* Price lowered to 700 from 1,100 CFA francs/kg
* Government also reduces taxes to encourage buying
(Adds CCC comments)
By Loucoumane Coulibaly and Joe Bavier
ABIDJAN, March 30 Ivory Coast slashed the price
it guarantees for cocoa farmers by 36 percent to 700 CFA francs
($1.14) per kilogram on Thursday and reduced taxes for the
April-to-September mid-crop amid a sharp drop in world prices.
The world's top producer sells forward the bulk of its
anticipated harvest to be able to set a minimum price for
farmers. The price was fixed at 1,100 CFA francs/kg at the start
of the current season in October.
However, futures prices on markets in London and New
York have since plummeted following bumper crops in most
of the world's cocoa producers.
"It's a large drop. The government is aware," government
spokesman Bruno Kone told reporters following a cabinet meeting.
The government will also waive a 5 percent registration tax
paid by exporters and reduce several smaller levies for the
mid-crop, reinjecting 43.5 billion CFA francs ($71 million) that
would have gone to government coffers into the marketing system.
Higher than expected output and a wave of export contract
defaults have created a glut of beans in Ivory Coast and
frustrated farmers who have struggled to find buyers.
The crisis forced the Coffee and Cocoa Council (CCC)
marketing board to sell 350,000 tonnes of beans in spot
auctions, sales which it was obliged to support with its reserve
CCC head Massandje Toure-Litse said on Thursday that Ivory
Coast must in future play a bigger role in the marketing of its
"Ivory Coast must be involved in the marketing of cocoa like
it's done in Ghana," she said. "Ivory Coast and Ghana are going
to get together very soon to find solutions to the drastic price
A BLOW TO FARMERS
While Ivory Coast currently organises auctions and fixes a
price scale based on average auction prices, Ghana exerts more
control over its supply chain, securing a syndicated loan each
year to pay for the crop which it sells directly to clients.
Since it introduced its forward sales system in 2012 the
price paid to Ivorian farmers has risen steadily in line with a
years-long trend toward higher world prices.
"Farmers aren't going to like this. Going from 1,100 CFA
francs (per kg) to 700 is a lot," said Dieka Issa Ouattara, who
farms near the village of Fengolo in Ivory Coast's western cocoa
"We're forced to take it. It's like a new colonialism. It's
not forced labour, but it's close," he said.
The sharp drop in prices for farmers - which will likely
create a differential with Ivory Coast's neighbours,
particularly second-biggest producer Ghana - also risks
encouraging cross-border smuggling of beans.
"It's such a blow for farmers. They're pretty much back to
square one," said one Abidjan-based exporter. "Of course it
helps us buy the mid-crop, but it's quite bad for the sector as
($1 = 613.8500 CFA francs)
(Editing by Edward McAllister, Greg Mahlich)