Chocolate Producers React Cautiously to Ivory Coast Cocoa Situation

Chocolate Producers React Cautiously to Ivory Coast Cocoa Situation
Source: FLEXNEWS
23/10/2006

23 October 2006 -

Ivory Coast cocoa farmers suspended a 3-day strike on Wednesday 18 October to allow the government time to resolve the problem of the producer price. However, should the response be negative, the strike will resume without prior warning from Wednesday 25 October, a cocoa farmers' association spokesman told journalists.

The strike was initially carried out on Monday 16 October after authorities opened the harvesting season and announced a retail price of USD 80 cents per kilo. The Ivory Coast Cocoa Association, however, told the media that farmers are seeking USD 1.15 per kilo.

According to Ivory Coast government statistics, the country is the world's top grower of cocoa beans, producing 40% of global output. Nonetheless, analysts believe that if the strike resumes, it would have to stretch out for weeks before eventually impacting world supplies and prices. Numerous press reports, however, claim that the chocolate industry could be threatened.

Forward-Thinking Producers

Leading Swiss chocolate manufacturer, Barry Callebaut, is rather optimistic about the situation in the Ivory Coast. Gaby Tschofen, Vice-President of Corporate Communications at the firm informed FLEXNEWS that the Swiss chocolate manufacturer has cocoa bean stocks in its factories, and processing is going on normally.

We believe that the current farmer protests will only have a short-term price effect. We don't expect a long-lasting price effect, given the level of cocoa bean stocks in consuming countries and given current forecasts that say supply will meet demand, added Tschofen.

Nestl, another global leader in the chocolate industry, told FLEXNEWS that the company was monitoring the Ivory Coast situation very closely. "Nestl purchases its cocoa from a number of countries, including the Ivory Coast. Thus we do not rely on any one country for our cocoa supplies, said Robin Tickle, of the firms communication department.

Stratfor, a security consulting intelligence agency, believes that, if the strike resumes, it is not likely to last very long. The agency adds that cocoa farmers in the country are very poor and getting their short-lived cocoa crop to port, and then exported, is time-critical. They cannot afford to have their crop rot as a consequence of a long strike, the agency said.