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Ivorian Agency, Cocoa Exporters Dispute Costs, Prices
A man prepares cocoa beans for sale in Daloa, which produces a quarter of Ivory Coast's national cocoa output, April 24, 2012. PHOTO BY REUTERS/ Thierry Gouegnon.
By Ange Aboa
31/08/2013
ABIDJAN (Reuters) - Ivory Coast cocoa exporters have rejected a price structure proposed by the industry regulator for the 2013/14 season, saying it underestimated their costs, and have called for government mediation, industry sources said.
The standoff highlights disagreements that have plagued the sweeping reforms that the government has put in place in an effort by President Alassane Ouattara to guarantee farmers a minimum price for their crop.
The main cocoa exporters, including Cargill , ADM, OLAM and Armajaro, have called for an increase of 27 CFA francs per kilo in the price structure from last year to take into account additional costs, notably in transport and taxation.
"We are asking for a 27 CFA franc increase in next season's cost structure because it was underestimated so much last year," the head of one international cocoa exporter based in Abidjan said on Friday. "We are asking for costs to be adjusted to the reality on the ground for the 2013/2014 season."
The Coffee and Cocoa Council (CCC) set a farmgate price of 725 CFA francs per kg for the October 2012 to March 2013 main crop and a price of 700 CFA francs/kg for the April-to-September 2013 mid-crop beans. It has not yet unveiled the farmgate prices for 2013/2014.
Ivory Coast uses an estimate of the costs for exporters to set a farmgate price for growers, based on the international market price. It is therefore a major factor in determining exporters' profits, at a time when many companies say they are being squeezed by the government reform.
Farmers and buyers have said that some merchants in Ivory Coast were buying below the CCC prices towards the tail-end of this season due to weaker demand. Some farmers were accepting offers between 500 CFA and 600 CFA.
Traders said buyers who adhered to the set price were feeling the pinch.
"Most people are worse off except for the farmer. Most people who operate have to bear a lot of risk but less reward," a European trader said.
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