ABIDJAN (Reuters) - Ivory Coast’s government has ended consultations with cocoa exporters and farmers on planned reforms to the sector that will guarantee its hundreds of thousands of smallholders a minimum selling price, officials said on Thursday.
The comprehensive reforms will effectively end a decade of liberalisation that left farmers beholden to the whims of international commodity markets, creating uncertainty that discouraged investment in their plantations.
But exporters, bankers and some farmers involved in discussions, which ended late on Wednesday after just three days, complained that they were too rushed, and some doubted whether their concerns were taken on board.
“We get the feeling they’ve already decided on everything and so these meetings were just to tell us what they’ve already resolved to do,” said the director of a European export company in Abidjan, who declined to be named.
Finance minister Charles Koffi Diby told Reuters on Tuesday the reforms will be launched by next month.
Exporters worry about a plan to have the government arrange transport and charge them for it, rather than organising it themselves, and they want more clarity on how it will work.
They also say it is unclear who will pay for the running of the regional warehouses that are to be set up for buying and stocking beans, and they fear new quality controls could herald too much state interference.
“They tried to reassure us about our doubts, but they want to move on this as quickly as possible, and I think that’s what will happen,” the exporter said. “They’ll go ahead with an imperfect system then tinker with it as they go along.”
President Alassane Ouattara is pushing ahead with reforms to the cocoa sector that were temporarily derailed by a violent power struggle between him and former President Laurent Gbagbo over a disputed election last November.
They are seen as the last hurdle to IMF and World Bank debt relief on some $3 billion of obligations.
The new reforms will guarantee farmers a minimum selling price, bringing the sector more in line with the regulated industry in world’s No. 2 grower Ghana.
Farmers will get at least half of the average export price for the season, including insurance and transport costs, a price the state will establish by selling more than three quarters of the cocoa ahead of time in forward contracts.
Farmers have welcomed the move, but a number of farmers’ cooperatives are unhappy about a clause that will allow exporters to purchase cocoa directly, which they fear will undermine them and their related social programmes.
Farmers’ cooperatives produce about a fifth of Ivory Coast’s cocoa output, which last season set a new record of 1.5 million tonnes.
“It’s not good if the exporters are coming in and competing with our members. That will kill us, because already middlemen undermine our operations by coming to the field with ready cash,” said cooperative manager Alphonse Beda.
“If the exporters do that as well, we’re finished. We’ll demonstrate against it if that proves necessary.”
Beda added however that farmers were happy with the core policy to stabilise prices, which would enable farmers to manage their income much better.
Meanwhile, the banking sector says it wants more clarity on the financial mechanics behind the forward contracts, and how Ouattara’s government intends to guarantee them.
Analysts doubt the markets will accept guarantees from a government with a poor record on meeting financial obligations.
“We raised some concerns, but we know they are just going ahead with this,” said a senior official in a French bank. “But perhaps its more important they do, to get the HPIC (IMF and World Bank) debt relief, then work out the details later.”