Ivory Coast Grants Tax Incentives for Cocoa Processors

  • Country to open secondary cocoa market dedicated to grinders
  • Ivory Coast seeks to lift local processing to 50% of harvest

Ivory Coast said it will introduce tax breaks for cocoa grinders that expand their capacity and lift production of value-added products as the world’s biggest producer of the chocolate ingredient seeks to process at least half of its annual harvest locally.

The West Africa nation will open a secondary cocoa market dedicated to grinders during the next main harvest that starts in October, Prime Minister Daniel Kablan Duncan told reporters in the commercial capital, Abidjan. Ivory Coast will guarantee grinders access to as much as 70 percent of beans sourced from the mid-crop, the smaller of the two annual harvests that runs from April through September, Duncan said.

“These measures aim to improve the competitiveness of the grinding plants and to boost the proportion of semi-finished and finished products,” Duncan said. The measures will contribute to lifting local processing to 50 percent by 2020, from 33 percent at present, he said.

Ivory Coast’s incentives to raise cocoa processing comes as the government seeks to accelerate economic growth that measured 10.3 percent in 2015, the highest in sub-Saharan Africa for the period.

The changes follow after the government in 2012 scrapped incentives for processors, which had to pay taxes on the weight of the beans they process rather than the product they shipped. The move increased the export tax rate by 25 percent for grinders who said they were at a disadvantage to exporters of raw beans, Ecobank Transnational Inc. said in a report last year.

Ivory Coast will levy a 14.6 percent tax on bean exports, 13.2 percent on cocoa mass, 11 percent on butter and 9.6 percent on powder, Duncan said. Exporting chocolate will be exempt from tax, he said. 

The new rates are conditional on grinders lifting their capacity by at least 15 percent for units that process 50,000 metric tons or less, Duncan said. Units that can handle between 50,000 tons and 100,000 tons have to increase their capacity by 10 percent, he said. The largest grinders should raise their capability by 7.5 percent.

Cocoa grinders will also require guaranteed supplies from the main harvest to meet the government’s targets, Loic Biardeau, general administrator of Saco, a unit of Barry Callebaut AG, told reporters.

“The mid-crop will not be enough to supply the factories,” Biardeau said.

(Corrects second paragraph to show Abidjan is the commercial capital. An earlier version of this story corrected the spelling of the name Barry Callebaut.)
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