Ivory Coast Cocoa Cooperatives Delay Buying on Cash Troubles

Cocoa farmer cooperatives in Ivory Coast, the world’s biggest producer, say a shortage of funds to buy beans from growers is slowing shipments to ports.

“Our members want to see cash when we arrive to purchase their beans,” Maurice Sawadogo, head of an association of 950 growers near the eastern town of Indenie-Duablin, said by phone Oct. 22. “We can’t get credit from the bank.”

Cooperatives in the West African nation sell about 30 percent of the nation’s crop. The rest is handled by middlemen who buy the beans from farmers and deliver it to traders. Banks remain reluctant to provide cooperatives with credit, Fulgence N’Guessan, the head of a group of 400 cooperatives, said by phone Oct. 21.

“Cooperatives can’t survive without a minimum of cash,” N’Guessan said.

The main harvest began this month after the government announced a minimum farm-gate price of 750 CFA francs ($1.57) per kilogram (2.2 pounds). Most of the crop for the 2013-2014 season was sold via an auction in the first half of this year, reaching 1.18 million metric tons by the end of August. The cooperative Sawadogo runs has stocked 200 tons this season, less than half of the 500 tons a year earlier.

Before 2011, some cooperatives received funding from state agencies to pay cash to cocoa growers.

Government Aid

“The cooperatives will get government support after the census of producers has started,” Bruno Kone, a government spokesman, said by phone from Abidjan yesterday.

Cocoa for March delivery fell 0.8 percent to 1,702 pounds ($2,757) a ton by 5:27 p.m. on the NYSE Liffe in London, extending yesterday’s 1.6 percent drop.

In the southwestern town of Meagui, buyers are waiting for a cash advance from exporting partners before they start collecting beans from farmers, Alexandre Gnande, head of a growers’ association in Meagui, said by phone Oct. 22.

“We have two types of problems: we lack funds, and locally there is a shortage of trucks,” he said. “We haven’t bought any beans yet but we stay optimistic and believe we can do it next month.”

Bean deliveries to ports were estimated at 106,000 tons to Oct. 20, more than double the amount in the same period last year, according to KnowledgeCharts, a unit of Commodities Risk Analysis based in Bethlehem, Pennsylvania.

Unlike cooperatives, independent buyers have a lot of cash at the start of the season to pay farmers directly at the farm gate, Salam Pelegram, head of a cooperative, said by phone.

“The cocoa beans are leaving the bush, but cooperatives can’t buy them,” he said. “Last year we did 1,000 tons in the first half of October, this year, we barely reached 350 tons. The government needs to help us.”

Before it's here, it's on the Bloomberg Terminal.