Ripple Effect of Cote D’Ivoire Politics to make Chocolates Dearer

The electoral dispute between Alassane Ouattra, the internationally recognised winner of Cote d’Ivoire’s presidential election and Laurent Gbagbo, his election rival who has refused to relinquish the presidency has resulted in the former declaring cocoa export ban. If the ban is implemented, industry experts believe the cocoa prices that have already hit 30-year high today would go beyond all statistical figures as chocolate demand will increase with Easter approaching.

Ouattara announced a one-month suspension on exports of cocoa yesterday to choke his rival Gbagbo’s source of income which he uses to run his government machinery that includes military and state workers. Ouattara, who is in a hotel guarded by the United Nations troops, said anyone not adhering to the ban would be considered to be “financing the illegitimate regime” of Laurent Gbagbo.

The markets reacted immediately to Ouattara’s ban call - cocoa prices jumped 7.4 percent this morning in London, reaching GBP2,307 per tonne of cocoa while New York ICE second-month cocoa futures rose more than 4 percent to a one-year high of US$3,340 a tonne.

However, it is not clear whether Ouattara’ export ban could be enforced easily as it needs the support of the international cocoa buyers as well. Moreover, the supply routes and ports are controlled by Gbagbo’s troops. The high prices for cocoa in the global market are also understood to expand chances of creating a smuggling environment which may eventually help Gbagbo to earn more.

Cote d’Ivoire is the world’s largest cocoa exporter, producing more than a third of the world’s supply, and the commodity is the main source of income for the government. Cocoa accounts for about 20 percent of Cote d’Ivoire’s Gross Domestic Product.

By Jose Roy