Cocoa farmers in Côte d'Ivoire, the world's largest producer, began the 2012-2013 season in October with a minimum price guaranteed by the state. This measure, part of the government’s sector-wide reforms, should stem corruption and make farmers less prone to the vagaries of international cocoa prices, giving them more financial stability so they can invest in their cocoa plantations.
Côte d’Ivoire produces about 35 percent of the world’s cocoa. Some 900,000 farmers grow cocoa in Côte d'Ivoire and 3.5 million of the country’s 22 million inhabitants live directly off the crop.
Prices have now been fixed at 725 CFA (US$1.41) per kilogram, a 9 percent increase on 2011-2012 average producers’ income. The price is equivalent to 60 percent of the international price at which cocoa is exported.
In the previous system, the government gave an indicative farm-gate price (the value of cocoa when it leaves the farm) at the beginning of each season but buyers rarely respected it. Last year farmers earned about 667 CFA ($1.29) per kilogram while the recommended price was 1,000 CFA ($2).
Producers have widely welcomed the price announcement. The set price should encourage people to invest, expand their plots, buy new fields, or better maintain them using fertilizers and insecticides, cocoa farmers in Abengourou in eastern Côte d’Ivoire, told IRIN.
George Kouame, a grower in Daloa in the west, said the regulation has encouraged him to add two more hectares to his 3.5 hectare cocoa plantation.
Many farmers call the previous pricing system hypocritical. "I am delighted the system has changed. It did not make sense to make farmers believe they would reach a set price while everyone else knew they’d earn less than that,” said Moussa Zoungrana, head of a cocoa farmers’ cooperative in Guiglo, western Côte d’Ivoire.
The government also hopes the higher price will improve the quality of the beans, which is often eroded because farmers do not dry them sufficiently in the rush to get them to market when prices are higher.
Under pressure from the World Bank and International Monetary Fund, Côte d’Ivoire initiated cocoa sector reforms in early 2012, the goal being to regulate a sector that had been liberalized by these same institutions 13 years earlier. Cocoa production hit a record 1.5 million tons in the 2010-2011 season, declining by 2 percent in 2011-2012 mainly due to poor weather.
Extortion, racketeering limit profits
Despite welcoming the moves, many farmers complain their income remains depressed as sales are down. Poor roads and pervasive racketeering are dissuading buyers now that they cannot pass on the cost to the producers, complained Alasane Sogodogo, head of a cocoa cooperative in Para, near the Liberian border.
Extortion from soldiers and police at illegal road-blocks set up between the cocoa-growing zone and ports in the south can cost the cocoa sector as much as $19.5 million per year, according to the newly formed administrative body, the Café Cacao Council (CCC).
According to farmers, three weeks after the price was set, buyers were still trying to push down prices - citing the poor state of the roads, or racketeering - but for the most part, they are sticking to the new rules.
Local buyers - usually organized into cooperatives - complain they already cannot compete with multinationals and with the new prices. They will struggle further unless they get more support from the government, Jacques Kouacou in Daloa, a cooperative head in western Côte d’Ivoire, told IRIN.
Meanwhile, the CCC says it will have renovated 3,000km of roads by December2012 in main cocoa-growing areas.
Other cocoa sector reforms
Other reforms include replacing four administrative bodies with the CCC (which will run the sector), and reducing the number of intermediaries involved in the buying process, which has in the past promoted corruption.
The state has also announced it will purchase 70-80 percent of the harvest in advance, in a bid to make both its own revenue and that of farmers more predictable.
The CCC announced that 368 CCC officers and 500 agents from the National Agency to Support Rural Development (ANADER) have been deployed across the country to ensure buyers and intermediaries are respecting prices.
Heavy penalties have been announced for those who do not respect the price, including buyers having their licenses withdrawn, and criminal prosecutions being pursued, noted CCC President Massandje Touré at the campaign launch on 3 October.
Five middlemen have already been arrested in western Côte d’Ivoire for trying to buy beans at a price lower than that set by the state, according to the CCC. One of them has been sentenced to three months in prison and fined 500,000 CFA ($974). Judgments on the others have yet to be passed.