Ivory Coast Suspends Plans to Boost Cocoa Yields on Price Drop

(Bloomberg) -- Ivory Coast’s cocoa regulator plans to suspend programs that are assisting farmers to improve their yields after last season’s record crop caused prices to plunge, according to a letter obtained by Bloomberg.

Le Conseil du Cafe-Cacao, the industry governing body in the world’s biggest cocoa producer, will stop the distribution of higher-yielding planting materials such as seeds and seedlings from the start of the next season in October, according to the letter which was dated April 18 and signed by CCC Managing Director Yves Kone.

Programs initiated by private companies to increase farmers’ productivity will also be stopped, Kone said in the letter that was sent to Gepex, a group representing exporters.

The suspension will last for as long as the CCC carries out a census of cocoa farms that will help the regulator “to design a strategy for the development” of the commodity, Kone said in the letter. The CCC is conducting a similar evaluation of coffee plantations, he said.

Mariam Dagnogo, a spokeswoman for the regulator, declined to comment when contacted by phone. Trade Minister Souleymane Diarrassouba said Monday in an interview at the World Cocoa Conference in Berlin that he hadn’t seen the CCC’s letter.

Bigger Crop

Ivory Coast gathered more than 2 million metric tons of cocoa in the season that ended in September last year, an all-time high, because of favorable weather and as trees that had been illegally planted in protected forests reached maturity. That helped send prices tumbling by about third over the period, forcing the West African nation to slash its budget and cut farmers’ pay.

The CCC told the World Cocoa Foundation, which represents buyers and chocolate industries, in March that it will suspend the distribution of better planting material.

Ivory Coast wants to obtain better control over supplies to achieve a fair price for farmers while ensuring that growers don’t plant in protected forests or employ child laborers, Diarrassouba said Monday.

The government is concerned that some seedlings distributed by private companies may have been planted in protected forest areas and not for the intended replacement of old or disease-infected trees, according to people familiar with the matter, who asked not to be identified because the information is private.

Diarrassouba said he couldn’t confirm whether this was the government’s view, but affirmed that it was trying to prevent cocoa growing in these areas.

Chocolate companies from Nestle SA to Mondelez International to Mars Inc. and processors including Cargill Inc. and Olam International have invested millions of dollars in sustainability efforts in recent years, some of which included yield-improvement programs. Increased production due to uncoordinated programs are partly responsible for the recent price collapse, Jean-Marc Anga, executive director of the International Cocoa Organization, said in Berlin Monday.

To contact the reporters on this story: Isis Almeida in London at ialmeida3@bloomberg.net, Olivier Monnier in Abidjan at omonnier@bloomberg.net, Baudelaire Mieu in Abidjan at bmieu@bloomberg.net.

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Andre Janse van Vuuren, Nicholas Larkin

©2018 Bloomberg L.P.