IVORY COASY – Exporters of Ivory Coast’s cocoa beans are on the verge of defaulting their contracts due to a lack of beans and urgently need up to 150,000 tonnes to honor their commitments, seven sources who attended a crisis meeting with the country’s regulator told Reuters.
Cocoa regulator the Cocoa and Coffee Council (CCC) met with representatives of Gepex, which represents multinational exporters, domestic traders’ lobby GNI, and UCOOPEXCI, which represents exporting cooperatives, last week to discuss the shortfall, the sources said.
The exporters estimate that arrivals at the country’s main ports stood at 34,000 tonnes for the week to 12 February, versus 66,000 tonnes during the same period last season.
The low supply comes at a time when the world’s top producer, responsible for 45% of the globe’s production, is heading toward the end of its October-to-March main harvest.
“We are heading towards a certain default because we have not been able to buy beans since January,” one of the sources, a member of UCOOPEXCI who attended the meeting, told Reuters.
Another of the sources, a member of the domestic cocoa trader’s association GNI, said they were also facing difficulties buying beans to honor export contracts.
Trying to explain the reason for the low supply, one source said: “Certified cocoa costs between 950 CFA (US$1.54) and 975 CFA francs per kilo, while the farmgate price is 900 CFA francs. We can’t compete because multinationals have a monopoly on all certified cocoa.”
Other sources of Reuters noted that the volume of cocoa being sold exclusively within the Fairtrade market, which commands a higher price that is passed on to farmers, has also cut the volumes available to domestic exporters.
The sources indicated that they had asked the CCC to react quickly so domestic exporters could avoid looming defaults.
At the meeting, which a spokesperson for the regulator confirmed was held but gave no details of discussions, the watchdog proposed pushing back the loading period for the contracts of struggling exporters to June so that they can buy beans between April and June during the mid-crop harvest; the sources said.
However, domestic traders think delaying the loading period to June will not solve anything, as their customers expect cocoa from the main crop, which is of much better quality than the mid-crop.
Another solution proposed by the CCC included authorizing local cocoa grinders to hold only 15 days’ worth of bean grinding capacity instead of 45 days but was rejected.
“We are currently grinding at almost 95% of capacity due to strong international demand, and this stock will quickly be exhausted in a few weeks,” said the manager of an Abidjan-based company.
The cocoa grinding companies said the solution was impracticable because the stocks are already scheduled to be processed within a few months in response to strong market demand for semi-finished cocoa products.
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