Abidjan, July 9 - A sharp increase in fuel prices in Ivory Coast, the world's top cocoa producer, will mean lower farmgate prices paid to cocoa farmers for their beans, exporters said on Wednesday.
They feared cocoa growers would bear the brunt of Monday's government-decreed increase in fuel and diesel prices, by 29 and 44 percent respectively, as buyers, hauliers and exporters tried to offset mounting transport costs.
Like many African countries, Ivory Coast was forced to raise fuel prices because of soaring world oil prices.
"It's inevitable. The increase in the price of fuel, especially diesel, will have an impact on all sectors, including the cocoa industry, as the cost of transport will rise," the sales director of a cocoa export company said on Tuesday.
"If the cost of transport increases, that means a reduction in the farmgate price as it's all the charges in between that determine this final price," he added.
Cocoa farmgate prices in Ivory Coast's main growng areas were mostly up during the week July 1-6 due to the scarcity of beans and strong demand from grinders and exporters.
They remained mostly above the non-binding indicative price for cocoa of 500 CFA francs ($1.20) a kg that the Coffee and Cocoa Bourse (BCC) marketing body has kept for the July to September period, unchanged from the previous April-June period.
The increase in the price of diesel in Ivory Coast from 545 to 785 CFA francs per litre, would force transporters to adjust their rates, another buyer for a European exporter said.
"At the moment, the average transport cost is 15 CFA francs per kilo but I expect this price to rise above 30 CFA francs in the coming weeks," he added.
The hike in transport costs came as the cocoa industry was beginning to feel the benefits of a campaign by Ivory Coast's army chief to crack down on extortion by the military.
Farmers and traders had said the dismantling of roadblocks and arrests of several soldiers and policemen in the last month had led to reduced costs in payouts during transport of beans.
The newly appointed head of the BCC also anticipated reduced farmgate prices as a result of the fuel price hikes.
But Edoukou Kouadio Angoua said this highlighted the need for a system, within the private sector, to maintain price stability for farmers who are vulnerable to swings in national and international markets.
Ivory Coast liberalised its cocoa sector in 2000, ending a system of guaranteed prices and scrapping the state-run Caistab which controlled the sector, but leaving in place a system of agencies and subsidies to promote and regulate production.
"There are the financial means for private stabilisation," Angoua said, without elaborating. "We need to think about the way, the method and the system that we want ... we will discuss (this) with the government."