Ivory Coast to allocate half cocoa mid-crop to grinders
Category: Cocoa
(Reuters) – Ivory Coast will allocate half of this year’s cocoa mid-crop to local grinders and is working on the details of tax breaks to take effect in the 2015-2016 season in a bid to stimulate the sector, government and industry sources said on Wednesday.
Ivory Coast, the world’s largest cocoa producer, withdrew tax benefits for domestic grinders in 2012 but began negotiations with cocoa grinders this month after the companies said the move had made them less competitive.
“We have opened talks with the government, and the prime minister has already confirmed to us we will have 50 percent of the mid-crop production guaranteed,” said a director of one local grinding company, who asked not to be identified.
The April-to-September mid-crop, which began last week, is around one third the size of the October-to-March main crop.
Production for the 2014-2015 season is running slightly ahead of even last season’s record crop, with 1.275 million tonnes arriving at ports from Oct. 1 to April 6, according to exporters’ estimates.
The 12 grinders — of which the largest include Barry Callebaut, Cargill, Olam and ADM Cocoa — can process more than a third of the country’s roughly 1.7 million tonnes a year of cocoa production.
President Alassane Ouattara’s government aims to increase that to 50 percent by 2020, but grinders say the withdrawal of tax benefits has made it more attractive to process cocoa in Asian countries such as Indonesia and Malaysia.
“The negotiations continued, but it was agreed that the government will give us tax benefits from the 2015-2016 season that will allow us to be competitive on the international market,” said the director of another grinding company, who also spoke on condition of anonymity.
An advisor to the prime minister, who asked not to be named, confirmed that the government aimed to have the new tax measures in place before the start of the 2015-2016 season.
Ivory Coast abandoned a decade of market liberalisation in the 2012/13 season, forward-selling the bulk of its anticipated crop to fix a minimum price for farmers.
The tax benefits for grinders withdrawn in 2012 — which exporters had argued made it impossible for them to compete fairly in the market — were worth around 70 CFA francs per kg.
In the decade before the 2013/14 season, Ivory Coast recorded average annual production of around 1.4 million tonnes, but the International Cocoa Organization said output could top 2 million tonnes in the coming years.
