Ivory Coast Could Lose Cocoa Price Supports

This country, the world’s largest cocoa producer, may be forced to consider a previously unthinkable option after the failure of international cocoa talks: cutting the support price it pays to millions of people who depend on cocoa for their livelihoods.

That would be a particularly difficult political and economic decision for a country that has grown rich off the fat of cocoa butter and where 4 million farmers depend on getting a fixed price for a commodity whose value has plunged.

This week, Ivory Coast said it had abandoned plans to increase cocoa production to a million metric tons a year because of the recent slump in world prices, which has resulted in the country losing money on all exported cocoa. The country’s present crop is estimated at 630,000 tons.

“The initial objective of our country to produce a million tons is no more than a dream,” the official Ivorian daily Fraternite Matin said.

Ivorians, worried by the inability of International Cocoa Organization members to settle a serious price dispute at a meeting last month in London, ask: How long can Ivory Coast continue to pay a fixed price to the people who depend on cocoa?

Touchy Issue

The question, as touchy an issue in this West African nation as who will succeed aging President Felix Houphouet-Boigny--often described as the country’s top farmer because of his enormous cocoa holdings--has been broached in Fraternite Matin.

“If the situation persists,” the newspaper said, referring to government losses resulting from price supports, “maybe it is the internal structure that must be revised.

“Reduce the price paid the producer? Cut the costs of harvesting and shipping? These are the questions which have to be answered,” the daily said after the London talks.

The government is quick to note that such talk is hypothetical. “It is nothing more than a question being posed,” one senior Agriculture Ministry source said.

But cocoa traders and other analysts here think it is only a matter of time before Ivory Coast has to act.

“When I got here, it (cutting price supports) seemed like something that would never happen,” one cocoa analyst said. “Now I wouldn’t be surprised if, . . . before the start of next season, the president comes on television to explain why the support prices have to be reduced.”

However, farmers here do not seem to believe that they will be affected by the recent collapse of the London cocoa talks and continued low world prices.

“As long as the government comes and pays . . . (the support price of about 64 cents a pound), that’s all that matters,” said Edouard Sedja-Ak, 58, a farmer.

TURMOIL ON COCOA MARKETS

PRICES COLLAPSE Friday close of May, 1988, cocoa contract on the N.Y. Coffee Sugar and Cocoa Exchange since April 20, 1987; in dollars per metric ton.