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Côte d’Ivoire and Ghana unite on cocoa trade, creating ‘Chocpec’

By The Africa Report
Posted on Friday, 16 April 2021 11:53

A man cuts a cocoa pod from a tree on a plantation in Toumodi, Côte d'Ivoire 13 October 2018. REUTERS/Thierry Gouegnon

Rare is the international business conference that can claim to have midwifed a new geopolitical strategy.

But that is what happened when Côte d’Ivoire’s President Alassane Dramane Ouattara met Ghana’s President John Dramani Mahama at the Africa CEO Forum in Abidjan in March 2016.

Asked how their countries could cooperate more closely, using their production of 70% of the world’s cocoa as a bargaining point with the multinational chocolate companies, the two presidents smiled knowingly. “That is exactly what we’re doing,” said President Ouattara.

“We are presenting a united front on the commodity markets. And we’re going to call it Chocpec,” added President Mahama to a mixture of applause and laughter. Veterans of the commodity markets were sceptical from the start.

A fruit and nut case

Few market analysts gave these two African states much of a chance in taking on some of the world’s biggest commodity traders servicing the global chocolate industry, which is worth $100bn in the United States alone.

“The days of producer cartels have long gone,” a London-based analyst told The Africa Report in March, explaining that Ghana and Côte d’Ivoire would have to step up local processing massively if they wanted to boost their share of revenue from the industry. “Whether it is oil, iron ore or cocoa beans, these days it’s a sellers’ market. Processing and manufacturing is the best way to get leverage in the market.”

Five years later, ‘Chocpec’ has taken off. The principle of cooperation among producer states is established, as are joint ventures on processing beans and making cocoa products within the region. It stands as a model for producers, but also offers a harsh lesson in the vagaries of the market, especially when hit by a global health emergency. It also casts light on how some operators can wriggle out of their international commitments.

To their great advantage, Ghanaian and Ivorian cocoa beans are regarded as amongst the highest quality on the market and are much preferred by the new wave of small-scale and artisanal chocolate makers in Europe, Asia and the US.

These small companies are prepared to pay premium prices for high-quality cocoa beans from West Africa. They gush about varieties of ‘graines de cacao’ in the region in the same way that an oenophile considers the all-important ‘terroir’.

Although their purchases do not make a huge dent in the current global production of around 4.6m tonnes a year, they have helped raise industry standards and growers’ expectations.

Shock choc

That has flowed into a wider debate about ethical production and the need for consumers in rich countries to pay a fair price. Workers’ rights groups claim that some Ivorian planters cut their costs by using child labour, bringing in young children from neighbouring countries.

In February, Ivorian police swooped on four alleged child smugglers in Aboisso in the south-east of the country. The police found 19 children, aged between 12 and 16, who had been brought from Burkina Faso to work on cocoa farms.

At the heart of the cocoa question is the market price. In both Côte d’Ivoire and Ghana, the governments agree to pay farmers a minimum price per tonne in arrangements that date back 50 years. That was meant to cover a decent wage for the farmers and their families, and necessary investment in cocoa trees and farms.

In good times, cocoa farmers were the bedrock of those economies. Many of the Ghanaian and Ivorian elite were educated, via government scholarships, through the sweat of the cocoa farmers. But when global demand slumped, state treasuries struggled to pay cocoa farmers the agreed guaranteed price for their beans. Some farmers voted with their feet.

Ghanaian farmers would smuggle their beans across the border when the price was higher in Côte d’Ivoire. Sometimes, the contraband cocoa went the other way. For years, a mix of fraternal rivalry and economic competition rendered any cocoa pact improbable between the two states. Adding political chaos into the mix didn’t help, according to Ivorian writer Véronique Tadjo.

While Ghana was wracked by coups in the 1960s and 1970s, Côte d’Ivoire’s economy accelerated. Thereafter, with military intervention and civil war in Côte d’Ivoire, Ghana attracted investment as a stable economy.

‘Chocpec’ is an example of a new spirit of cooperation, says Tadjo: “We are getting back into sync and thinking more about our commonalities.” Ghana and Côte d’Ivoire jointly confronted the international confectioners last November, accusing them of reneging on a commitment made in 2019 to pay an additional $400 per tonne, to finance a “living income differential”.

Back down, Big Choc

Côte d’Ivoire’s Yves Koné, managing director of the Conseil du Café-Cacao, and Joseph Boahen Aidoo, chief executive of the Ghana Cocoa Board, lambasted global players such as Mars, Hershey’s, Nestlé and Blommer for sourcing their beans from other exchanges and doing anything to avoid buying directly from West Africa and paying the $400 premium.

A war of words dragged on, and the confectioners made concessions. Their reputations were already tainted by accusations of their complicity in wide-scale deforestation, child labour and impoverishing farmers and their families. Nestlé, Cargill and Mars were named in a suit by the NGO International Rights Advocates accusing the companies of complicity in trafficking and forced labour.

With a dedicated organisation, the Initiative Cacao Côte d’Ivoire-Ghana, formed last August, the two countries have managed to hold the line, despite the exigencies of the pandemic. Some of the confectioners started seeking separate deals, disparaging their rivals.

By the end of the year, the biggest companies had accepted Ghana and Côte d’Ivoire’s arguments and reached a compromise deal on pricing and the surcharge.

This year, market conditions look even tougher. The key to future success for Ghana and Côte d’Ivoire will be recruiting other producer countries, such as Nigeria, Cameroon and Ecuador, to the Chocpec grouping.

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