Ivory Coast Audits Cocoa Cooperatives Amid Management Concerns

(Bloomberg) -- Ivory Coast is auditing cocoa cooperatives amid concerns that poor management could threaten local groups’ survival.

The world’s top cocoa producer has almost completed audits of 230 cooperatives in the southwest of the country and plans to review another 48 that export and are part of a group known as Ucoopexci, the industry regulator Le Conseil du Cafe-Cacao said.

“It’s clear that cooperatives are still very little structured,” the CCC said in a document dated January and posted on its website Wednesday. “They are also confronted with bad governance affecting their reliability and viability.”

The country’s cocoa industry is recovering from a wave of defaults by local exporters last season, when many had bet on higher prices but then couldn’t fulfill their contracts when cocoa started tumbling. A KPMG LLP audit of the sales system showed that 32 shippers defaulted on 222,302 metric tons of cocoa, with smaller exporters including cooperatives accounting for about two-thirds of the unfulfilled contracts.

KPMG said that the CCC lacks a system to monitor the financial health of local exporters.

Poor financial management is among the major issues for Ivorian cocoa and coffee cooperatives, the CCC said. The situation is even more difficult for those that are also exporting because they’re particularly susceptible to price fluctuations, it said.

“The past two years have been a struggle for the cocoa sector because of the slump in international prices,” the CCC said. “The emergence of strong national actors who can master the marketing mechanisms is an objective of the Conseil du Cafe-Cacao in the medium term.”

Read more: Ecobank reduces Ivorian cocoa clients after export defaults

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