Prices for cocoa on the global market have nearly tripled since 2023, but farmers in Ivory Coast have found it hard to cash in. The cocoa trade in the country is controlled by government-run regulator Conseil du Café-Cacao, which sets prices.

Kigali

Global cocoa prices have nearly tripled since 2023 due to supply issues such as bad weather and disease, but farmers in Ivory Coast are not benefiting from the surge. The government regulator sets domestic cocoa prices at about a third of the global market rate, prompting many farmers to smuggle beans into neighboring countries where they can earn significantly more.

This smuggling has led to a drop in official cocoa shipments from Ivory Coast and is affecting the national budget, as cocoa accounts for up to 40% of export revenue. The trend also complicates international sourcing, with buyers facing shortages and traceability issues, especially ahead of new EU regulations. As a result, higher prices are being passed on to consumers worldwide.

People smuggling cocoa beans out of Ivory Coast

prices for cocoa on the global market have nearly tripled since 2023 as bad weather and disease outbreaks exacerbate supply issues. But farmers in Ivory Coast have found it hard to cash in as the government run regulator sets the price at about a third of the global level fueling smuggling of the crop to neighboring countries. For more Bloomberg's on your ganga joins us now from Kigali Rwanda. And you talk to us about the incentive to smuggle cocoa and how smugglers actually get it out of the Ivory Coast. Looking obviously to take advantage of these higher cocoa prices now. Jumana smuggling is a dangerous but highly lucrative business. Now when you're caught you face up to 10 years in prison or pay a fine of up to eighty six thousand dollars. But on the flip side if you're not caught you can make up to two hundred and forty dollars a week in comparison to eighty dollars which is a monthly living wage in the country. So that is incentive enough. If you also look at the prices of cocoa in the international market they've nearly tripled. They peaked at 13000. Now they've settled at 9000. And in the intro you mentioned that there are a couple of other factors that are fueling shortage bad weather diseases and investment in the industry. And all these are factors that are just leading to price gains in the international market. And as a result we are seeing prices soar. But farmers are not feeling the gains because most of their beans are bought by government run institutions. And this is because the government is trying to insulate farmers from volatility in the international market. Now when the prices are low the farmers enjoy the cushion. But when the prices are high they can't help but feel shortchanged particularly when countries like Togo Liberia and Guinea are offering to pay nearly twice what the government is paying in Cote d'Ivoire to buy just a ton or a bag of the beans. And so we are seeing smuggling on the rise motorbikes and trucks taking alternative routes in the night trying to smuggle cocoa out of Ivory Coast into neighboring countries like Guinea. And as a result despite Guinea not making enough investment to boost domestic cocoa production their shipments have grown by 15 percent. And while they are reaping the benefits the pain is being felt across the border. And as you know how is the smuggling actually impacting the economy in both in Ivory Coast but also just broadly more broadly in the region as well. What sort of an impact is it having. Demand is unfolding quite first in 2023 2024 shipments of cocoa at the port dropped by over 30 percent. And while there are other factors contributing to this the government says of a hundred thousand tons were smuggled out of the country in comparison to one point seven million tons that they produced in that season. And because cocoa account for up to 40 percent of total export revenue for the government this could leave a big dent in their national budget and also their development plans in the country. Other people who are also feeling the pain are international buyers. Sourcing has become more difficult because one there's shortage and two you cannot trace the bins particularly now that EU regulations are going to come into effect on the 30th of December. If you cannot trace the bins then you are unable to rule out deforestation and child labor from the value chain. And that means that it will be harder for these bins to be absorbed in the international market. Exporters and traders are also feeling the pinch because when there's a shortage then they're torn between either breaking the law or paying exorbitant prices at Farmgate to be able to get their hands on these coffee bins. And that means cocoa bins rather. And that means that these prices are being passed down to the consumers. A cup of chocolate is higher and also above chocolate. Prices are going higher and higher.

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