ROOT CAUSE OF THE CRISIS WITHIN THE COCOA SECTOR IN IVORY COAST...
Over 600,000 cocoa farmers in the Ivory Coast ( the largest producer and exporter of cocoa in the world with over 40% of global production) have gone on a country wide strike on Monday 16 October 2006, to protest against low farm gate prices of cocoa set by the government at $US 0,80/kg and high export taxes.
Copy of a letter addressed to Mr. Henri Amouzou - president of ANAPROCI, the association representing cocoa and coffee farmers in Ivory Coast- with regards to the severe crisis prevailing within the cocoa sector in Ivory Coast.
Dear Mr. Amouzou,
I am writing to you with regards to the severe crisis prevailing within the cocoa sector in Ivory Coast. I have read about your decision to call on a general strike to obtain an increase in cocoa farm-gate prices and a decrease in government taxes.
"A well defined problem is half resolved." Einstein
However, you must address the root cause leading to low prices of cocoa on the world market; namely, the STRUCTURAL OVER SUPPLY of cocoa on world markets which is driving down both world prices and farm gate prices of cocoa in Ivory Coast. In fact, the Ivory Coast along with other major cocoa producers in the world ( Ghana, Indonesia, etc.) are caught in a vicious trap cycle of structural over supply of cocoa resulting in declining prices of cocoa on the world market, followed by further increases in production to make up for the loss of income resulting from the initial price decline, which itself leads to further price decline…It is this vicious trap cycle which MUST be broken!
Example: Ghana ( 2nd largest producer of cocoa in the world)
In response to declining prices of cocoa on the world market, Ghana increased its production from 320,000 MT to 450,000 MT between 1996 and 2000. This led to an excess supply of cocoa on the world market, with a resulting further 40% decline in the price of cocoa during the same period.
“Structural over supply in the commodity market lies at the heart of global poverty and instability.” ( Brandt Report, 1980)
The Ivory Coast - which accounts for over 40% of global cocoa production - is in a favorable position to break this vicious trap cycle. In fact, West Africa produces close to 70% of cocoa in the world; Thus, if Ivory Coast, Ghana, Nigeria, Cameroun, and other major producers of cocoa ( i.e Indonesia, Malaysia, etc.) set up a cartel similar to the OPEP cartel, you could set production quotas and prices that would be mutually beneficial to all cocoa producing and exporting nations, thereby breaking free from the vicious trap cycle of the world market.
Value addition
You must also process the cocoa locally - add value to the cocoa instead of exporting raw cocoa -so as to break free from the dictate of the world market. Furthermore, local value addition will create investment, employment and will generate income, thus creating economic growth. The wealth generated from local value addition will also enable the government to collect more taxes which can be used to invest in infrastructures to attract further investment within the sector (i.e. power supply, roads, etc.), thereby creating a favorable environment for local value addition of cocoa and other primary agricultural commodities facing the same problem (i.e coffee, cotton, etc.)
Under the current system, you are only reinforcing the trap cycle and digging your own graves in the process...
I wish you all the success in your struggle against the economic and social injustice facing the cocoa and coffee farmers in the Ivory Coast.
Truthfully,
Arya Tajdin.
Executive Director
Yajna Centre
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