By Javier Blas, Commodities Editor
Published: March 8 2011 00:14 | Last updated: March 8 2011 00:14
Laurent Gbagbo, the Ivory Coast leader who the international community says lost presidential elections in November, announced he would nationalise the cocoa sector in a surprise move that threatened to drive the cocoa price sharply higher.
The African country is the world's largest cocoa exporter, accounting for 40 per cent of global supplies of the bean used to make chocolate. Cocoa prices are nearing three-decade highs amid the worsening crisis in Ivory Coast.
Mr Gbagbo's move comes after Alassane Ouattara, who won the elections according to UN certified results, extended for a second month a ban on cocoa exports that trading houses, including Cargill and Archer Daniels Midland of the US, Swiss-based Barry Callebaut, Olam of Singapore and UK-based Armajaro, are observing.
The decree was read on state broadcaster Radiodiffusion Télévision Ivoirienne on Monday night and left the Ivorian cocoa industry in disarray amid lack of details about what exactly the new measures meant for the commodity trade.
It said cocoa and coffee purchases and exports in Ivory Coast would now be "exclusively done by the state", replacing trading houses. It did not spell out the future of cocoa bean stocks held in the country. During the ban, trading houses have accumulated about 400,000 tonnes of beans, worth $1.45bn at current prices, which could now be confiscated.
A senior cocoa trader said the decree made "a difficult situation to say the least".
State television did not explain how Mr Gbagbo would finance the purchases of cocoa – the country's annual crop is worth about $4.5bn at present prices – or which international customers will buy the beans.
But industry officials doubted the plan could work. Eric Sivry, at Marex Financial, the London-based commodities brokerage, said the big question was who would buy "contentious cocoa" from Mr Gbagbo's government.
Cocoa is heavily taxed in Ivory Coast and is a key source of income for Mr Gbagbo, who diplomats say needs about $150m a month to pay civil servants and the military.
The move came as forces loyal to Mr Gbabgo said rebels had seized a third town in the west of the country amid escalating violence since the election.
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