Ivory Coast's move to halt the distribution of high-yielding seeds and other advanced tools to cocoa farmers could pave the way for problems regarding quality, more erratic production and the spread of diseases, industry sources warn.
Ivory Coast recently suspended programmes aiming to increase cocoa productivity in an effort to tackle oversupply, which last year drove prices to their lowest in more than nine years and slashed farmer incomes by more than a third.
The seeds can provide significant yield gains but the extent to which they have contributed to a rise in production in top grower Ivory Coast is debated.
Record Two Million Tonnes
Output in Ivory Coast surged to a record 2 million tonnes in the 2016-17 season, from 1.2 million 10 years earlier. Last season, it outstripped demand by some 300,000 tonnes, according to the International Cocoa Organization.
"We have invested a lot of money and also other resources to develop productivity," said one pod counter for a major chocolate maker, estimating yields have risen to 800 kg per hectare, from about 350-400 kg per hectare a decade ago.
Yet industry sources say illegal cocoa in protected forests is the main reason for the supply glut and, as a result, halting productivity efforts will fail to make a significant dent in supply - while giving rise to quality issues and disease.
"The industry has developed the cocoa sector over the last 10 years by injecting millions of dollars," an Ivory Coast-based manager at a major trade house said. "But also the know-how that makes it possible to have beans of excellent quality."
Informal Seed Market
Once the schemes stop, farmers are likely to turn to the informal market for seeds, sources said. This could lead to the use of poor-quality varieties, since the planting material is less likely to be vetted and verified.
"Farmers are still going to replant when their trees die off," said one European source at a firm with a productivity scheme. "It's just going to give rise to a black market in seeds."
Farmers are also more likely to use cuttings from their existing trees to plant new ones, which could facilitate the spread of diseases such as swollen shoot virus.
The virus causes a sharp initial drop in yields and ultimately kills the tree. It has badly affected this season's crop, prompting the Coffee and Cocoa Council (CCC) in January to start uprooting some 300,000 hectares of infected trees.
Less Predictable Production
Sources say the spread of swollen shoot and other diseases could become difficult to manage for the government and cocoa production may become less predictable as a result.
"It's going to have more of an impact on how regular or erratic production is," a European trade house source said.
If the quality of beans were to deteriorate, the policy could backfire by eroding the premiums over London futures paid for Ivorian beans.
In recent years, Ivory Coast has dramatically improved the quality of its cocoa, narrowing the gap between its beans and those of neighbouring Ghana, which are often used in high-end chocolate.
An adviser to the CCC's director general downplayed concerns, saying productivity schemes reach only a small fraction of farmers.
"The impact is limited and will be limited," the adviser said. "There will be no drastic drop in yield or a rapid rise in diseases."
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
