The Ivoirian government plans to cut taxes on cocoa sales and exports during the next farming season. This would help boost minimum price to producer, a source with knowledge of the matter told Bloomberg.
According to the source, if the taxes are not reduced, price to producer is unlikely to increase. However, this increase would help Cote d’Ivoire curb cocoa smuggling to Ghana whose tariffs are currently more attractive.Truly, many believe the country could lose up to 400,000 tons of cocoa to Ghana due to smuggling.
After the global drop in prices of cocoa, Ivory Coast had to reduce its price to producer to CFA700, from as much as CFA1100 before. The decrease was to be expected as the country had decided to push farmers to produce more in order to reinforce its position as leading cocoa producer worldwide.
Strangely, a few years back, Jean-Marc Anga from the International Cocoa and Coffee Organization (ICCO) had warned that oversupply could bring prices down, but at the time the country aimed at raising its cocoa output above two million tons.
A target which the country almost achieved as its output for the ongoing season will stand around 1.98 million tonnes. However, for the next season, sources close to public authorities said the country expects its output to stand between 1.72 million and 1.75 million tonnes. Will this volume will be enough to clear global surplus and help pull prices back up? That is yet to be known.