Cargill won't reduce ICoast cocoa ops after "satisfactory" tax talks

Wed Feb 6, 2013 6:28am EST

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* Cargill was re-evaluating after incentives abolished

* Ivory Coast wants to increase domestic cocoa processing

ABIDJAN Feb 6 (Reuters) - Cargill has no plans to reduce its cocoa processing operations in Ivory Coast, citing progress in talks with the government over abolished tax breaks for grinders and increased export levies, company officials said.

The company had said those decisions, taken late last year, would force it to re-evaluate its operations in the world's biggest cocoa grower.

However, following a meeting with the country's prime minister and minister of industry, Cargill officials said there were no plans to reduce the amount of cocoa processed in Ivory Coast or move its grinding operations elsewhere.

"It's not being discussed," said Paul Naar, president of Cargill Europe, late on Tuesday.

Cargill is among the world's leading processors of cocoa and operates facilities in Ivory Coast with a capacity to grind 120,000 tonnes of beans annually.

"The dialogue is ongoing... We're satisfied with the process. Our engagement in Ivory Coast remains the same," said Cargill's Ivory Coast director Lionel Soulard, who also attended the meeting.

Ivory Coast scrapped a 20-year-old tax break for the 2012/13 season that had been given to grinders to encourage more domestic processing of beans.

And in November it decided to levy an export tax on semi-finished cocoa products based on their equivalent weight in beans rather than the nature of the product, essentially raising the export tax on most products by 25 percent.

That led several exporters with local grinding facilities to reconsider whether it was still profitable to process cocoa in Ivory Coast.

Exporters including Cargill, Barry Callebaut, CEMOI and ADM all have grinding operations based in Abidjan or Ivory Coast's second port city of San Pedro.

In 2010, Ivory Coast became the world's top cocoa grinder with a capacity of 532,000 tonnes of beans, turned mainly into cocoa butter and powder.

As part of a sweeping reform of the cocoa sector implemented this season, the government is aiming to locally grind half of its cocoa bean production by 2015.

"We're at around 30 percent. It must be much higher. I think this is one of the objectives of (President Alassane Ouattara)," said Industry Minister Jean Claude Brou.

"We're speaking with all of the grinders, including Cargill, in an atmosphere of trust. I think that things are going well," he said.

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