Ange Aboa

ABIDJAN, (Reuters) – The cocoa board of Ivory Coast will give a maximum allocation of 200,000 tonnes to local exporters in this season. This is half the amount that was planned under a government decree. Five industry sources spoke to Reuters Thursday.

To improve the competition in Ivory Coast’s biggest cocoa-exporting nation, the government decided that 20 percent of all cocoa imports from multinational companies must be made in Ivory Coast.

This would have meant that more than 400,000 tons of beans were available in the season of 2021/22. Two sources from CCC stated that the Cocoa and Coffee Council (CCC), the regulator, has ruled it can’t be implemented fully because local exporters don’t have the logistical or financial capacity to handle the volume.

One source said that while we have begun to allocate international contracts volumes to local exporters, they are now aware that they can’t export 20% of what the government has given them.”

Three local companies spoke on condition anonymity to say that the CCC informed them that local exporters would have a cut of 200,000 tonnes.

This decree was intended to alter the current status quo in which major international chocolate producers use more financial power to purchase and export cocoa while smaller local companies lack financing.

However, local banks remain wary about funding exporters even if international contracts have been guaranteed according to CCC and two sector sources.

The main threat for banks is the weak supply chains of local exporters, which must be capable of securing the required volumes.

These exporters pose too much risk to us. The exporters have no collateral so we don’t know if they can buy the cocoa, even if we loan them money,” explained the credit manager for one of the most important banks that finance the cocoa industry.

According to another banker, a predicted drop in cocoa output this year has raised worries about fierce competition for bean production. This will be detrimental to small exporters.

Source: “Under such conditions, the small ones pose a threat to us.”

A third CCC source stated that the CCC might redistribute international contracts to some local exporters.

The source stated that “we cannot risk local exporters defaulting” and suggested that they are looking into the possibility of cancelling contracts with those without financing, as well as giving the funds to those with financing.