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Cocoa production to lead agricultural sector

Article - April 5, 2017

Côte d’Ivoire‘s agricultural sector is key to its economy and following recent growth, international investment is now being sought to power further development

Agriculture has become a mainstay of Côte d’Ivoire’s economy contributing nearly a quarter to its GDP, but a revamped strategy looks set to ramp that up further over the coming years.

The agricultural sector, which is dominated by products such as cocoa, coffee, cashew nuts and cotton, accounts for at least 50% of the West African nation’s exports and is estimated to support between 60-70% of jobs in the country.

Reforms have already been made in order to make the market sustainable and ensure revenues are more stable through the introduction of a forward auction market. The system was introduced in 2011 by the Conseil Café Cacao (CCC), which manages the regulation and development of the coffee and cocoa sector and replaced the previous system of spot sales, and sees grinders and exporters bidding for export licenses for 70-80% of the country’s output.

“When the current president came into office, he asked for the coffee and cocoa sectors to be reformed. And, amongst other objectives, he guaranteed to secure revenue for the producers, so that they would get at least 60% of the market price,” explains Massandjé Touré-Litsé, the CCC’s Managing Director.

“Today, three years or so after the reforms, it is the exporters who congratulate Côte d’Ivoire because our bet on quality has been achieved. As far as securing their income, they are more than satisfied”

Massandjé Touré-Litsé
Managing Director, Conseil Café Cacao

The remaining output is sold on spot, ensuring the vast majority of sales prices are largely fixed and providing a modicum of predictability for state revenues.  Mamadou Sangafowa Coulibaly, Côte d’Ivoire’s Minister of Agriculture and Rural Development, says that such reforms are helping to revitalize the sector and power wider economic growth.

“Everyone knows that agriculture plays an important role in our country,” he explains. “To revive this sector, we have had two main focuses. The first is to make reforms that improve the governance of the sector, and the second is to develop a national investment program that allows for the return of investments back into the sector.”

The national investment scheme began in 2012 and Mr. Coulibaly says results to date have been impressive, with a surge in job creation across the country. Food security has also improved and revenues from crops such as cashew nuts as well as cocoa are up.

“We have enjoyed sustained agricultural growth and have been able to increase our food crop output by 28% in three years,” explains Mr. Coulibaly. “We have not only seen our quantities grow, but quality has improved as well. And more importantly, income earned by our producers has increased fourfold.”

Mr. Coulibaly adds that cashews have risen in price to 650 francs per kilo (approx. $1.05) against 75 francs before the reforms, while cocoa has more than doubled in price to 850 francs per kilo.

“Everyone needs the cocoa from Côte d’Ivoire,” says Ms. Touré-Litsé, who adds that the improvement in quality has helped the country to fight off competition from fellow cocoa producers such as Ghana. “Today, three years or so after the reforms, it is the exporters who congratulate Côte d’Ivoire because our bet on quality has been achieved. As far as securing their income, they are more than satisfied.”

There is little doubt that the country’s agricultural sector has faced considerable challenges over recent years but Mr. Coulibaly, whose team has remained in place following a reshuffling of the government in January, says the sector has now regained its place in the economy.

The next focus is on private investment, he says, and by 2023 the government wants 50% of its cocoa output to be processed locally to ensure further domestic growth.

It is an ambitious target, but certainly at present, the figures are moving in the right direction. Cocoa production jumped to a record 1.7 million tons in 2014, up from 1.47 million tons in the 2012/13 season and international companies are moving into the space.

France’s Cémoi is investing in a chocolate factory with an annual production capacity of 5,000 tons, but the key will be to use the country’s agricultural growth to deliver structural reforms, which should ensure domestic producers can take a stake further down the production line and move into finished products, thus securing a greater share of the profits.

“It’s important - and not only for cocoa, but in all agricultural sectors. What we have achieved by putting this sector on a growth trajectory is nothing new. Côte d’Ivoire has known agricultural growth in the past. It has never been able to achieve structural transformation of this agricultural economy. This makes it turn from primary/raw to value-added production,” adds Mr. Coulibaly.

“We need finished products produced locally because we have a local market and a sub-regional market,” continues the CCC’s Ms. Touré-Litsé, who adds that other international partners are also in demand to invest in the sector, following the lead of Cémoi.

“We want Americans to come and work in partnership with us to come and set up transformation units such as that of Cémoi. U.S. investors have their part to play,” Touré-Litsé adds. “They are already here. But they should go a bit further down the value chain and transform.”

Mr. Coulibaly adds that despite some apprehension when the reforms were first introduced, Côte d’Ivoire-based operators have been largely satisfied by the positive impact it has had on the market.

The CCC chief is also clear that foreign investors should have confidence in the territory, and its government, as they attempt to become an emerging country by 2020.

“You have to be courageous and get going. Africa is not at the other end of the world. Africa is not that continent of catastrophes, it is the continent of beautiful things. In Africa, there is development, it is the continent on which the rate of growth is greater. It takes bold businessmen to come and invest now.”

The government is also supporting extensive investment into the agricultural sector to both entice foreign direct investors but also to assist domestic producers. The Programme National d’Investissement Agricole (National Program for Agricultural Investment, PNIA) has pledged more than $3 billion to support the growth of cash crops such as cocoa, rubber and palm oil, with the injection already having helped create around one million new jobs for Côte d’Ivoire’s population.

“The PNIA should generate over 2.4 million jobs,” says Mr. Coulibaly. “Today we are already at one million, and the PNIA should contribute to the food security of six to seven million Ivoirians.”

Mr. Coulibaly also highlights the success of the Agriculture and Animal Resources Salon (SARA), an international trade fair that was rebooted after 16 years in 2015 to attract global investors to the country and provide information on opportunities.

“We want to put the accent on private investment, this is why we renewed the SARA platform,” Coulibaly adds.

While much of the focus at trade fairs such as SARA has been on cocoa, it is by no means the only product powering Côte d’Ivoire’s agricultural reawakening. Côte d’Ivoire is Africa’s biggest exporter of palm oil, a sector that is also attracting investment, while the country’s famous coffee industry is also being revived and Ms. Touré-Litsé says rising prices are helping to entice producers back.

“Today, coffee prices are rising, so naturally our production is increasing,” Touré-Litsé explains, adding that the sector has a vital role to play as the country looks to improve life for its citizens.

Indeed, the improving cocoa and coffee sectors are beginning to deliver real change to workers, while a recent tie up between the CCC and Cargill has seen them working with local farmers to deliver improved education and healthcare across the country.

A key aspect to delivering widespread social improvement however partly lies in the price of products, according to Malamine Sanogo, former Director General at the Cotton and Cashew Council (CCA).

“The price of products has an impact on the quality of life in rural areas. That is very important and that is why these reforms have taken place. The objective of these reforms is to ensure that there is an impact,” Mr. Sanogo says.

“If you take the cashew, before the reform, prices were set at 100-200 francs. They were set by the big operators who dictated the market. But with the reforms, prices have doubled or trebled and this has had a direct impact on rural areas. We are now working on capacity building for producers and we are urging that they group together to better sell and organize.”

Mr. Sanogo adds that by grouping cashew growers together and working together with them throughout the production chain, the entire sector can see an uptick in revenues as best practices are passed down. Bundling sales is also having an impact while educating producers about good agricultural practices is helping to ensure the quality of the cashew, and providing a better bottom line for producers.

“We are also developing other services for local producers,” Mr. Sanogo explains. “We are in the process of creating a sector development fund and we will improve the living conditions by digging wells, building schools and health centers, while also providing loans and supporting diversification, which is very important.”

It is another example of how Côte d’Ivoire’s burgeoning agro-industry and the opportunities it affords both domestically and internationally are so pivotal to the country’s future prospects.