Reuters logo
Ghana currency woes drive contraband cocoa to Ivory Coast
November 8, 2012 / 2:07 PM / 5 years ago

Ghana currency woes drive contraband cocoa to Ivory Coast

* Flow of smuggled beans reverses

* Caused by Ghana’s struggling currency, late payments to farmers

By Loucoumane Coulibaly

ABIDJAN, Nov 8 (Reuters) - The traditional flow of contraband cocoa from Ivory Coast to Ghana has reversed direction in recent weeks as Ghanaian farmers, frustrated by a falling local currency and payment delays, seek CFA francs, farmers and exporters said.

The shift upends earlier industry projections that an official price gap would drive continued heavy smuggling into No. 2 grower Ghana. If it lasts, smuggling could instead pad output figures this season in top world supplier Ivory Coast.

“Now it’s the Ghanaians who are sending their cocoa here. It’s not a lot for the moment. But we often see little trucks coming from Ghana to unload beans,” said Lambert Aka, who farms north of Abengourou near Ivory Coast’s border with Ghana.

Farmers and exporters said Ghanaian planters were seeking swift payment in CFA francs, the currency of former French colonies in West Africa which is pegged to the euro, to avoid the Ghanaian cedi, which has tumbled in value.

“It is certainly due to the depreciation of Ghana’s currency. And it’s a phenomenon which will increase if it depreciates further,” said a purchasing manager for a European cocoa exporter based in Abidjan.

Joseph Amani, a cocoa farmer and cooperative manager in the Ivorian village of Apprompron near the Ghanaian border, said he had seen many planters bringing cocoa in from Western Ghana.

“Farmers all along the border are selling in Ivory Coast. It is because the CFA is more solid than the cedi,” he said.

Ghana’s cedi plunged nearly 20 percent versus the dollar in the first half of the year on rising import demand to feed its oil-driven economic boom, though the currency has stabilised since August.

Ghanaian farmers have also complained of delays in payment from cocoa regulator Cocobod for beans delivered last season, encouraging them to smuggle.

“There has been some delay in the payment for light crop purchases, but that has been sorted out now,” a major buyer of Ghana cocoa said, asking not to be named.

“We noticed that the volumes being recorded along the border communities are very low. We know it could be due to many factors including smuggling,” he said.

The shift has defied expectations that an official price gap between the two countries would lead to continued smuggling into Ghana this season.

Ivory Coast introduced a broad regulatory reform of its cocoa sector this season that allowed it to fix farmgate prices at 725,000 CFA francs ($1,400) per tonne - a price which at current exchange rates is lower than Ghana’s fixed farmgate price this season of 3,392 cedis ($1,800) per tonne.

Ivory Coast’s new farmgate price, however, marks a 9 percent increase on last year’s average price and is paid to farmers upon delivery - a draw to Ghanaian farmers looking for quick money for their produce.

Ivory Coast-based exporters say they have received no reports of Ivorian cocoa being smuggled to Ghana.

“I‘m not aware of any (Ivorian) cocoa going out to Ghana. We’ve certainly been hearing from farmers in the (border) region that the cocoa is coming from over there,” said another purchasing manager of an Abidjan-based exporter.

A decade of liberalisation, which established a system of spot buying in Ivory Coast, had encouraged rampant smuggling of Ivorian cocoa mainly to Ghana, where government-fixed prices were typically higher.

Industry estimates suggest as much as 200,000 tonnes of Ivorian cocoa were exported illegally during the record 2010/11 harvest. The figure dropped to around 50,000-70,000 tonnes in the recently ended 2011/12 season, traders say, after the country was reunited following a decade-long political crisis that culminated in a civil war.

($1 = 1.8837 cedis)

$1 = 512.4060 CFA francs Additional reporting by Kwasi Kpodo in Accra; Writing by Joe Bavier; Editing by Richard Valdmanis and Jane Baird

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below