SVORY COAST – The government of Côte d’Ivoire is considering releasing an annual subsidy of 10 billion CFA francs (US$17M) over the next 4 seasons starting in 2024/2025 to local cocoa exporters.
The financial boost is intended to strengthen the position of local players in a semi-liberalized market where 6 chocolate multinationals buy and export about 80% of the national cocoa production.
The six chocolatiers include the Swiss group Barry Callebaut, world leader in industrial chocolate, Olam (Singapore), Cargill (USA), Ecom (Switzerland) and the French groups Touton and Sucden.
The subsidy should boost local exporters’ financial capacity and allow them to obtain 25% of the harvest, approximately 500,000 tons each year.
Until now, local operators benefited from an incentive of 3 billion CFA francs ($5 million) to buy between 150,000 tons and 200,000 tons of cocoa per season.
On the other hand, the new subsidy should increase the propensity of banks to grant credit to national exporters thanks to the improvement of their financial profile.
In recent years, the domination of transnational companies has been singled out as one of the major causes of locals’ difficulties, ranging from default on contracts to the cessation of activities.
Côte d’Ivoire expects its harvest to rebound to 2 million tonnes in 2024/2025 compared to an estimated volume of 1.8 million tonnes for the 2023/2024 campaign.
Yet issues that have long hobbled the industry remain far from fixed, meaning the price of beans that make chocolate isn’t likely to decline back to the much lower levels that had previously prevailed.
Analysts at Fitch Solutions’ BMI unit forecast rolling second-month cocoa futures in New York to average US$7,000 a ton in 2024.
Although that’s down from eyewatering levels above US$11,000 earlier this year, most-active futures had averaged less than US$2,000 for decades and the December contract is currently trading above US$7,000.
“We are certainly not seeing the potential for a big surplus. There is still a lot that can happen in the next months,” said Steve Wateridge at Tropical Research Services. The market will most likely be balanced and “that’s not a good place to be in,” Moussa Konate, a cocoa producer in Côte d’Ivoire commented.
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