The war over Ivory Coast's cocoa heats up
Ivory Coast is the world's largest cocoa supplier, and Alassane Ouattara, the internationally-recognized leader, is asking cocoa companies to boycott Ivory Coast cocoa in hopes of cutting off the funds keeping rival Gbagbo afloat.
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Even more important, Vines says, will be whether daytime traders in London and New York stop purchasing Ivorian beans – and Thomas Mikulski, a strategist with trading firm Lind-Waldock in Chicago doesn’t think they will.Skip to next paragraph
In Pictures Ivory Coast unrest
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“Traders on the trading floor are not in a wait-and-see mode,” he said. “The see the price ratcheting up and they are buying it.”
Earlier in the week, Outtara wrote to London trading firms asking them to cease.
“If they can stop doing that,” said Ouattara's economic minister, Toikeusse Mabri, “Gbagbo will not have any money and this conflict is going to end very soon.”
In the trading floors of New York or London, Ouattara’s call for a global boycott on Ivoirian cocoa may make for a salty moral dilemma – but back in Ivory Coast, the thought of canceling the trade that of millions of Ivory Coast’s farmers and truckers call their livelihood presents a more immediate predicament.
So far, many of the planters and sellers implicated in the trade have yet to feel the impact.
“We sell our beans without any problems,” Allo Blanchot, an accountant with a small cocoa growers cooperative said. "Even Cargill, the biggest buyer of them all has said it won't buy any more beans, but others are buying, betting that the price will go up."
Should they stop, Gbagbo’s government wants the world to know that millions of Ivorians could suffer during this, the heart of the harvest season.
“Don’t forget that we are talking about seven million people who make their living off of coffee and cocoa,” his Agricultre Minister Issa Malik Coulibaly told reporters, Tuesday. “We don’t have the right, for any reason, no matter what, and still less for a political rationale, to sacrifice these seven million people.”
Even if Ouattara’s cocoa ban succeeds – and brings the conflict to an end by the close of the one-month suspension – analysts say the loss of cocoa revenue by itself would not sweep the Gbagbo government from its entrenched position.
Smuggling to neighboring Ghana and Liberia, Frahauf says, is likely to spike – and Ghana’s cocoa production is already up 52 percent this year, she adds.
Between the farm gate and the Ghanaian border, an Ivoriain trucker carting cocoa could expect to pass through hundreds of miles of regularly roadblocked highways where soldiers demand their de-facto salary.
“There will be a lot of irregular taxation or just plain extortion,” she says.
Plus, cocoa only accounts for twenty percent of the country’s revenue, Vines adds.
“There’s still oil” – an almost impossible export to ban – “which brings in as much money as does cocoa,” he says.
For chocolate gourmands unwrapping Godiva’s on Valentine’s, the Ivorian conflict is likely to mean two things – primarily, confusion over whether the sweets we savor are funding chaos in a near-voiceless part of the planet.
And, of course, higher prices.
The product sells at about $3,330 per metric ton as of Jan. 26.
“Right now, you can expect to see small jumps in retail price,” said Hector Galvan, a senior trading adviser at RJO Futures in Chicago. “If cocoa continues to climb to $3,500, $3,600, $3,700, you’re going to see some noticeable changes, but not anything where these things jump two or three hundred percent.”
“We shouldn’t take for granted,” he added, “that a conflict in a certain part of the world can reach across the globe very easily now, not because of guns and bullets but because of the way commodities are priced everyday.”