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Ivory Coast Said to Fear Losing Fifth of Cocoa to Smuggling

  • World’s no. 1 producer cut farmer payments after prices fell
  • Neighboring Ghana decides against reducing producer pay

Ivory Coast’s cocoa regulator forecast the nation may lose a fifth of its cocoa crop to smuggling during the next harvest if neighboring Ghana refuses to cut payments to farmers after international prices fell, according to a person familiar with the matter.

The prediction by Le Conseil du Cafe-Cacao comes after the world’s biggest cocoa producer cut farmers’ pay by 36 percent to the equivalent of about 700,000 CFA francs ($1,251) per metric ton in April to cope with global prices that dropped more than a third in a year on expectations of oversupply. Ghana, the second-biggest grower, has kept farmer payments at the equivalent of 7,600 cedis ($1,708) per ton since October and has ruled out any cuts for the main harvest that starts next month. Cocoa is harvested twice a year in West Africa.

The Ivorian regulator expects losses of as much as 400,000 tons of cocoa next season, said the person, who asked not to be identified because he’s not authorized to speak publicly about the matter. One of the nation’s biggest exporters has a similar forecast, according to a separate person familiar with the matter.

Ivory Coast President Alassane Ouattara conveyed his concern about the pay discrepancy to his Ghanaian counterpart, Nana Akufo-Addo, according to two other people familiar with the matter. The two countries agreed in May to cooperate on plans to counter volatile prices and officials of their regulators were locked in talks about the partnership at a meeting on Wednesday and Thursday in Ghana’s capital, Accra.

Marry Ideas

Farmer prices are on the meeting’s agenda, Ghana Cocoa Board Deputy Chief Executive Yaw Adu-Ampomah said by phone on Tuesday.

“Each one will have their ideas and we marry them together to see which is the way forward,” Adu-Ampomah said. “This year Ghana is not going to reduce the producer price to the farmer.” He declined to comment further.

Read more: Ghana Warns Farmers Smuggling May Jeopardize Pay

Mariam Dagnogo, a spokeswoman for CCC, didn’t answer calls seeking comment. Ivory Coast will continue to adjust farmer payments according to international prices, government spokesman Bruno Kone said by phone on Wednesday.

“Ivory Coast’s government has a responsible approach and when you have a responsible approach, you can hardly afford to buy higher than what you sell,” he said. “This said, everyone does as they please.”

Cocoa accounts for about a fifth of Ivory Coast’s exports and, according to the IMF, a 1 percent change in revenue from exports of the beans can lead to a 0.63 percent shift in government spending.

The government of Akufo-Addo, who came to power in January, vowed to increase production in Ghana to more than 1 million tons, from about 780,000 tons in the season through September 2016. The Ghana Cocoa Board secured a $1.3-billion loan for farmer payments for the new season, compared with $1.8 billion for the crop that ends this month.

Ivory Coast will probably harvest 1.98 million tons in the current season, while Ghana’s crop will be 950,000 tons, according to forecasts by the International Cocoa Organization.

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