Microkhan by Brendan I. Koerner

No Half Measures

September 19th, 2012 · 1 Comment

The Ivorian government thinks it’s trying to do its cocoa farmers a solid by guaranteeing export prices, rather than leaving folks at the mercy of a capricious market. But the farmers don’t seem to appreciate the gesture, for the way the prices are apparently being calculated by bureaucrats who don’t understand the country’s on-the-ground realities:

Cocoa merchants in Ivory Coast are threatening to block supplies or resort to smuggling if a prolonged dispute with the country’s marketing body over transport costs is not resolved before the start of the new season next month.

The world’s top grower will begin harvesting the 2012/13 crop on October 1 under a sweeping reform aimed at guaranteeing prices for farmers. The Coffee and Cocoa Council (CCC) is due to set both a CIF (cost insurance, freight) export price and a farmgate price, which takes into account taxes and estimated handling costs incurred to get the beans from farm to port.

But merchants say a 51.7 CFA franc per kilogramme over-land transport cost estimate proposed by the CCC in July does not reflect the myriad bribes and illegal taxes they must pay to soldiers, police and customs agents en route to port.

“There are unauthorised roadblocks to pay, but they are not taken into account. We can’t work with 51.7 francs when right now even at 100 francs you’re making nothing,” said Daniel Aka, a cocoa merchant based in Abengourou in the country’s east.

Mr. Aka’s reality check reminds me of Rodney Dangerfield’s economics lesson from Back to School. Systems with numerous (and avaricious) moving parts are never as simple as textbooks make them out to be.

(Image via Cara in Cocody)

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