June 19, 2014 12:19 am

Ivory Coast cocoa reforms leave bittersweet taste

Dried cocoa beans are packed in hessian sacks on a cocoa farm near Amankwakram in Western Ghana on the border with Ivory coast©Reuters

In the past 15 years, the World Bank has been involved in not one but two shake-ups of the way Ivory Coast runs its vital cocoa sector. In the interim, the country – previously west Africa’s most prosperous – descended into intermittent conflict, turmoil and division. Competing interests sidetracked reform. Now, the head of the new cocoa authority hopes they have finally got it right.

Since late 2012, guaranteed prices have been reinstated for farmers, ending the liberalised system introduced under the previous reorganisation. Most of the harvest is now purchased in advance, and a revamped Coffee and Cocoa Council is trying to restore confidence in a sector struggling with ageing plantations, low yields and a history of racketeering.

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Massandjé Touré-Litsé, the council’s chief executive, described the decade of liberalisation as “a mess”. Smallholder farmers – about 800,000 planteurs grow cocoa and/or coffee – were ill-equipped to negotiate with powerful middlemen, she says, and incomes suffered.

But was the World Bank not also behind that previous reform? She laughs, noting: “They said it was more a question of governance, not that the reform was bad.”

Developed for export under French colonial rule, cocoa was promoted strongly after independence, and Ivory Coast overtook neighbouring Ghana as chief supplier. It still produces more than a third of the world’s cocoa. But the sector’s future has been uncertain and the chocolate industry has become sensitive to consumer concerns about issues such as child labour.

The old system, controlled by a state marketing board, ran into deep deficit. Under the first reform, it was replaced by an array of mostly private-sector bodies, which – according to a World Bank economist – were “poorly and inappropriately managed”.

After conflict erupted in 2002, government and rebels both levied cocoa taxes. “Vested interests found ways to cream off rent,” the official says. Last November, 15 former “cocoa barons” were jailed for up to 20 years for embezzlement and other charges.

Cocoa reform, including a new framework and reduced taxation, was among conditions set by the World Bank and IMF for an overdue debt write-off, and was also linked to budget support from the bank. Matters were unresolved until Alassane Ouattara, a former IMF deputy managing director, became president in 2011 after a contested election.

Ms Touré-Litsé says top exporters have welcomed the changes, and quality has improved. Minimum farm-gate prices – 60 per cent of international market prices – were being rigorously enforced.

The World Bank is now backing a public-private partnership for cocoa in the country’s southwest. But how does the bank reconcile the new fixed-price system with free-market orthodoxy? “We’re not always orthodox,” the World Bank economist replies.

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