ABIDJAN, Ivory Coast--Ivory Coast, the world's top producer of cocoa beans, is expected to levy its export tax on semifinished cocoa products based on their equivalent weight in beans, a major international exporter told Dow Jones Newswires on Tuesday.
This would be a change to the existing tax, which is currently based on the nature of the product being exported. Semifinished cocoa is produced after the beans are roasted and ground. Products include cocoa butter, which is used to make chocolate bars.
"The (export tax) decree is not yet publicly published but it was signed on Sunday," the exporter said on the sidelines of the World Cocoa Conference in Abidjan.
The export-tax change was leaked to the news media the same day that President Alassane Ouattara told the conference, "It is very important that more cocoa-processing activities are conducted here in Ivory Coast."
Edward George, head of soft commodity research at Ecobank, said the tax change runs against the spirit of Mr. Ouattara's reforms for the cocoa sector as the new tax structure would favor the export of raw beans over those of semifinished products. The sector reforms included forward-selling crops and imposing stricter quality standards.
Cocoa processors in Ivory Coast were already feeling the effects of the government's decision in September to remove a long-standing tax break for local grinders. In an interview Monday, French cocoa processor Cemoi said the scrapping of that tax break had resulted in the company investing less money in Ivory Coast's cocoa sector for the season that began Oct. 1.
Market participants at the conference told Dow Jones Newswires that the export-tax change would add pressure to processor margins and deter the grinding of cocoa beans locally.
The change could also lead to an increase in cocoa beans available for trade in the global market.
"Traders concluded that more cocoa could make its way out of Ivory Coast in bean form rather than semifinished products," said Eric Sivry, head of agricultural options brokerage at London-based Marex Spectron. "It theoretically supports the idea that certified stocks could be replenished."
According to figures from Ecobank, Ivory Coast processed a total of 440,000 metric tons last season, up 22% from the prior season and currently processes around one-third of beans domestically. Major bean processors Barry Callebaut (BARN.EB), Archer Daniels Midland (ADM), Cemoi and Cargill all have operations in Ivory Coast.
Write to Neena Rai at [email protected]
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