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 neena.rai@dowjones.com
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