Côte d’Ivoire Tragedy Continues

Alassana Ouattara and Laurent Gbagbo on election posters
Alassana Ouattara and Laurent Gbagbo on election posters. Reuters Photo

First, my apologies for the long silence of this blog. I’ve had a really busy time and blog updates have taken a back seat. But I had to add a post, now that the presidential election in the Côte d’Ivoire has deteriorated into chaos. A quick summary: after five years of delays, the presidential election finally took place on October 31. Initial reports were encouraging, there was little violence and the election seemed to proceed properly. The results let to a runoff election between the two top vote-getters: sitting President Laurent Gbagbo and opposition candidate Alassane Ouattara. The runoff election took place on November 28 and on December 2, the Ivorian Electoral Commission announced that Alassane Ouattare had won the election with 54 percent of the vote.

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FLO Increases Cocoa Floor Price and Social Premium

Here’s a bit of welcome news. For the first time since 1997, the Fairtrade Labelling Organization (FLO) has increased the minimum fairtrade price for cocoa. Starting January 1, 2011, the minimum price will be $2,000/ton up from $1,600/ton. The social premium will also increase from $150/ton to $200/ton.

FLO is the global umbrella organization for all national fairtrade certifiers. It sets the fairtrade standards for the wide variety of goods now available on fairtrade terms. The increase in cocoa prices is long overdue as input costs of farmers have increased over the past thirteen years.

On a practical level, the increase of the minimum price won’t have any input as the market price continues to hover around $3,000/ton. But the increase in the social premium will have an immediate impact as cocoa farmer cooperatives will receive the social premium irrespective of the world market price.

Ghana Increases Producer Prices

With the new cocoa season underway, Ghana’s Cocoa Board (COCOBOD) announced a 33 percent increase in farm gate prices. The new price of GH¢200 per bag lifts the per ton price to GH¢3,200 ($2,238) from last year’s GH2,400. The new prices recognizes the increases in the world market price over the past year.

More importantly, however, it recognizes the prevalence of smuggling which has cut into Ghana’s exports. With some estimates as high as 100,000 tons smuggled to the Côte d’Ivoire last year alone, stopping this outflow has become a top priority of the COCOBOD. Last year’s harvest amounted to 632,024 tons, 10 percent below the 700,000 tons of the 2008/2009 cocoa year.

COCOBOD seems hopeful that the price increase will lift this years total exports above the 700,000 ton level.

Cocoa DNA Unravelled

It was only a question of time before it would happen, but on Wednesday, the New York Times (and many other news outlets) announced that two teams of scientists had sequenced the complete DNA chain of the cocoa tree. Most appropriately, the news appeared in the business section, not the science section. The two rival teams, one financed by Mars, the other a collaboration between French government laboratories and the University of Pennsylvania backed by Hershey, were quick to dispel any worries that the DNA sequence would become private property. The information will be freely available. The Mars project can be found at the Cocoa Genome Project website.

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The Man Who Just Bought 7 Percent of the World’s Cocoa

Anthony Ward, founder and CEO of Armajaro who just took delivery of all that cocoa, gave an interview in January that give some insight into why he bought so much cocoa. He is clearly betting on future shortages and hopes to cash in on the likely profits.

On the other hand there are voices that claim Anthony Ward ended holding the bag (or better over 3 million bags of cocoa) after a deal went wrong. Globe and Mail author Paul Waldie claims that Ward ended up on the “wrong side of a private hedging arrangement with Swiss chocolate-maker Barry Callebaut AG.” On Monday, news surfaced that almost half of the cocoa in question had been passed on to Barry Callebaut. Since then, the London price of cocoa has dropped by almost 6 percent.