April 30, 2019 / 2:20 PM / 23 days ago

Ivory Coast acts to avert defaults on cocoa export contracts this season

ABIDJAN, April 30 (Reuters) - Top cocoa producer Ivory Coast has averted defaults on export contracts this season by letting multinational commodities companies buy at-risk contracts from local exporters, exporters and sources at the cocoa regulator said on Tuesday.

During the 2017/18 and 2016/17 growing seasons, exporters defaulted on nearly 500,00 tonnes of cocoa contracts they had bought in advance of the season as world market prices fell and exporters were unable to honour commitments to suppliers.

In response, the Cocoa and Coffee Council (CCC) was forced to resell their contracts at an overall cost of more than 300 billion CFA francs ($512 million) to the Ivorian government.

“Unlike the two previous years, this year we avoided defaults because the CCC reacted quickly by giving out risky contracts to other (exporters),” said an Abidjan-based exporter.

The “big five” exporters of Ivory Coast cocoa - U.S. agricultural group Cargill, France’s Groupe Sucres et Denrees (Sucden) and Touton, Singapore-based Olam and Switzerland-based Barry Callebaut - purchased all the export contracts potentially at risk of default, said two sources at CCC, who did not wish to be identified.

As a result, those five companies control 80 percent of export contracts this season, compared to less than 60 percent two years ago, according to the sources. ($1 = 588.3300 CFA francs) (Reporting by Ange Aboa; Editing by Juliette Jabkhiro and Susan Fenton)

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