- COMMUNICATION OF THE COFFEE-COCOA BOARD AS PART OF ITS INFORMATIVE AND AWARENESS TOUR IN COFFEE AND COCOA GROWING AREAS .
- A.OBJECTIVES OF THE REFORM
This reform, inspired by the government program of the President of the Republic aims at:
- Strengthening good governance and transparency in resource management;
- Developing a sustainable cocoa and coffee economy through the reorganization of the production, improvement of productivity and combating worst forms of child labor;
- Safeguard farmer’s income by setting a guaranteed minimum price and improving internal and external marketing
- Establishing strong inter-professional bodies supported by credible farmer Associations.
B.ORIENTATION STRATEGIES ADOPTED
1- Sustainable Cocoa and Coffee Economy
1.1. Production
- Maintaining our position as world leader for the production of cocoa through actions to improve productivity and quality.
- Supporting the strengthening of agricultural research and dissemination.
1.2 Fight against worst forms of child labor
- Participation into the nation 2012-2014 action plan to combat child trafficking, exploitation and labor.
1.2. Policy instruments on sustainable cocoa and coffee economy
- Setting up of a Private‐Public Partnership (PPP) platform aiming at establishing a consultation framework with the private sector on issues related to the sustainability of the coffee and cocoa sector
- Strengthening and improving the implementation of socio‐economic infrastructures through the rural areas investment fund (Fonds d’Investissements en Milieu Rural ‐FIMR).
2- External Marketing
2.1 Management of the physical flow
The Coffee and Cocoa Board has set up a coherent framework to manage the physical flow of the internal marketing to ensure compliance with the admitted prices and quality.
2.1.1 Rules governing the internal marketing
The management procedure of the internal marketing encompasses ten management rules ensuring the smooth running of the internal marketing mechanisms. The rules are outlined as follows:
1.At the beginning of the crop year, the Coffee and Cocoa Board shall provide each certified operator with a unique identification code in the sector. All the departments of the coffee-cocoa production area have been codified by the Coffee and Cocoa Board;
2.The quantity of coffee and cocoa produced in a given area, during a given area during a given crop year shall be collected by farm gate- buyers through the declared trackers, the cooperatives and the exporters operating in the area;
3.Cooperatives and buyers shall make purchase in the area where the their certificate is valid;
4.All certified operators shall be holders of (standardized purchase receipt, voucher and bill of lading) for the management of farm-gate transactions. These receipts are secured so as to prevent each operator from issuing fanciful or falsified receipts:
- Therefore, the exporters shall have books of delivery slip and bill of lading providing the following information:
- oThe transportation vehicle
- oThe origin and quantity of the product
- oThe owner of the product
- oThe destination of the product
- oThe quality of the product.
- The cooperatives and the buyers shall have books of farm-gate purchase receipt and bill of lading;
- Each document shall comprise three stubs: the first for the product supplier; the second to the Coffee and Cocoa Board and the last stub for the entity receiving the product;
5.All farm gate purchases shall be materialized by a receipt issued by the buyer. The trackers shall issue the receipt in the name of the agent of the buyer;
6.Transactions among buyers or intra-cooperatives shall be declared by the operator purchasing the product under the same conditions as the declarations of purchase. They are known as transfer of bush products;
7.Products buyers shall to keep up-to-date their purchase records
8.Any farm gate product buyer shall declare purchases on a weekly basis to the representation of the Coffee and Cocoa Board (regional divisions) of his/her area of operations. The declarations be made no later than one week following purchase shall cover:
- The quantity of the product;
- The purchase price of the product;
- The identity of the buyer;
- The origin of the product (place of purchase);
- The transaction date.
9.The transport of the product from the purchase areas to the exporter warehouses and factories shall be supported by a document called "bill of lading."
The cost of product transport from the purchase areas to the ports shall be integrated into the schedule of guaranteed price so that each operator manages its own equalization.
The schedule also called differential is the cost structure incurred by the stakeholders of the farm gate sector to the product delivery to the importer based outside Côte d'Ivoire
In a stabilized system, the costs of the schedule are guaranteed and otherwise reimbursed to the operators who had borne them. As a matter of fact, the costs shall be correctly evaluated in order to avoid:
- Penalizing the operators (in case the values are minimized and do not cover the actual costs exposed) ;
- Or reduce the revenue of the farmer and the income of the State (in case the values are over-evaluated and offer major margin to the operators.)
In that respect, the Coffee and Cocoa Board has scheduled meetings with cooperatives and processors.
10. Product delivery to the factories and warehouses of the:
- Delivering products to the exporters’ warehouses and factories shall result in the establishment of a delivery slip providing information on the product’s origin, quantity, quality and purchase price;
- At the entry of the exporters’ factories and the warehouses, a systematic quality control shall be conducted by an authorized dealer;
- Poor quality shall be directly sent to manufacturing factories and a discount may be provided at the expense of the product’s owner.
2.1.2 Monitoring of the stakeholders’ activities by the regional delegations of the coffee and cocoa Board
The number of regional delegations of the coffee-cocoa Board in producing areas will be 13. Coffee and cocoa Board departments will be located in the following districts: Abengourou, Abidjan, Aboisso Adzopé/Agboville, Bongouanou, Daloa, Duékoué, Gagnoa, Man, San Pedro, Soubré and Yamoussoukro.
The regional delegations will participate in the awareness and informative tour for stakeholders and will conduct spot checks in buyers’ stores and cooperatives and among producers. These checks shall include:
- The balance between the stated purchases and receipts issued to producers;
- The prices charged to ensure the effective payment of the guaranteed price to producers;
- The quality and quantity of the product in stock;
- The balance between the bills of lading and delivery slips;
- Purchase Record keeping.
Producers will therefore retain purchase receipts issued to them by buyers.
In short, the results expected through the rigorous implementation of the system described above are:
- 1.The farm gate guaranteed price will be complied with in the field;
- 2.The tracking system for physical flows in the field will be efficient through two computer-based systems: SAIGIC will enter data in delivery slips while the market information system (MIS) will enter purchase receipts;
- 3.Statistical information on production will be reliable;
- 4.The quality of the product marketed by buyers and cooperatives will be known;
- 5.The route of the product from the producers will be traceable;
- 6.The procurement capacity of buyers and cooperatives will be known;
- 7.Fraudulent transactions will be exposed.
2.2 Setting a guaranteed price by crop year
Starting from the forthcoming crop year, the Government pledges to set a guaranteed price to producers. This price will be fixed twice per crop year: you will have a price for the main agricultural season and another one for the secondary agricultural season. This price will be at least equal to 60% of the average CIF price (international price) proceeding from the new external marketing system. Even in the event of a drop in international prices, the producer price shall not be less than 50% of the CIF price.
2.3 Determining the guaranteed cost differential or schedule
- Establishment of a differential covering the entire marketing chain of coffee or cocoa and that be summarized by five key steps:
1 Collection of farm-gate products;
2. Transport of products to packing plants (ex-works value);
3. Processing and storage of the product (Loco warehouse value);
4. Handling and preparation operations for export products (FOB value);
5. Product shipment (CIF Value, FCFA/Kg).
- The development of the differential will be done jointly with operators and will be updated at the start of the crop year 2012/2013.
2.4 Improving on product quality
Quality is one of the major issues of the cocoa sector in Côte d'Ivoire. Since the liberalization of the sector, it was found that cocoa quality was continuously deteriorated at all stages of the marketing chain. This resulted in lower incomes in producers and their organizations because of high levels of reimbursement made by exporters and the loss of government revenue.
Considering the behavior of players in the field, you find out that buyers and trackers pick ungraded products, routinely conduct mixtures, and finally deliver very-average-quality or even sub-standard products to exporters.
Producers and cooperatives are also highly liable for the deterioration in the quality obtained at farm gate especially in terms of pre-and-post-harvest practices that constitute the starting point of quality approach.
Players in the field should understand that the requirements of consumer countries in terms of quality are becoming stronger as shown by the large number of laws adopted by the European Union.
The new internal marketing system therefore aims to improve quality. Also, the minimum guaranteed price to producers is based on delivering good quality products. This requires that technical packages before, during and after harvest should be strictly observed. In other words, dear farmer parents and relatives, you must:
- Maintain your farm, keep it clean to promote sound plant growth and regularly trim young plants growing onto cacao trees, preferably during farm cleaning periods;
- Comply with treatment periods of cocoa trees with pesticides: in June-July, the first treatment and in December-January the second one;
- Harvest the pods when fully ripe, to prevent weight loss, poor fermentation, the risk of rot or high levels of bean sprouts;
- Take great care not to harm the beans during pod breaking;
- Ferment properly cocoa pods: the fermentation duration should not exceed 6 days;
- Dry cocoa pods very well, that is reducing the moisture content by 8% to prevent mold growth which is indicative of poor-quality cocoa;
- Sort well cocoa beans because it must be free of foreign material;
- Put cocoa pods in clean bags, free of any odor,
- Store cocoa pods to become dry in a ventilated area with no smoke or odor;
- Finally, avoid storing cocoa on the floor.
Our parents who are farmers are therefore required to give utmost consideration to quality matters; otherwise no one will purchase their products.
As for buyers, it is strictly forbidden to practice price reductions on the producer price. Any buyer failing to abide by the settlement of the price guaranteed to producers will be punished. The penalty can range from temporary suspension of its authorization to its outright withdrawal.
2.5 Other arrangements for producers
The support usually provided to producers and their organizations will be continued and consolidated as shown below:
2.5.1 Management of the bag plant
Bush bags are meant for to private producers, cooperatives, and contractors according to their collection capacity and product delivery rates.
The residual stocks of bags per store will be updated regularly to replenish depending on the smooth run of the activity.
At port areas in Abidjan and San Pedro, the Coffee and Cocoa Board will ensure that exporters give back the equivalent number of empty bags during each delivery of products via inspections.
2.5.2 Management of farm inputs
The Government aims to promote the provision and better use of:
Pesticides ;
Improved planting material (pods, seeds, budwood, and in vitro plants) ;
Fertilizers.
The strategy employed so far needs to be improved to reach out the largest number of producers. Thus, the CNRA will have to enlarge and bring closer the seed fields of production areas.
2.5.3 Funding cooperatives
The Government wants the active participation of producers and their organizations in the management of the sector. To this end, it is important to make these organizations workable. The Ministry of Agriculture is conducting discussions with private partners to finance cooperatives.
To arrive at a better value for money, actions so far taken will be continued and finalized. These are:
2.5.3.1 The census of producers
The census was completed producers. What’s left to be done is to validate the results. This step is to showcase the results in different areas of production of coffee and cocoa by requesting validation from the producers and their communities.
After this process, the business cards that will be used to organize elections for the representation of producers will be issued to them.
2.5.3.2 The identification and evaluation of cooperatives
The identification and evaluation of cooperatives are needed to better target support to be provided to cooperatives. A preliminary survey conducted in January 2012 by the Offices of the Ministry of Agriculture and the Coffee and Cocoa Board accounted for a total of 2,015 cooperatives existing in the coffee and cocoa sector. The evaluation of cooperatives will therefore be made on this basis.
Once this improvement made the capacity of producers and their organizations will be built through:
- Training of producers in farm management;
- Training of cooperatives in organization and good governance;
- Effective monitoring of cooperatives as provided by the law on cooperatives;
- The certification of accounts by authorized auditors.
2.5.4 Partnership with research centers and management structure
At the institutional level, the Departments of coffee and cocoa at ANADER and CNRA will be strengthened on the basis of a planning agreement (program and funding with a requirement for quantified results), to ensure greater efficiency. The point is therefore to redefine and strengthen collaboration between the Board of Coffee-Cocoa and the CNRA, FIRCA and ANADER to:
- Improve varietal research;
- Produce sufficient improved disease-resistant and insect-proof planting material. As such, the sector funded 30 ha of seed fields to increase production capacity of seeds of the CNRA. Finally, the sector is funding the setting up of a Production Laboratory of in vitro plants at CNRA. This Laboratory will multiply faster the best clones of cocoa;
- Improve quality at entry through the strengthening of ANADER’s efforts to provide better support for producers through awareness, information and training.
On Swollen shoot disease, the sector funded the CNRA to make research on control methods against this disease. A guidebook has just been made available to ANADER to educate and train farmers on these methods.
2.5.5 Promoting a sustainable cocoa economy
- Establishment of a public-private partnership
To meet the challenges of sustainable cocoa economy, address the lack of synergy and capitalize all private or public initiatives implemented in the field and to optimize the resources available to the communities in cocoa- producing areas, the platform of public-private partnership will be implemented soon. Thus, continuous dialogue will be established between all stakeholders in the cocoa sector to better coordinate efforts and initiatives to promote a sustainable cocoa and coffee economy.
- Coordination of certification projects
Cocoa certification is based on the principles of traceability and respect of economic, social and environmental sustainability. It aims to improve the living standards of farmers and their communities, while meeting the demands of consumers.
It is in this context that in recent years, certification projects were developed in cocoa producing areas in Côte d’Ivoire on the private sector’s initiative (chocolate makers, exporters, NGOs, etc..).
In order to take corrective action to address the numerous issues which arose from lack of coordination including as well the non-payment of certification premiums to producers, the Coffee and Cocoa Board decided to focus on coordination and monitoring of these projects in cooperation with stakeholders to safeguard the interests of producers and their communities.
The Investment Funds in Rural Areas (FIMR)
- To help improve the living and working conditions of producers and their communities, the program to carry out socio-economic infrastructures initiated since 2008 will continue through the FIMR. This shall include:
- The rehabilitation of feeder roads to fluidize internal marketing activities and ensure compliance with the guaranteed minimum price. To date, over 9,000 km of tracks were rehabilitated in three years;
- The construction of boreholes and rehabilitation of pumps in rural areas;
- The construction of classrooms, accommodation for teachers, provision of furniture and school kits;
- The construction of health centers and provision of essential drugs to health centers, health districts and to teaching hospitals.
III.EXTERNAL MARKETING MECHANISM
3.1 Presentation of the system
- Two sessions of sale per day:
- Morning: From 10:30 to 12:00 GMT
- Afternoon: From 14:00 à 15:30 GMT
- Each session consists of three stages:
- Phase 1: Submission of Bids – Duration, 30 minutes
- Phase 2: Adjudication of tenders – Duration, 15 minutes
- Phase 3: Confirmation of bids – Duration, 45 minutes
- The daily tonnage sold is at the discretion of Coffee and Cocoa Board;
- Reference Pricing is based on prices charged on the LIFFE adjusted by a differential of origin and converted into F CFA/kg;
- The ceiling price of each bid is determined by the limit of escalation;
- The award is made in order of highest price remaining within the limits of escalation;
- In case of equal price, the award will be made in the order of submission based on the arrival time;
- Award is made within the limits of available tonnage and limit by operator raging from 10 to 25% of tonnage sold;
- All released contracts shall be subject to a security deposit representing 2.5% of the contract value and countertrade contract (cover) for local operators;
- Each operator has four (4) working days to provide documents relating to each contract released;
- For the execution of contracts released by international operators, the Coffee and Cocoa Board shall appoint local exporters (shippers) for the execution of these contracts, taking into account of:
– The financial solvency of the local operator;
– The ability to have physical products observing qualitatively and quantitatively the contractual terms.
3.2 Compensation or calculation of repayment and support
- At the beginning of a crop year set a reference CIF price corresponding to the weighted average price of sales secured in advance (forward sales) and sales to be achieved during the crop year (spot sales);
- The comparison of each unfreezing price with the reference price results in three (3) possible situations:
- The unfreezing price is equal to the price reference on a CIF basis. There is no transfer or support;
- The unfreezing price is higher than the price reference on a CIF basis and the gap between the two prices constitute a transfer and shall be paid by the exporter to the Coffee and Cocoa Board;
- The unfreezing price is lower than the price reference on a CIF basis and the gap between these prices is called support and shall be paid by the Coffee and Cocoa Board to the exporter.
- IV.Promoting processing and adding value
- Promoting small processing units and exploring new markets for processed products;
- Preparation of an agreement with processors intended for the local processing of products not meeting quality standards for export;
- Promoting local and regional consumption products of coffee and cocoa through communication campaigns (including the benefits of consumption of products) and promotional campaigns.
V.Taxes and other charges
- Maintenance of existing taxes and other charges to 22% of the CIF price in accordance with commitments made by the Government vis-à-vis development partners;
- Conducting a study on the benefits for the single export tax (DUS) granted by the State to processors, to guide the industrial promotion policy.
VI.Representativeness, professionalization and organization of producers
- Identifying of producers and organizing elections for the selection of delegates;
- Representativeness of producers on the Coffee and Cocoa Council;
- Improvement of the cooperative movements operating in the sector through the identification and evaluation of these cooperatives.
VII. Management Institutional framework
The organizational structure of the reformed sector includes:
- A single public body responsible for the management of the sector:
« The Regulatory Stabilization and Development Board of the Coffee-Cocoa Sector changed into: The Coffee and Cocoa Board»;
- It is composed of a Board of Directors and an Executive Management;
- The Coffee and Cocoa Board is run on a parity basis between the State and the joint-trade organization;
CONCLUSION
This reform will help:
Producers:
- to ensure compensation for any given crop year;
- to improve their income, their living environment and welfare;
- to have a better representation of producers and their professional organizations;
- to combat the worst forms of child labor;
- to lay the foundations for sustainable production.
The Government:
- to benefit from predictable revenue through the transparent management of operations and better management of production and marketing statistics;
- to maintain its position as the world's largest producer of cocoa beans;
- to boost coffee production;
- to reduce poverty in rural areas;
- to improve the Ivorian label.
Other operators:
- to create conditions for fair competition;
- to provide a Permanent Consultation Framework;