Ivorian cocoa: after the floor price, production is capped

On July 11, during the presentation of the World Bank’s latest report on the Ivorian economic situation (« In Cocoa Country - How to Transform Côte d’Ivoire »), the Coffee-Cocoa Council (CCC) unveiled its new strategy to limit the impact of volatile world prices on farmers’ incomes: to cap national production of brown beans at 2 million tonnes. This represents a decrease of more than 11% by the next cocoa season.
Shocked by the sharp drop in prices (40%) observed in 2017 following the Ivorian overproduction in the 2016/2017 season, and its dramatic consequences on farmers’ incomes - which had then fallen by about 36% while the major chocolate firms increased their profits by nearly $5 billion -, the cocoa sector regulator in Côte d’Ivoire has announced that it intends to stabilize the brown gold harvest at 2 million tonnes from the 2020-2021 marketing year, which will start in October 2020.
In concrete terms, the CCC aims to curb the creation of new plantations and to stop the production and supply of high-yielding cocoa seeds and seedlings, usually to the benefit of multinationals such as Mars or Nestlé, which develop improved hybrid species and distribute them to farmers in order to increase the productivity of their plots. With a view to better control of harvests and better traceability of beans, the Ivorian cocoa policeman has also initiated a census of cocoa farmers and their orchards throughout the country.
This measure, although in line with the initiative to improve producers’ incomes, currently under discussion with Ghana, is not new: already at the beginning of 2018, the CCC stated that it wanted to stabilize its production, stating that the increase in yields observed over the past 10 years (from 1.6 to 2 million tonnes) was mainly due to programmes initiated by the major chocolate manufacturers. At the time, the regulator was even talking about limiting the national supply to 1.7 -1.8 million tonnes. This figure has apparently been revised upwards, probably in view of the record production (2.25 million tonnes) expected for the 2018-2019 harvest, which will end on 30 September.

The World Bank’s diagnosis

Given that Côte d’Ivoire’s economic model is based on the agricultural sector, particularly the cocoa sector, where the country is the world’s largest producer, the 9th report of the international financial institution, entitled « In Cocoa Country - Transforming Côte d’Ivoire », looks at this sector and outlines a worrying picture. Although harvests have quadrupled since 1960 to reach more than two million tonnes in 2018, producers’ living conditions have not improved much. In 2015, 54.9% of them lived below the national poverty line. In addition, this increase in production has had serious consequences for Côte d’Ivoire’s natural heritage, with an alarming decline in forests from 12 million hectares in 1960 to 3 million hectares in 2001. According to the study, these challenges also represent an opportunity as they give Côte d’Ivoire the opportunity to rethink the entire cocoa value chain to transform its economy. Three areas of intervention are thus proposed: (1) focus on technology to increase yields and move from extensive to intensive growth; (2) establish traceability mechanisms for buyers to ensure a responsible product; (3) develop the local processing industry.
« Côte d’Ivoire has a unique opportunity to improve the living conditions of its cocoa farmers and create jobs along the processing chain while restoring its natural heritage, » says Coralie Gervers, World Bank Operations Director for Côte d’Ivoire, Benin, Guinea and Togo. « There is an urgent need to modernize the cocoa sector and make it a real vehicle for inclusive growth. »