Cocoa Trade Reform: Ivory Coast to Phase Out 80% of Middlemen by 2024/25"

The Ivory Coast is on the verge of a significant transformation in its cocoa market. The nation's cocoa authority is set to introduce a reform that will phase out the role of middlemen within the coming year. This initiative is designed to mitigate risks associated with the current system and to address the issue of overpayments.

The target of this reform is the group of intermediaries who currently operate as scouts and buyers, acquiring cocoa beans from remote farms and selling them to exporters. These middlemen are responsible for a substantial 80% of the cocoa volumes that reach the ports of Abidjan and San Pedro. In contrast, cooperatives handle only about 20% of these volumes.

Central to this reform is the implementation of a new traceability and certification system by the Coffee and Cocoa Council (CCC). This system is scheduled to be fully operational by October, marking the start of the 2024/25 cocoa season. It will introduce a digital payment mechanism that covers all sales and purchases of cocoa beans, directly linking farmers with exporters.

Arsene Dadie, the CCC's director of domestic marketing, has indicated that the new system will render the current intermediaries obsolete, as they will not be integrated into this digital framework. The system will be anchored by farmers' identification cards, which double as payment cards, and will primarily involve cocoa cooperatives as the sole intermediaries between exporters and farmers.

To date, the CCC has registered 1.05 million cocoa farmers and has issued approximately 900,000 identification cards, with around 800,000 already distributed. A pilot program involving 580 cooperatives and 22 exporters is currently testing the new sales system.

Dadie has emphasized that the rollout of the traceability system among cooperatives is happening concurrently with the distribution of the cards. This approach is expected to guarantee direct payments to farmers, eliminating the need for any intermediaries in the next cocoa season.

Moreover, the CCC is determined to reduce the influence of intermediary scouts and buyers by cutting down the number of permits available to them and imposing stricter regulations. Those who have been identified as contributors to the current overpayment issues will be barred from receiving permits. The CCC also plans to enforce stringent measures to better regulate the remaining permit holders.

The CCC has reported that approximately 40,000 metric tons of cocoa beans are currently being stockpiled by independent buyers, who are holding back deliveries to the ports and demanding prices up to 1,800 CFA francs per kilo, significantly higher than the official farmgate price of 1,500 CFA francs.

 This situation has led to a slowdown in the supply chain, compelling the CCC to temporarily suspend cocoa bean exports to ensure that local grinders can secure the volumes they need for production. The upcoming reforms are expected to address these challenges, paving the way for a more efficient and equitable cocoa industry in Ivory Coast.