ABIDJAN/NEW YORK, Jan 11 (Reuters) – Farmers in top cocoa grower Ivory Coast say the current crop is worsening, with beans starting to rot, as lack of financing prevents them from properly fermenting and drying beans already stressed by bad weather.
Front-month New York cocoa futures traded on ICE have risen nearly 15 percent since the start of December, mainly on worries over consistently dry weather in Ivory Coast, traders said. The conditions were brought on by seasonal Harmattan winds that sweep in sand from the Sahara, which can ravage cocoa pods and sap soil moisture, leading to smaller beans.
Financing of cocoa bean purchases and exports is vital to Ivory Coast, the world’s largest producer, with an annual yield of about 2 million tonnes, or about one-third of the world’s cocoa. Farmers say that banks which arrange financing for farmers and middlemen known as pisteurs, who purchase beans from farmers to sell to exporters, have pulled back on funding in the wake of the bankruptcy of the country’s largest exporter.
That has left farmers unable to care for their plantations or combat the degradation of their beans.
“I have to put the fertilizer once a year and spray the field three to four times a year each quarter. But I can not do it because I have no money,” said Etienne Koidja, a farmer in San Pedro, Ivory Coast. “Pisteurs and exporters who were helping us also have no money because the banks did not finance.”
Banks have reduced financing for smaller exporters in the wake of the collapse of SAF-Cacao in July. Ivorian banks have struggled to get paid for loans to exporters during the country’s 2016/17 season, which was also marred by crisis.
With local exporters not able to send products abroad, ports are letting shipments of the commodity sit and therefore deteriorate further.