Global Cocoa Outlook: Côte d'Ivoire Focus
BMI View: Côte d'Ivoire will harvest a record cocoa crop of 1.54mn tonnes in 2013/14. However, the recovery in production will not last, and we see output decreasing in 2014/15. This will keep the global cocoa market in deficit, helping prices averaging higher in 2014 and 2015.
Côte d'Ivoire is on track to harvest a record cocoa crop in 2013/14, as favourable weather throughout the season helped pod development, especially in the mid-crop (April-September). We have revised up our production forecast for the 2013/14 season ending in September and now see production coming in at 1.54mn tonnes, up by 6.6% year-on-year (y-o-y), compared with our previous forecast of 1.52mn tonnes. However, we believe the production recovery recorded in 2013/14 will not last and remain cautious about growth prospects in the country. In 2014/15, we see production declining by 3.5% y-o-y to 1.49mn tonnes.
Over our forecast period to 2017/18, production will only grow by 7.0% on the 2012/13 level to 1.55mn tonnes, near the 2013/14 level. Our expectations for weak production growth mainly stem from low fertiliser use, less favourable weather conditions and poor revenues for farmers. Insufficient government support and pending labour shortages (owing to government efforts to diversify the economy) will also contribute to subdued production growth. Côte d'Ivoire has made some reforms to its cocoa sector, including a change in the price paid to farmers (farmers receive 60% of the total cocoa price since 2012, compared with less than 50% between 2003 and 2011, according to Jeune Afrique). Despite these measures aimed at providing farmers with more financial security, we believe the lingering problems will prevent significant production growth over the long term. Likewise, the CocoaAction plan - a joint agreement signed in May 2014 between the government and 12 of the world's largest chocolate and cocoa companies, including Barry Callebaut, Cargill, Hershey, Nestlé and Olam International, and which aims to boost productivity in the sector - will have limited impact in the coming years.
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