Reforming the Cocoa Marketing System in Ivory Coast

Published Jun 19, 2024
The CCC of Ivory Coast is reforming its cocoa marketing system to eliminate independent intermediary buyers, who currently handle 80% of cocoa transactions and are accused of hoarding and demanding excessive prices. These intermediaries have caused supply chain disruptions, leading to delayed deliveries and temporary export suspensions to prioritize local grinders. Set to be implemented by the 2024/25 season, the CCC’s reforms will cut intermediaries and digitize payment transactions using identification cards for farmers. Cooperatives will become the sole intermediaries, aiming to stabilize prices and ensure efficient supply chains. Although 580 cooperatives and 22 exporters are testing the new system, challenges such as technological infrastructure, farmer education, and enforcement could delay its rollout. The CCC has identified 1.05 million farmers, issuing 900,000 identification cards to support this transition. The success of these reforms will depend on robust technological support and stringent enforcement to prevent regulatory evasion.

The Coffee and Cocoa Council (CCC) of Ivory Coast, the country’s main cocoa regulator, is undertaking significant reforms in its domestic cocoa marketing system. These changes aim to eliminate the role of independent intermediary buyers and address the issues of hoarding and overpayment, which have disrupted the supply chain and impacted the cocoa industry.

Independent intermediary buyers currently handle approximately 80% of the cocoa volumes purchased from farms and delivered to the ports of Abidjan and San Pedro. In contrast, cooperatives manage only 20%. According to the CCC, these intermediaries hoard around 40,000 metric tons (mt) of cocoa beans, leading to delayed deliveries to ports and demanding up to CFA 1,800 per kilogram (kg) (USD 2.96/kg), significantly higher than the official farmgate price of CFA 1,500/kg. The hoarding by intermediaries has slowed the supply of cocoa to exporters. This has forced the CCC to suspend cocoa bean exports temporarily to ensure that local cocoa grinders can procure the necessary volumes for their factories.

The CCC plans to overhaul the domestic cocoa marketing system within a year to eliminate intermediaries and prevent the associated risks and overpayments. The reform will focus on removing intermediaries that source cocoa beans from farms and resell them to exporters. This step is crucial to prevent overpricing and ensure a smoother supply chain. The CCC intends to reduce the number of permits issued to intermediaries and introduce strict restrictions to eliminate non-compliant entities. Intermediaries responsible for current overpayments will be excluded from the system.

The CCC is deploying a new cocoa traceability and certification system, set to be operational by Oct-24, at the start of the 2024/25 cocoa season. This system will digitize all payment transactions for cocoa bean sales, from farmers to exporters. The system will rely on identification cards for farmers, which will also serve as payment cards, streamlining transactions and reducing the potential for fraud and overpayments.

Figure 1. Identification Card Registration in Ivory Coast

Source: Reuters

Under the new system, cocoa cooperatives will become the sole intermediaries between farmers and exporters. This shift aims to provide more structure and oversight in the supply chain. Currently, 580 out of nearly 2,000 cooperatives are participating in a test deployment of the new sales system. Additionally, 22 out of 100 exporters are involved in the testing phase.

The CCC has identified 1.05 million cocoa farmers and issued around 900,000 identification cards, with about 800,000 cards already distributed. This widespread adoption is essential for the successful implementation of the new system. By limiting the number of permits and enforcing stricter controls, the CCC aims to enhance cocoa regulation, ensure fair pricing, and prevent future disruptions.

However, caution regarding this new marketing system is required. Overhauling a system that has been operational for years may take longer than expected, as intermediaries may find loopholes to evade the new reforms. Additionally, deployment of the new traceability and certification system could take longer due to the difficulty of implementing such systems, especially in regions such as West Africa. The challenges associated with technological infrastructure, farmer education, and logistical issues might slow down the rollout process. Ensuring comprehensive training for farmers and cooperatives on the new system and establishing robust technological support will be crucial. Stringent monitoring and enforcement are required to prevent attempts to bypass the new regulations.

The planned CCC reforms represent a significant shift in Ivory Coast's cocoa marketing system. By eliminating independent intermediaries and implementing a robust traceability and certification system, the CCC aims to stabilize the market, ensure fair pricing, and enhance the efficiency of cocoa supply chains. These changes will ultimately benefit farmers, local grinders, and exporters, contributing to the sustainable growth of Ivory Coast's cocoa industry. However, the complexity of overhauling the existing system and the challenges of implementing new technologies require careful management to ensure the success of these reforms.

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