With Cocoa Reforms, Ivory Coast Is Nearing Relief From Debt

Ivory-Coast-Cocoa

By ‘Fisayo Soyombo
VENTURES AFRICA — Ivory Coast‘s revamp of its cocoa sector, which began in November last year, is attracting plaudits from its international partners who are weighing up the deservedness of granting debt relief to the West African country.

 

The world’s leading producer of cocoa, the major ingredient in chocolate, Ivory Coast instituted the reform in order to raise farmgate prices, and in turn encourage growers to boost output and make investments in their abandoned plantations.

 

Under the programme, authorities have been holding auctions twice daily to sell the bulk of the 2012/13 season’s crop before it actually starts in October. The auctions will be used to determine the standard price for the season, and will require that farmers get at least 50 percent of that price for the duration of the season.

 

Buyers and exporters had initially distanced themselves from the arrangement, accusing authorities of underestimating the real cost of bringing cocoa to port. They also had little faith in the scale for reimbursing handling costs, fearing it could heap losses on them.

 

But government officials now say that the auctions are going on and the broader reform process is alive again, as government intends to address all concerns of exporters.

 

“We are satisfied with how the auctions are now moving forward,” Emmanuel Ahoutou, principal private secretary to Finance Minister, Charles Koffi Diby said. “Everyone is participating in them now. It’s working well and without problem.”

 

Although the International Monetary Fund (IMF) is yet to officially review progress reports prior to the taking of a final decision, it has declared that a deal would likely be done by the end of June, a move that analysts consider a tacit expression of confidence in ongoing works.

 

“The things that we identified as essential for the first six months have more or less been done. Setting up the new structures, putting the legal framework in place, and starting auctions: all of that is happening,” IMF Resident Representative, Wayne Camard said.

 

Tedd George, head of agricultural research at Ecobank believes that concluding the debt deals is years behind schedule, and that the IMF and the World Bank are under enormous pressure to get them out of the door.

 

“I don’t think they are looking at the fine print. Right now (buyers and exporters) are engaged because they have little other option. But they are also negotiating hard behind the scenes to protect their interests,” he added.

 

Farmers in the country have said they would be happy if the succeeds in providing them with prices between 800 and 1,000 CFA/kg.

 

Ivory Coast is the largest cocoa grower in the world, its biggest exporters being units of ADM, Cargill, Barry Callebault and Armajaro. It produced a record 1.5 million tonnes last season despite the civil war that crushed exports for many months.