Exporters in Ivory Coast should stop purchasing their cocoa directly from growers and instead buy through farmer-owned co-operatives, according to proposals drafted by a committee studying how to reform the industry.
Exporters in the world's top cocoa grower are barred under Ivories law from buying beans outside of its two ports, but some companies have workers buying cocoa in the bush in order to ensure they get their required quantity and quality of beans.
A senior member of the committee set up by President Laurent Gbagbo to study ways to make the sector more efficient and more profitable for producers said less than 10 percent of Ivory Coast annual cocoa harvest was purchased through co-operatives.
Merchants, private buyers and exporters handle the vast majority of the purchases themselves.
The source said the aim of the proposal was to ensure co-operatives non-profit entities which are meant to sell beans to shippers on behalf of farmers would see their revenues increase as well as those of their members.
"One of the objectives of the reform is to have strong national businesses working in the sector," the source told Reuters on Monday, adding that the government ideally wanted all of the cocoa to be sold on through co-operatives.
The source said the proposals would be submitted to Gbagbo "soon". Exporters, many of whom deny doing any direct buying in the bush, said one issue would be for the co-operatives to prove that they are trustworthy and can handle large amounts of cocoa.
"The proposal is do-able if the co-operatives have the means to do it and are well organised. It's not really in the interest of exporters to go into the bush if they can be sure of what they will be getting," Karmic Berthed, supply director Barry Callebaut local Sauce unit, told Reuters.
"There aren't many who do it (buying directly in the bush) but they do it to ensure a minimum level of quality," he said, adding that some exporters who had lost out to dishonest or disorganised co-operatives found it difficult to trust them.
A European-based commodity analyst also said quality and supply issues were behind the direct purchases in the bush. "They are probably securing their supply and making sure of what quality they will get as there's a big quality issue with Ivories beans now," he said.
The committee source said the government was reluctant to take action against exporters working in the bush because it recognised co-operatives were not well enough equipped to give exporters exactly what they needed to meet their contracts.
"The co-operatives need a lot of support to reinforce their capacity. It means being able to transport, stock and collect the cocoa and to organise themselves," it said. This would require having more lorries, warehouses and computers. One idea mulled by the committee was to have legally binding supply contracts between co-operatives and exporters.
Other proposals included setting up a system of forward sales to protect farmers' revenues and giving clearer roles to the country's cocoa bodies. Such proposals have been put forward many times in the past but have failed amid bickering between an array of cocoa bodies each with its own vested interests.
With an election in October and the country still split in two by civil war, Gbagbo may find it even harder to push through any serious reform of the unwieldy cocoa sector.