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Ivory Coast Cocoa Farmers Want End to Processors’ Tax Breaks

A group of cocoa farmers in Ivory Coast want the government to put a stop to the tax breaks given to cocoa exporters that grind beans in the West African nation because they say it penalizes local cooperatives.

“We’re asking everyone to be on the same level,” said Mamadou Kone, head of the National Circle of Coffee and Cocoa Producers, an Abidjan-based producers’ association which claims to have 200,000 members. “There is no fair competition if some operators receive subsidies and others don’t.”

The tax break was given to local grinders 20 years ago to encourage processors to set up operations in the world’s biggest cocoa producer, and increase processing capacity, said Kone, who sits on the 12-member board of governors of the new cocoa regulating body, the Coffee Cocoa Council. Kone said he spoke on his own behalf.

Companies that ship semi-processed cocoa products rather than beans can negotiate a discount on a 14.6 percent export tax, according to the former state-controlled Coffee and Cocoa Management Committee. The council, which was created as part of industry changes made last year, now oversees cocoa.

Minister of Agriculture Mamadou Sangafowa Coulibaly said in January the government was re-examining the tax breaks. Roselyne Aka, in charge of communications at the ministry, didn’t answer calls made to her mobile phone today.

In December, nine exporters that don’t grind beans, including Groupe Sucres et Denees SA and Touton SA, asked that the government scrap the subsidy.

Tax breaks to the major cocoa exporters, Archer-Daniels- Midland Co., Cargill Inc., Cemoi of France and Barry Callebaut AG (BARN), were worth almost 28 billion CFA francs ($53 million) in 2010, according to a December letter from the nine cocoa buyers.

Kone said the subsidy costs at least 30 billion CFA francs each year. “The money should be used to help farmers and local cooperatives, build roads, hospitals and schools,” he said.

July delivery cocoa gained 1.7 percent to 1,474 pounds ($2,269) per metric ton by 3:45 p.m. in London.

To contact the reporter on this story: Olivier Monnier in Abidjan at omonnier@bloomberg.net

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net

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