Interview: Massandjé Touré-Litsé
Can cocoa processing in Côte d’Ivoire be increased?
MASSANDJE TOURÉ-LITSÉ: In 2014, the cocoa processed locally accounted for 35% of the country’s output. By 2023, the government wants 50% of output to be locally processed cocoa products. To reach that aim, competitiveness studies are being conducted – notably in terms of factor cost – to assess Côte d’Ivoire’s attractiveness to investors compared to other countries in the region. Meanwhile, the Investment Code eases doing business for industrial newcomers and grants a number of fiscal advantages like a tax exemption on imported materials. A good sign for increased processing is the French chocolate manufacturer Cémoi’s construction of a new factory in Abidjan, which will come on-line in 2017. There is also a need to empower manufacturers with small-scale production units. The more we add value to our resources, the better it is for the economy; we cannot continue to only be a raw cocoa bean exporter.
How does the minimum farm-gate price encourage farmers to improve cocoa crop yields?
TOURÉ-LITSÉ : There is a direct link between the farm-gate value and the quality of cocoa beans. Before the 2011 reform, authorities suggested a non-binding target price, there was no stable price level and farmers’ cash flow was unpredictable. With the reform, the minimum farm-gate price is mandatory and guarantees farmers will receive 60% of the cost, based on insurance and freight (CIF) price. Farmers now have the time and resources to grow cocoa beans effectively.
When best agricultural practices are applied, cocoa quality increases. Ivorian cocoa commands a premium on the international market; it is not yet as high as Ghanaian cocoa, but this is a step forward. The priority has been ensuring that government revenues from the cocoa sector are well-managed, and now handled with good governance standards. One of the greatest challenges of cocoa production in Côte d’Ivoire is the aging orchard. There is no option but to replace all aging orchard to increase yields and productivity. Financed by government revenues, there are currently three orchard replacement efforts within the Quantité, Qualité et Croissance programme. Orchard replacements are conducted in partnership with the National Agronomic Research Centre, which provides more high-yield varieties. The CCC also works with a number of international partners including Mars, Nestlé and the World Agroforestry Centre to regenerate orchards.
What risks are there in the cocoa futures market?
TOURÉ-LITSÉ : Forward-selling auctions of cocoa are tied to the London cocoa futures market. Every day the CCC puts on the market an undisclosed volume of cocoa and buyers bid on bean quantities they want to purchase. There are risks in such a scheme. In London, the cocoa business is not only about demand and supply, as speculative funds are also on the market. That is why producing countries are price-takers instead of price-makers. The CIF price depends on the international market trends and if prices go down, farmers’ revenues decrease. The market is also exposed to default risk – when buyers bid but fail to enforce and pay their contracts. Nonetheless, a number of guarantees were put in place to address the issue. Besides a deposit from each buyer, a back-up fund of CFA40bn (€60m) was established by the central bank, which helps regulators alleviate risks in case of contract enforcement default.
How can coffee production be improved?
TOURÉ-LITSÉ : Côte d’Ivoire used to be one of the world’s largest coffee producers, but because of price deflation, farmers gave up on the crop. They started to plant palm and rubber plantations instead. To restart coffee plantations, the CCC distributed new crop varieties with a yielding capacity of 3.5 tonnes per ha. By focusing on robusta coffee for North Africa, we expect to produce 200,000 tonnes by 2020, and a farm-gate minimum of CFA620 (€0.93) per kg was established.
Read More from OBG
