Cocoa: Winners and losers

COMMODITIES

Cocoa prices, which were already high before the troubles in Cote d'Ivoire, have now soared. While this is good news for Africa's other producers such as Ghana, it may mean little to Ivorian farmers if they cannot harvest their crop. NEIL FORD reports.

The insurgency by sections of Cote d'Ivoire's military has caused cocoa prices to soar (however, there was a dip following a ceasefire agreement between the rebels and the government early in November). The rebels, whether by design or chance targeted the fertile cocoa producing region of the south-west. While producers within the country itself are threatened by ruin, those elsewhere in West Africa are set to cash in.

Around 70% of the world's cocoa supplies come from West Africa. While Ghana produces 15%, Nigeria 7% and Cameroon 4%, C6te d'Ivoire accounts for a massive 43%, indicating the importance of the unrest in that country to the cocoa sector as a whole.

Even before the fighting began, prices were on the up, partly because Ivorian production had steadily fallen from around 1.4m tonnes in 1998-99 to 950,000 tonnes last year.

Cocoa prices have also been pushed up by increased demand from major manufacturers in anticipation of the Christmas season, and on 18 September the price stood at $2,021 a tonne, up from $1,444 in June.

Since the outbreak of the uprising on 19 September, the price has steadily climbed. By 10 October, the world cocoa price was at a 17 year high with futures contracts at 1,600 ($2,500) a tonne in London.

Although the cocoa season traditionally begins on 1 October, the impact upon producers during the first two weeks of the army rebellion was limited as fighting remained restricted to the north, well away from the cocoa producing region. However, when rebel forces temporarily took the town of Daloa in the cocoa belt, it was feared that the price would sky rocket.

A spokesperson for C6te d'Ivoire's National Coffee and Cocoa Producers' Association said that cocoa prices were higher than they had been for many years but added: "The economy of the country will be forced to its knees if we cannot find a peaceful solution. " He argued: "It's such a scandal and the greatest losers are the coffee and cocoa producers."

BOOM FOR SOME

One of the few positive side effects of the upheaval has been the bumper pay out expected by other cocoa producing countries. The Ghana Cocoa Board (Cocobod) has already increased the price it pays farmers to $763 per tonne of cocoa beans.

However, because Ghana continues to fix prices, farmers have not benefited to the same extent as those elsewhere. In Cameroon, the cocoa price is free to float and farmers are reported to have doubled their earnings on last year's harvest.

The main problem in Ghana is the amount of cocoa that is smuggled into Cote d'Ivoire for export, where its farmers can often obtain a much better price across the border. Indeed it is believed that Ghana's cocoa harvest may be substantially greater than official figures suggest. The chief executive of Cocobod, Kwame Sarpong, estimates that 50,000 tonnes of cocoa were smuggled into Cote d'Ivoire during the last harvest.

The price differential is so great that Ghanaian farmers are expected to continue smuggling their produce into Cote d'Ivoire. Although the rebels control parts of the Ivorian cocoa belt, the government maintains its grip on the main exports ports, which act as conduits for the smuggled cocoa. The Ghanaian government complains that its neighbours impose far too low cocoa taxes. The IMF says that Cote d'Ivoire does not make enough money on its exports and has advised it to increase its cocoa tax.

Even before the rebels moved into Daloa, ED&F Man Cocoa, the world's biggest cocoa company, estimated that global production would fall by 4.1% this year. Suddenly cocoa has become more attractive to commodity brokers. Investors have begun to move into cocoa and other soft commodities such as coffee and wheat as prices have risen and stock markets around the world have remained unstable. Another impact upon the industry has been the International Cocoa Organisation's decision to delay its planned move from London to Abidjan.

RACIAL TENSIONS RISING

One of the greatest effects upon Cote d'Ivoire's cocoa sector has been the loss of many farm workers. Immigrants from other West African countries make up a large proportion of the workforce and many have decided to flee. Most come from Burkina Faso and are known as Burkinabes. Ivorian President Laurent Gbagbo has blamed the government of Burkina Faso for supporting the rebellion and Burkinabes and other foreigners have come under attack by both loyal government forces and groups of young Ivorians.

Until the mid-1990s, Cote d'Ivoire had a tradition of respecting foreigners and of displaying remarkably little ethnic or religious intolerance. But one of the results of the poor economic performance of recent years has been a rising tide of prejudice and attacks upon immigrant workers. The governments of Burkina Faso, Mali and France have all complained about attacks on their citizens.