UPDATE 2-I.Coast sets high cocoa farmgate price, exporters wary

Fri Mar 29, 2013 11:46am EDT

* Mid-crop farmgate set at 700 CFA francs/kg

* Represents 25-franc reduction of main crop price

* Farmers happy, exporters sceptical (Adds farmer and exporter comments, details)

By Loucoumane Coulibaly

ABIDJAN, March 29 (Reuters) - Ivory Coast fixed a cocoa farmgate price of 700 CFA francs ($1.37) per kg for the April-to-September mid-crop, the head of the marketing board said, a higher-than-expected figure that pleased growers but left exporters sceptical.

The world's top cocoa producer forward sold the bulk of its 2012/13 harvest in order to introduce a guaranteed price for farmers at the start of the season in October.

The auctions, part of sweeping reforms aimed at improving the livelihood of farmers, ended more than a decade of sector liberalisation and a system of spot buying.

"The proposed 700 CFA francs per kilogramme represents a very incentivising price for the farmers," Lambert Kouassi Konan, chairman of the Coffee and Cocoa Council (CCC), told journalists in Abidjan on Friday.

"We've seen a very visible improvement in quality (this season), proving that the farmers are capable of producing good-quality beans," he said.

Mid-crop beans are typically smaller and of lower quality than those of the main crop and fetch a lower price on the world market. The new price represents a 25 franc discount on the main crop farmgate of 725 CFA francs per kg.

"We can work with that. Before, we were getting 400 or 500 (francs) during the mid-crop. This is already much better," said Dieka Issa Ouattara, who farms near the western town of Fengolo.

The CCC also announced a maximum bean count - the measure of bean size - of 120 beans per 100g for the mid-crop.

"For the farmers, this price isn't bad. And with this bean count there will be no problem," said Marcel Aka, the head of a farmer cooperative based in Daloa.

Kouassi said the main crop price had succeeded in stopping the flow of smuggled cocoa across the border into neighbouring Ghana, the world's number 2 producer, where government-enforced prices have long exceeded those in Ivory Coast.

Production for the season is lagging behind 2011/13 levels, however, he said.

"We've observed a drop in production. We are waiting for the end of the (main crop) harvest to have a real idea of the trend," he said.

NOT MANY TAKERS

Exporters had demanded a discount of 80 CFA francs/kg on the cost, insurance and freight (CIF) export price after the CCC initially offered a 30 franc reduction during talks in December and January.

The new CIF price of 1,157 CFA francs/kg represents a 51 franc discount, including 25 francs coming from the reduction in the farmgate price.

The source of the remainder of the discount was unclear, though exporters said at least some of it was due to a reduction in percentage-based taxes.

"It's going to be hard. It's a high price for cocoa that isn't good quality," the head of a San Pedro-based export firm said.

The mid-crop harvest typically attracts fewer bean exporters than the larger main crop, and much of the production is channelled towards firms with processing facilities in Ivory Coast.

Under the reform, Ivory Coast, which is also the world's leading grinder of beans, aims to boost its processing capacity and locally transform half of its output into semi-refined products. It currently grinds around a third of its beans.

The purchases manager of an Abidjan-based exporter said the new price may benefit Ivory Coast-based processors.

"It requires some close analysis, but I'm not sure there will be a lot of takers. But maybe the grinders will buy it," he said. ($1 = 510.8300 CFA francs) (Reporting by Loucoumane Coulibaly; Writing by Joe Bavier; Editing by Daniel Flynn and Jane Baird)