Reforms in Ivory Coast's cocoa sector will include a guarantee to farmers of a minimum selling price in an effort to ensure plantation owners turn a profit, Agriculture Minister Coulibaly Sangafowa said at a news conference on Monday. The change, part of a raft of reforms to be announced in the coming months, would bring the world's top cocoa grower into line with policies in neighbouring Ghana and potentially put an end to years of back-and-forth smuggling.
"The reform should ensure that there is no disparity between the system in Ivory Coast and in Ghana to make sure the systems are not so different that it encourages contraband," Sangafowa said, adding he believed Ivorian farmers should receive "at least 50 percent of the CIF price". The CIF price refers to the market price of a commodity adjusted for costs, insurance and freight. Cocoa futures on New York's ICE market were down slightly on Monday to $2,865 per tonne by 1500 GMT.
Ivory Coast has long talked of reforming its cocoa sector, but efforts to do so have been sidelined by political troubles since its 2002-03 civil war, which exploded into violence again late last year after disputed elections. Sangafowa said it was possible the new farmgate price policy could be applied during the forthcoming 2011-12 season, which begins in October.
"It could be operational for this season, or the application process could begin this season. Wait two weeks and you'll see," he told reporters. Farmers in the West African country frequently complain they are underpaid and unable to reinvest in their plantations, and they have been pushing for a strictly enforced fixed price like that seen in Ghana.
Analysts and exporters have said some 100,000 tonnes of cocoa were smuggled into Ghana this year from Ivory Coast, where fighting shut down exports and cut prices. Ghanaian authorities have denied that smuggling has significantly contributed to its banner crop, which has exceeded 1 million tonnes this season from just over 630,000 tonnes a year ago.
"Ghana knows its own production levels, and it knows what made the difference this year," Sangafowa said. Sangafowa said Ivory Coast would sell forward a portion of its seasonal crop, which has topped a record 1.4 million tonnes so far this year, in order to ensure plantation owners receive the set price for their beans. The minister told Reuters last week that the full reform proposals should be outlined within three months. Sangafowa said on Monday he also hoped to encourage more cocoa processing prior to export.
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