ABIDJAN: Ivory Coast raised the minimum price payable to cocoa farmers and capped the amount exporters can pay for beans at ports on Wednesday, as the world's top grower increased state regulation ahead of a new harvest.
The twin decisions, taken as Ivory Coast embarks on its second season since reintroducing price controls, aim to boost farmer incomes while preventing small exporters from being squeezed out of the market.
The West African nation abandoned a decade of liberalisation last year to fix a guaranteed price for the 2012/13 season by selling forward the bulk of its crop.
The minimum farmgate price for the new October-to-March main crop of 750 CFA francs ($1.55) per kilogramme, decided at a cabinet meeting chaired by President Alassane Ouattara, represents a 25 CFA per kilogramme increase from last year.
Exporters said the price rise was likely to discourage smuggling to neighbouring Ghana, the number two producer, which is expected to leave its own producer price unchanged.
"After the arbitration of the president, who retained the highest hypothetical price, the guaranteed price for farmers for the 2013/14 season is 750 CFA francs per kilogramme," government spokesman Bruno Kone told reporters.
Ivory Coast's cocoa marketing board, the CCC, said later in the day that port arrivals during the 2012/13 season had declined slightly to 1,415,997 tonnes as of Sept. 22, versus 1,435,818 tonnes during the same period of the previous season.
SATISFIED FARMERS, HAPPY SMALL EXPORTERS
Introduced in an effort to improve the livelihoods of farmers and encourage them to reinvest in ageing plantations, the government's reform of the cocoa sector has come under fire from all sides during its first season.
Exporters initially boycotted cocoa auctions in protest of what they said was an unrealistic cost scale. The merchants responsible for delivering the bulk of Ivorian output from plantations to the ports claimed transport allowances erased their margins.
And though growers initially welcomed the price stability created by the reform, more recently they have criticised a lack of enforcement on the ground that allowed merchants to persistently undercut the price during the mid-crop harvest.
But while some farmers contacted by Reuters on Wednesday said they'd expected a higher price this season as increased demand and poor weather in West Africa have pushed up world prices, most voiced satisfaction with the new farmgate.
"It's a good price that will help us invest in our plantations," said Labbe Zoungrana, who farms in the coastal region of San Pedro. "With this price we can hire workers to help with upkeep."
In a concession to smaller players, the CCC also imposed limits on what exporters can pay for beans, fixing a minimum price of 830 CFA francs per kilogramme for beans arriving at ports and a maximum price of 845 CFA francs/kg.
"This is what we asked the CCC to do this year," said the purchases manager for an Abidjan-based exporter, who asked not to be named.
"Last year some exporters paid up to 40 CFA francs above the price, causing cash flow problems for others. Without this decision the small exporters would have disappeared within two years," he said.
Ivory Coast-based exporters say an unchanged price in Ghana, which has struggled to stabilise its cedi currency, is likely to keep the outflow of smuggled Ivorian beans in check.
Smuggling exploded during Ivory Coast's recently ended 10-year political crisis as middle-men trucked beans to Ghana, Liberia, Togo and Guinea in search of higher prices.
It was largely brought under control last season as Ivory Coast's minimum farmgate price and more stable CFA franc currency, which is pegged to the euro, encouraged farmers to keep their beans in the country.
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