all, the eviction of cocoa farmers who illegally cultivate in some 200 national parks and protected forests in Côte d’Ivoire. This would represent about 7,000 producers and, according to some estimates, up to 30 or even 40% of the national production. A challenge of size. «In five years’ time, we will have to remove all the producers who are in the classified forests in order to have a more intensive and environmentally friendly production. We now think that cocoa production can be associated with the forest. We are going onto agroforestry programs.»
@La Mandarine, Bertrand Boissimon
In January, Côte d’Ivoire launched its Cocoa-Forest Initiative, part of ‘Zero Deforestation’ program, an option of the REDD (Reducing Emissions from Deforestation and Degradation) strategy adopted by Côte d’Ivoire in November 2017. As early as 2015, the CCC had launched a roadmap entitled «Cocoa, friend of the forest» which was included in its guidance note policy for COP 21 in Paris. The Cocoa-Forest Action Plan was adopted in 2017 by Abidjan and presented in Berlin in November at the 23rd Conference of the Parties on Climate Change.
Another measure that impacts production is the announcement made by Côte d’Ivoire in January 2018 to move up a gear in its fight against the disease «swollen-shoot» ; it launched the program of intensifying the uprooting of orchards infected by the swollen disease shoot. The disease has been present in Côte d’Ivoire since 1943 with a rise in its most virulent forms in 2003. Hence the launch of programs to fight against this disease of cocoa: from 2008 to June 2017, 17 885 ha of infected cocoa trees were destroyed and 5,487 ha already replanted. The new program aims to uproot 100,000 ha (from a national cocoa area of around 2 million hectares) of cocoa affected by the disease over the next three years, which would amount to 150,000 t of cocoa. However, the program plans to replant the cocoa equivalent, with the objective of substituting healthy plants for diseased plants. Therefore, in the long term, after a normal period of reduced grubbing production, the volumes would return to the same or higher levels with younger and possibly improved seedlings.
Another measure that will undoubtedly impact the volumes in the next campaign is the announcement in March by the CCC to ask the major chocolate manufacturers established in Côte d’Ivoire such as Nestlé, Mars and others, to stop distributing highyielding seeds and high quality hybrid cocoa plants, at least for a time. During this break, the CCC should conduct a census of cocoa (and coffee) orchards in Côte d’Ivoire.
The planter on the front line
As a backdrop to all this, the planter saw its guaranteed price go from FCFA 1,100 per kilogram in September 2016 to FCFA 700 from April 1, 2017, at the start of the mid-crop. The 700 francs was the price confirmed for the entire 2017/18 campaign, main and mid-crop. The objective is, of course, to be more in tune with world prices plummeting by more than 30% in 18 months – even if they have resumed since the end of January 2018. But the indirect consequence is to demotivate planters and especially young people who might be interested in the sector. De facto, this could therefore reduce production, as farmers can turn to other more lucrative crops such as cashew, rubber or even food products.
When the fixed guaranteed price in Côte d’Ivoire falls, usually cocoa farmers in the East of the country sell, fraudulently, their beans in Ghana, when the price is higher, which has been teh case since the start of April 2017. But this option will no longer be possible or at least should be more difficult in the future as the the Heads of State of Côte d’Ivoire and Ghana signed in March the Abidjan Declaration with the aim of getting closer and, in particular, to «harmonize their marketing systems so as to offer prices. roughly the same as the producers in both countries,» explains Minister Sangafowa Coulibaly. «Ideally, we should be in line so that the Ivorian producer will have about the same price as the Ghanaian, all of which, of course, is connected to the market». The objective for Côte d’Ivoire is for the planter to get at least 60% of the world price.
@La Mandarine, Bertrand Boissimon
Processing, storage, consumption
Beyond this, the long-term objective is to raise local processing to 50% of national production by 2020 and, ultimately, consumption.
«We are now focusing on transformation. We call on all investors and very often, you now have investors who are not necessarily European and who are interested in processing cocoa locally and exporting the products. semi-processed -masse, butter, cakes, liqueur- in their countries […] On-site processors are also encouraged to make full use of their installed capacity. Côte d’Ivoire produces 2 Mt so the goal is to reach in 2020 at least 900,000 t,» Trade Minister Souleymane Diarrassouba told CommodAfrica at the World Cocoa Conference in Berlin at the end of April. He then «greeted the AfDB and the World Bank, who are supporting us to build infrastructure that will allow us to transform but also store cocoa. The idea is not to have a buffer stock, but to have certain elements so that our production or our interventions are not neutral at the level of the determination of international prices.»
And why not tax raw beans exports ? The Minister of Agriculture Sangafwa Coulibaly is considering the matter. «You do not have to tax those who process locally, and in cocoa, the more you process, the less you pay taxes. But we need to tax the products that are exported raw. But if we tax them, the price to the producer is no longer the same as when the raw material is not taxed, which is why we said that, with Ghana, we need to harmonize our tax policies to encourage the processing of our products.» Note that in July 2016, taxes on cocoa butter had been lowered from 14.6% to 11%, from 14.6% to 13.2% for mass and from 14.6% to 9.6% for powder.
The focus is also put on diversifying cocoa farms. «I think it’s up to us to diversify our sources of income and our markets for the sale of our products,» says the Minister of Commerce. «We need to start promoting consumption at the level of our countries and regions and we need to go to other countries, especially emerging countries where we can sell cocoa, and we must explore the possibility of having direct sales. Because today we go through traders and we are less in direct contact with the the final buyer which is the industry.»
