A race against time is underway for Yves Brahima Koné, Coffee & Cocoa Council director general. Just like in 2017, Côte d’Ivoire, the world’s largest producer of cocoa beans, could see some of its exporters unable to honour all the cocoa bean supply contracts they have obtained.
Emergency meeting
On 10 February, Koné called an emergency meeting of the main market players at CCC headquarters to discuss the situation. Present were Lionel Soulard, Cargill director general and president of Gepex, the main union of multinationals, Germain Tété, representative of Ivory Cocoa Products (ICP), Stéphane Apoque, director general of the Ivorian trader Kineden SA, and veteran cocoa trader Anthony Fortez.
Led by Koné, the exchange revealed a shortfall in the availability of cocoa beans for exporters equivalent to around 120,000tn for the current main production season (October 2022 to April 2023).
If this ends up being the case, the Ivorian state could lose approximately 10bn CFA francs (nearly $16.2m) in tax and parafiscal revenues. Some Ivorian operators could even go bankrupt after having to pay CCC penalties and negotiating arrangements with clients or banks who advanced funds to purchase the beans. Koné sent a detailed report on the situation to the government, which is closely following the developments.
According to our sources, there are several reasons for what is looking more and more like a new crisis for the sector. In particular, the CCC may have been too optimistic in terms of its ability to exploit the current harvest. The volumes sold through contracts represent almost the entirety of the domestic production.
Speculation
However, this calculation does not take into sufficient account the speculation of certain buyers, known as processors, who stock part of the beans collected from cocoa farmers in the interior of the country rather than bringing them to the ports of San Pedro and Abidjan.
Above all, a relatively large portion of the production is smuggled to Guinea and Liberia, where purchase prices are higher. In 2021-2022, this volume was estimated at between 20,000tn and 30,000tn. This year, it is said to be much higher. The specialised brigade that patrols the border is unable to prevent this traffic.
The hypothesis of defaults on export contracts haunts the CCC boss. In 2017, the failure of national operators led to the dismissal of Massandjé Touré-Litsé, then CCC director general. An audit by KPMG estimated the cost of this episode at more than 100bn CFA francs for the government.
In order to find the missing volumes, Koné could propose that the unserved buyers of Ivorian beans wait until the interim season, which starts in April. The missing volumes could then be taken from the quota of local processors (grinders).
READ MORE Côte d'Ivoire: Yves Brahima Koné, head of the Coffee & Cocoa Council, sets his sights on the East
The multinationals that dominate the bean buying market are not affected by these difficulties. Cargill passed the 250,000tn mark for cocoa beans purchased between last October and mid-February. Switzerland’s Barry Callebaut, through its subsidiary Saco, has secured a supply of 190,000tn. The exporters’ podium is rounded out by the Indo-Singaporean Outspan (175,000tn), ahead of the French Touton (100,000tn). These multinationals combined account for about 80% of Ivorian cocoa beans.
The production volume for the main cocoa season, which began in October 2022, is estimated at 1.655m tonnes, up 55,000tn from the previous year.
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