Chocolate crisis?

By Philippe de Pontet and Anne Fruehauf

The price of your favorite chocolate treat may not have gone up yet, but there is a real chance it will, despite the resolution to the impasse in Cote d’Ivoire, the world’s leading exporter of cocoa. The arrest of former President Laurent Gbagbo after a four-month standoff significantly improves the prospects for a full resumption of cocoa exports. But there are still significant political and logistical hurdles that could affect how much you’ll pay for a candy bar. 

The immediate situation in commercial capital Abidjan is broadly reassuring. Gbagbo urged his supporters to stand down while the incoming President Alassane Ouattara struck a note of national reconciliation in his address to the country. These developments, together with the presence of about 10,000 U.N. peacekeepers, should limit regime-threatening instability, despite the charged atmosphere and the presence of armed militias that represent a potential source of unrest. There was further positive news on April 13 when the Ivorian government reported that the nation’s two main ports would reopen and that cocoa exports would resume within days.

But there are several obstacles to the resumption of full exports that some observers may be missing. Even though the EU and Ouattara have lifted their export bans, cocoa revenues have long been funneled to Gbagbo’s cronies. The incoming government will want to ensure that cocoa sales do not enrich the ex-president’s associates at the expense of the state. That sets the stage for potentially disruptive reforms to the industry.

The other factor is the security situation both in Abidjan and in the restive western regions where most cocoa is produced. Cote d’Ivoire’s west has been the scene of significant turmoil and ongoing retributions in recent weeks. This instability could threaten key transportation corridors from the cocoa fields to San Pedro, the port of departure for about a third of Cote d’Ivoire’s exports.

Additionally, migrant farmers will need to travel back to the planting regions by the end of April in time for the May-July harvest that accounts for about a third of annual production. Instability, roadblocks, and bank closures could be a real deterrent. Commercial banks will need to resume operations for small traders to buy the harvest. Any delays or problems at this level could also influence international prices, despite expectations for a bumper crop.

Philippe de Pontet and Anne Fruehauf are analysts in Eurasia Group’s Africa practice.