COTE D'IVOIRE: Cocoa farmers hope reforms will pay off
Members of a cocoa growers cooperative in Sikensi, 100km northwest of Abidjan
ABIDJAN, 21 November 2011 (IRIN) - Income for cocoa farmers in Côte d'Ivoire is expected to rise after reforms announced by President Alassane Ouattara’s government in early November.
Producers should then receive 50-60 percent of the international cocoa price for their beans, rather than the 35 percent they get today, according to Minister of Agriculture Mamadou Sangafowa Coulibaly.
The international price, also termed the Cost, Insurance and Freight (CIF) price - where the seller pays the costs, freight and insurance to get the goods to the destination port - refers to the price of cocoa that is ready for export.
The government is making these reforms as a result of conditions set by the World Bank and the International Monetary Fund (IMF), which will allow it to gain access to US$3 billion of debt relief under the Heavily Indebted Poor Countries Initiative.
Minister of Economy Charles Koffi Diby said on 8 November that the government plans to put the reforms in place before the end of 2011, and is expecting debt relief to be approved before the end of 2012.
Cocoa brought Côte d’Ivoire $1 billion in foreign exchange receipts in 2006, compared to $1.3 billion from oil and other refined products, according to the IMF
. The country produces around 40 percent of the world’s cocoa and delivered a record harvest of nearly 1.5 million tons of beans in 2010-2011.
Some 900,000 farmers in Côte d’Ivoire grow cocoa, and 3.5 million people live off the income generated by related activities.
The reforms put the onus on the government to regulate the sector more firmly. In a shift in policy seen in many other sectors, the World Bank and IMF now require stricter regulation, having pushed for liberalization of the sector 13 years ago.
The government plans to set a guaranteed price for cocoa before the next season, which begins in October each year and ends the following September. This measure should put Côte d'Ivoire in a better position to influence global cocoa prices, said government spokesperson Bruno Koné.
Under liberalization the government announced an indicative price to be paid to producers at the beginning of each season, but this was often not respected. In reality, cocoa prices tended to fluctuate daily.
The set price for the 2010-2011 season was 1100 CFA francs ($2.26) per kg, but the average price achieved was 805 CFA francs ($1.65) per kg, according to Côte d'Ivoire’s Coffee-Cocoa Management Committee.
The 2011-2012 indicative price was $2.06, but in the week of 24-31 October, farmers received only $1.50 on average for their beans, and many are refusing to sell until prices rise.
“Few trucks leave the farms to the ports. Farmers are waiting to sell, even if [that means] the quality of their cocoa could deteriorate”, said Bilé Bilé, head of a cooperative of 637 producers in Abengourou, near the Ghana border
Other changes include setting up a single regulatory body to oversee the sector, replacing the four institutions currently performing this function. Minister Coulibaly also said 70-80 percent of the harvest will be sold before the start of each season, so that the income of producers and the state is more predictable.
Before liberalization, the Caisse de Stabilisation et de soutien des prix des productions agricoles (CSSPPA) - the stabilization fund and support prices of agricultural products, also known as Caistab - managed the sector, but was seen by many to be un-transparent and inefficient in its dealings, said Samir Gadio, West Africa economic analyst at Standard Chartered Bank in London. He also noted that deregulation did not improve transparency.
Minister Coulibaly is stressing transparency. “We saw too many abuses under liberalization; we now want to put good governance at the heart of the reforms,” he told reporters at the launch of the policy changes.
Gadio said analysts will be closely monitoring just how independent the new regulatory body is.
Farmers should gain
Farmers’ associations have largely welcomed the reforms. Mamadou Koné, who leads a producers' cooperative in Duékoué, western Cote d’Ivoire, told IRIN that the reforms should enable growers to stop "being delivered to the fluctuation of the international market… with a minimum price to refer to each season, we can better plan for the future.”
Despite a record crop in 2010-2011, farmers still struggled to get by, with cocoa prices inconsistent and usually too low. Bilé Bilé, head of the Abengourou cooperative, told IRIN the price set by the government had never been respected.
“Producers never received enough, while the cost of living - and of rice.-.has continued to climb,” he told IRIN. Many producers have struggled to make a profit after covering the cost of fertilizers, pesticides and transport, all of which have soared in recent years.
Farmers continued to harvest despite the post-electoral violence that hit the country - much of it in cocoa-growing regions - and a three-month ban on exporting beans imposed in January 2011 by President Alassane Ouattara to cut off the finances of ex-President Laurent Gbagbo during the crisis.
The agricultural sector of the Ivoirian economy is expected to expand by 1.7 percent in 2011, while the industrial side seems set to shrink by 8.4 percent and the services side by 13.4 percent, according to the finance ministry.
Many producers complain that they have not had enough say in the reform discussions. Gervais Seri, president of the National Association of Coffee and Cocoa Producers, told IRIN: "Farmers are at the heart of the industry, so as producer associations, we are recommending that we sit on the board of the new regulatory structure.”
More detail is needed on exactly what the government is proposing, said a foreign diplomat who requested anonymity. Thus far the government has been generous with information in broad terms, but has not provided any details of exactly how the reforms will work.
"Cocoa is a business matter,” Amoikou Boi, a producer in the eastern town of Abengourou, told IRIN. “The State should not impose [changes] without consulting producers.”