On protecting farmer revenues and greenfield investments
How have producers been affected by the financial difficulties that face exporters?
YVES BRAHIMA KONÉ: Producer exports depend mainly on the international market, while the financing difficulties encountered by certain local exporters with banks are merely the consequence of governance, or lack thereof. Banks are entitled to require guarantees from exporters. Only exporters with the resources to purchase cocoa beans can offer these guarantees, and supply and demand is well balanced. I do not think that the evolution of the relationship between banks and exporters has an effect on producers. When the price offered on international commodities markets does not reward the work of planters, the government makes efforts to find a solution.
In October 2018 the joint action of the government and CCC led to an increase in minimum farm gate cocoa prices. Côte d’Ivoire’s authorities would have wishes for a larger increase, but the international market conditions would not allow it. We are not content with this increase and we are looking for ways to ensure that farmers are encouraged to produce higher-quality cocoa. In this regard, Côte d’Ivoire and Ghana are putting into place cooperation mechanisms on the storage, processing, marketing and promotion of the regional and domestic consumption of cocoa. The main objective of this cooperation is to improve the income of our producers.
What agricultural initiatives are currently under way to drive modernisation in the sector?
KONE: The bodies in charge of the supervision of the rural landscape have always promoted agricultural modernisation as a means to improve the sector’s competitiveness. Cocoa production has traditionally been dominated by small family-based organisations. Given intensity of resources allocated to cocoa harvesting and its importance for the country’s economy, the CCC strives to modernise all of the value chain’s segments. At the production level, irrigation and harvesting techniques are improved using new tools. Specifically, the council has provided producers’ cooperatives with the tools to improve the productivity of écabossage (breaking the cocoa pods to extract beans). In addition to increasing productivity levels, this also contributes to an improvement in the quality of the beans harvested. The modernisation of agriculture is not only aimed at the farm level, but also at transport and distribution. The transport of cocoa bean bags or funds that are related to the cocoa trade is subject to a security problem. For this reason, the council is pushing to develop the use of electronic payment systems within the cocoa segment.
Describe some of the economic implications involved in local cocoa processing?
KONE: The government has set the goal of locally transforming 50% of Côte d’Ivoire’s cocoa production by 2020. Côte d’Ivoire is currently highly exposed to international raw material price fluctuations and speculation. Our export bargaining power is affected by the fact that beans do not keep well and must be processed and sold quickly. Considering speculation is less intense on semi-finished products than beans and that semi-finished products can be kept longer than raw products, we believe that local transformation will enable us to protect the sector from international commodity price fluctuations.
At the same time, local transformation is a challenge that is aligned with the desire to structurally transform Côte d’Ivoire’s economy by 2020. The CCC has received instructions from the government to move towards the transformation and seeks to attract foreign investors. As such, the CCC is working on two new processing plants in Abidjan and San Pedro with capacities of 100,000 tonnes and 50,000 tonnes, respectively, set to open by the end of 2020, and it is looking for international investors to form a partnership with.
Côte d’Ivoire’s bid to create favourable conditions for investors has worked. Indeed, in addition to the extension plans of Cargill and Barry Callebaut, four greenfield projects in the sector are now under way.