A Not So Sweet Situation - Cocoa and Cote d'Ivoire

ABIDJAN, Ivory Coast -  This past month Americans celebrated a holiday, originally of pagan origin, but which has been adopted by popular culture as a day for people to celebrate their love for each other. It is also a day when emotions run high. Men feel compelled to demonstrate their affection by purchasing flowers, chocolate, or other gifts. Women on the other hand, have become expectant of these affirmations, and are often upset if their partners do not deliver one of these market driven tokens of love.

While to some people a Valentine's Day without chocolate would be seen as undesirable, some cocoa producers in the Ivory Coast experienced the exact opposite problem. After an unrealized premonition by cocoa exporters in the Ivory Coast that led to them defaulting on their export contracts, cocoa growers have been left without paychecks while tons of beans have been left to rot or sit at ports along the coast awaiting shipment. Unfortunately for many, the implications of this could have a long-term effect as many producers have been left indebted and unable to prepare their next round of crops.

Perhaps ironically, the Ivory Coast's market system was designed to rely on forward sales in which a minimum market price was set for farmers in hopes of encouraging them to reinvest in their plantations. According to interviews conducted by Reuters, many farmers have not purchased fertilizer or other material for next seasons crops because of the uncertain future and their current state of financial insecurity due to the default. Additionally, this issue has surpassed cocoa farmers and reached shops selling fertilizer and pesticides, many of which have closed as a result of the excruciatingly minimal demand for their products.

While businesses have shut down and many farmers have truncated their plantation cycles, some individuals have refused to be disheartened and have decided to sell their crops for less than the government dictated market price of 1,100 CFA francs ($1.79). Still yet, others have gotten a little more crafty. Although the default has proved harrowing for many, some people have outsmarted the system and began smuggling cocoa across the border to neighboring Ghana and Guinea where they can sell it to make a larger profit than in their homeland.

Even though this has provided temporary relief for some, there does not exist a long term solution. As a result, many have taken to the streets in a cry for help for government assistance during this time of need. Likely fueling the protests is the fact that the Ivory Coast has not used either its stabilization fund or the Reserve Fund to support cocoa sales or otherwise mollify the situation.

Although the future remains uncertain for the cocoa industry in the Ivory Coast, it is almost certain that there will be global ramifications as a result of this situation. The Ivory Coast is the worlds largest cocoa producer, producing an average of 1.65 million tons a year and providing cocoa to companies to companies such as Cadbury, Hershey's, and Nestle. With this in mind, it is perhaps in more peoples best interest than just the cocoa growers that a solution is discovered for this issue, and fast.