How focus on value added boosts Côte d’Ivoire’s exports

Côte d’Ivoire’s agriculture sector, responsible for approximately one-fifth of the country’s GDP and employing two-thirds of the population, is a key part of the economy, as well as the social, cultural and political fabric. The sector is also significant at the global level, exporting cocoa, cashew nuts, palm oil, bananas, coffee, rubber and cotton worldwide. Indeed, Côte d’Ivoire is the world’s leading cocoa producer and shares the title of number-one cocoa grinder with the Netherlands. It is also the top cashew nut exporter and dessert banana producer.

Moving forwards, as Côte d’Ivoire begins rolling out its National Development Plan (Plan National de Développement, PND) 2021-25 and pursuing environmental and sustainability goals for 2030 and beyond, the agriculture sector will be key to meeting development targets. The use of digital solutions, a greater emphasis on in-country refining and processing of agricultural commodities, and ensuring more equitable distribution of the sector’s rewards are among the policy goals for the coming years.

However, with international agricultural commodity prices displaying increased volatility stemming from a combination of climate change, the Covid-19 pandemic and fallout from Russia’s ongoing invasion of Ukraine, agriculture is likely to become more strategically important in the years to come.

Structure & Oversight

Côte d’Ivoire’s agriculture sector covers four general climatic zones: the Sudan savannah, with 900-1400 mm of annual rainfall; the Guinea savannah, with 1000-1500 mm; the semi-mountainous forest zone, with 1200-1600 mm; and the forest zone, with 1200-1600 mm of annual precipitation. Around 64% of land in the country is agricultural, with roughly 17.7m ha under permanent crop or pasture production, and 2.9m ha under arable cropping systems.

Several government ministries play crucial roles in the sector. Among the most important are the Ministry of Agriculture and Rural Development (MARD), the Ministry of Animal Resources and Fisheries, and the Ministry of Water and Forestry. As of mid-2022 these ministries were headed by Kobenan Kouassi Adjoumani, Sidy Tiémoko Touré and Laurent Tchagba, respectively. Previously, a separate Ministry for Rice existed, in recognition of the crop’s domestic importance; however, reforms to the government structure in late 2020 and early 2021 merged this ministry with MARD to integrate rice development with overall agricultural strategy. As of May 2022 the formation of a separate department for rice under the auspices of MARD was still under way.

There are also a number of state boards responsible for the regulation, promotion, marketing and development of specific crops. These include the Coffee and Cocoa Council (Conseil du Café-Cacao, CCC), the Cotton and Cashew Council (Conseil du Coton et de l’Anarcade, CCA), the Palm Oil Council (POC), state forestry management company SODEFOR and the National Rice Development Office (Office National du Développement de la Riziculture, ONDR). The CCC sets the purchase price for coffee and cocoa producers, and implements price stabilisation mechanisms when appropriate. The CCA and POC undertake similar tasks for their subsectors, while the ONDR regulates rice and rice seed production and coordinates and monitors investment.

International Bodies

The country is a member of several key international and bilateral agriculture and fisheries bodies, including a cocoa initiative with Ghana that was established in 2019. The two countries produce around 60% of the cocoa in the world, giving them major influence on the global market. The initiative also administers the living income differential (LID), a $400-per-tonne additional remuneration to cocoa farmers.

International organisations present in Côte d’ Ivoire include the UN World Food Programme, the UN Food and Agriculture Organisation, and the International Fund for Agricultural Development.

In addition, Côte d’Ivoire is a member of the International Cocoa Organisation (ICCO), which brings together the top cocoa-importing and exporting countries from around the world.

While many farming, forestry and fishing sector operations are undertaken by artisanal and smallscale cooperatives, the country is also home to a number of local subsidiaries of major multinational agri-businesses and agro-industrial outfits, including US-based Cargill, commodity trading and processing company ECOM Agroindustrial and Switzerland’s Barry Callebaut, among others. These major players are represented by the Association of Professional Coffee and Cocoa Exporters of Côte d’Ivoire (Groupement Professionnel des Exportateurs de Café et de Cacao de Côte d’Ivoire, GEPEX).

Plans & Programmes

The sector’s development is guided by a series of government plans, including the second iteration of the National Agricultural Investment Programme (Programme National d’Investissement Agricole, PNIA) 2018-25, the Strategic Development Plan (Plan Stratégique de Développement, PSD) 2011-30 and the PND 2021-25. In addition, the agriculture sector is expected to contribute to the country’s nationally determined contributions under the Paris Agreement, including a 28% reduction in greenhouse gas emissions by 2030.

The PNIA’s main objectives are enhancing value addition in agricultural commodities, increasing productivity, boosting access to finance, strengthening the institutional framework and achieving sustainable resource management. The PSD, meanwhile, sets out a range of strategic clusters for areas with a competitive advantage where robust growth can be sustained, such as agriculture and agro-industry. The PSD is divided into five-year instalments, including the PND 2021-25. This scheme continues along the same lines as the aforementioned plans and sets a number of specific goals, such as establishment of nine agropoles – or clusters – for commodity processing, to receive special attention and support. They include rice, sugar, cocoa, coffee, cashew nuts, cotton, horticulture (mango, pineapple, dessert bananas and other fruits), rubber and palm oil.

These nine agropoles will be the focus of 16 highvalue-added activities throughout country’s various regions. The south-western Port of San-Pédro, for example, will become a centre for processing cash crops like cocoa and plantains, and in addition will have a fish-processing facility. North of the port, the provinces of Cavally, Guémon and Tonkpi will host food granaries and the development of a valuable coffee-growing region at Man (see analysis).

National Development Plan

The PND 2021-25 aims to boost productivity, targeting 7.8% annual growth in agricultural production. The plan also calls for the rapid development of aquaculture; the formalisation of farming; self-sufficiency in high-quality rice, supported by increased mechanisation; the development of a system of agricultural insurance; and a permanent method of collecting statistics.

In 2019 approximately 49% of Côte d’Ivoire’s meat and offal requirements were met by local production, along with some 19% of milk and dairy needs. The PND 2021-25 forecasts these figures will rise to 60% and 25%, respectively, by the end of the plan’s timeline. In developing solutions to meet these targets, the PND 2021-25 also notes some of the challenges facing the sector and the country as a whole. Around 45% of the population lives under the poverty threshold, while a 2018 study by the UN World Food Programme found that roughly 10.8% of the population was experiencing food insecurity. Though these numbers have fallen in recent years, food security remains an important strategic goal.

The PND 2021-25 is the most ambitious national programme to date, with more than double the amount of investment envisaged than under its immediate predecessor, at $105bn in total. The private sector is targeted to supply 74% of the required investment, about 4% of which will go to agriculture. The plan has the backing of the African Development Bank (AfDB) and is being rolled out nationwide.

In May 2022 the government announced the launch of the five-year Abidjan Initiative, a scheme to use $1.5bn of private investment to restore degraded forests and boost food production. According to President Alassane Dramane Ouattara, desertification and drought affect 60% of the territory, and up to 90% in the sub-Saharan north. Restoring land and forests is therefore key for the future, and crucial to the agriculture sector.

Size & Performance

Agriculture, forestry and fishing constituted 21.4% of GDP in 2020, according to the World Bank. This share had risen for a number of years after reaching a low of 15% in 2009. Previously, however, the sector was responsible for substantially more of the country’s GDP, at 47.9% in 1960 and 34% in 1992, for example. The decline is largely due to the growth of extractive and other industries, as the total value of the sector has steadily increased over the last two decades. In 2008 agricultural value added was $7bn; by 2018 that figure had reached $8.8bn and in 2020 hit $9.3bn.

Covid-19

As the pandemic took hold in early 2020, Côte d’Ivoire was able to avoid some of the more serious impacts seen elsewhere, but the crisis nonetheless required support programmes for vulnerable and vital sectors such as agriculture. Some CFA1700bn ($29.2bn), or 5% of GDP, was committed to an emergency pandemic plan in March of that year, with CFA300bn ($515.7m) of that going towards the Agricultural Emergency Programme – CFA50bn ($86m) for food production and CFA250bn ($429.8m) for the agricultural export subsector.

These measures partly took the form of price supports – subsidies to exporters to encourage them to buy crops at set farm-gate prices. CFA35bn ($60.2m) was allocated to support cashew nuts, and CFA5.6bn ($9.6m) was earmarked for cotton. A further CFA6.1bn ($10.5m) went to rubber, CFA500m ($860,000) to palm oil, and CFA500m ($860,000) to banana growers. Pineapple and mango farmers received similar packages. By December 2021 CFA66bn ($113.5m) had been disbursed in total.

These measures helped to alleviate the worst effects of the pandemic; however, waning global demand for agricultural exports continued to weigh on the sector’s performance. AfDB figures show agro-exports were down 2.2% that year, while agrofood industries contracted by 1.3% and forestry fell by 16.5% as global construction – and therefore demand for materials – shrank dramatically.

In 2021 both the global economy and Côte d’ Ivoire’s agriculture sector began to pick back up. The Ministry of Economy and Finance reported 3.3% growth in agricultural exports and 4.5% growth in food agriculture for the year, while the Economist Group expected the sector’s contribution to GDP to grow by 5% in 2022 and 4.5% in 2023. However, Russia’s invasion of Ukraine, which began in February 2022, has had a negative impact across the sector. Amid global fertiliser and oil price volatility, productivity appears likely to diminish somewhat.

Cocoa

Côte d’Ivoire’s position in the global cocoa market is strong, particularly given its cocoa initiative with Ghana. As with all harvested crops, production is ruled by the seasons. In Côte d’Ivoire, there is an October-to-March main crop, followed by an April-to-September mid-season crop. The rainy season runs from April to mid-November. Inadequate rainfall is likely to lead to smaller pods and lower yields, while excessive rain during drier periods can also impact the crop, increasing the risk of mould on the beans. Given these sensitivities, climate change is a significant concern for the sector.

Key regions for cocoa include the central belt of Bongouanou and Yamoussoukro, the centre-west region of Daloa and the western region of Soubré, the southern zones of Agboville and Divo, and the eastern region of Abengourou. Most cocoa is grown and harvested by local cooperatives; a system of purchasers and exporters bring the crops from the farm gate to the final market, largely overseas. Europe is the main destination, with the EU receiving around 67% of the country’s cocoa exports.

According to the ICCO, the 2019/20 season saw Côte d’Ivoire produce some 2.1m tonnes of cocoa beans out of a global total of 4.7m tonnes, giving it a 44.4% share. The following season, the country produced an estimated 2.25m tonnes, an increase of 6.7%. However, global cocoa bean production volumes were higher that season, which reduced the country’s share of the world’s combined production to 43%. For the 2021/22 season, the ICCO projected cocoa bean production would moderate to 2.2m tonnes amid rainfall variable, although in May 2022 Reuters reported that many growers were optimistic about the prospects of a good harvest.

Côte d’Ivoire is also a major producer of cocoa grind. In April 2022 GEPEX reported that total grind stood at 364,000 tonnes since the beginning of the 2021/22 season, up from 334,000 tonnes recorded throughout the same period in 2020/21.

Meanwhile, efforts to ensure sustainable growing practices and financial support for farmers continue apace. Enforcing the LID has sometimes been challenging, but the bilateral cocoa initiative with Ghana is working with the EU, in particular, to help enforce better pricing and higher rewards for growers.

Coffee

Côte d’Ivoire produces mostly Robusta beans, which are mainly used in the production of instant coffee, with France and Italy its top export markets. Although the country was once a major exporter, this position has eroded somewhat in recent years. According to the International Coffee Organisation, Côte d’Ivoire exported 1.8m 60-kg bags in 2020. Reviving the subsector’s fortunes, therefore, has been a major goal of the CCC. In addition, an initiative under the PND 2021-25 seeks to promote production of higher-quality – and therefore higher-priced – Arabusta beans, which are grown in the mountainous Man region (see analysis).

Cashews

Over recent years Côte d’Ivoire has emerged as the top global producer of raw cashew nuts – a versatile crop used in everything from cooking to aircraft braking systems. In 2021 approximately 968,000 tonnes of cashew nuts were produced nationwide, up from 500,000 tonnes in 2013. The quality of the harvest has also improved, as measured by the kernel output ratio (KOR), which rose from 46 in 2013 to 48 in 2021. Another quality measure – dryness – has also improved, as humidity levels fell from more than 10% to 8% over the same period. Bondoukou, Bouna, Bouaké, Katiola, Boundiali, Odienné, Yamoussoukro, Zuénoula, Korhogo, Ferkessédougou, Séguéla and Mankono are the primary growing regions for the crop.

Around 10% of cashews are currently processed in-country. Traditionally, raw nuts are exported to Asia, where Vietnam – the world’s leading cashew processor – is responsible for processing 52.8% of the global total, compared to Côte d’Ivoire’s 2.6%. After processing, the bulk of the output is re-sold to the world’s primary cashew market, the US. In keeping with Côte d’Ivoire’s strategic plans to encourage greater value addition in the sector, recent years have seen the government enact programmes in an effort to boost the level of processing taking place domestically to 50% by 2025/26.

These plans include moves by the CCA to boost crop quality to a KOR of 52, an orchard rehabilitation programme, training for cashew producers in up-todate methods, capacity-building among sector bodies, and a double-bagging system at the bush and warehouse stages to reduce moisture. In addition, in early 2022 the government was drafting plans for a $20m guarantee fund for cashew farmers, incentivising investment in the sector by securing improved access to finance for potential growers.

Cotton

The 2021/22 season was a successful one for Côte d’Ivoire’s cotton farmers, with the forecast revised to a record 600,000 tonnes, up 7% from the previous season’s output. The season for cotton is May to April, after sowing from late April to June and harvesting from October to January. Ginning and marketing begin in November.

Five organisations currently control cotton production, purchasing, transformation and export in the country: Compagnie Ivoirienne pour le Dé veloppement du Textile, which was state run until it was privatised in 2016; Ivoire Coton; Compagnie Ivoirienne de Coton (COIC), which in 2019 took over zones previously operated by the Société Industrielle Cotonnière des Savanes; the Société d’Exploitation Cotonnière Olam (SECO-OLAM); and Global Cotton. Ivoire Coton and COIC were responsible for a combined 61% of production in 2020/21.

The companies had a total annual ginning capacity of 635,000 tonnes as of 2021. Production gains have been due in part to the efforts of the National Centre for Agricultural Research, which has developed new seed varieties, and a seed multiplication and distribution scheme that is run by COIC, Ivoire Coton and SECO-OLAM, leading to a climbing germination rate, from 40% in 2018/19 to 60% in 2020/21.

Almost the entire cotton crop is exported, most of which is unwoven, with $23.3m of woven fabrics sent mainly to neighbouring countries in 2020. Imports of woven fabrics were higher that year, at approximately $27.5m. Under the PND 2021-25 and other government plans, the drive to boost local value addition may see these numbers change.

Rice

The West African coast has a long history of rice cultivation, but the modern sector developed in tandem with major irrigation works in the 1960s. Several rice development programmes followed, most recently the National Rice Development Strategy (Stratégie Nationale de Développement de la Riziculture, SNDR) 2020-30. Today, domestic rice covers roughly 50% of consumption, making Côte d’Ivoire the fifth-largest importer of rice globally. Demand for the crop is set to grow as economic development places it within more people’s budgets.

“Rice used to be a luxury good, but now it is a staple food,” Aminou Arouna, programme leader and impact assessment economist for the Africa Rice Centre, told OBG. “Rice consumption on the continent stands at around 27 kg per capita, compared to 77 kg per capita in Asia, so there is still plenty of room for consumption growth. However, strategic policy actions such as investment in water management and attracting private investment are required to achieve self-sufficiency in rice.”

As part of the goals of the SNDR 2020-30, the government is pushing for rice self-sufficiency by 2025. Expanding local rice production has, however, become increasingly challenging in the face of recent external pressures. Rising international oil and gas prices, for example, have driven up fertiliser costs around the world – a dynamic that has been exacerbated by Russia’s invasion of Ukraine. At the same time, climate change is negatively impacting water supply and its dependability, which, in combination with large-scale production of irrigated rice, weighs on productivity.

However, there are ongoing efforts to harness private sector investment to boost output, despite some structural and legacy issues. Mills leased out to private companies have at times struggled to reach profitable capacity levels, particularly as productivity has been impacted by rising costs for rice farmers in terms of fertiliser or fuel for equipment. Enabling private sector production of rice, while building up the irrigation infrastructure to support continued investment, may be a suitable way forwards.

Forestry

Côte d’Ivoire was once home to extensive forested areas, but deforestation presents a pressing issue for the country – particularly as large areas of land are converted to cash crops like cocoa. Between 1990 and 2015 some 300,000 ha of forested area was lost to deforestation annually, with the total amount lost since 1960 standing at around 80%. This negatively impacts agricultural exports to the EU, where regulations on halting imports from deforested land have tightened.

The government has taken several steps to stop and reverse this trend. Enacted in 2018 in partnership with neighbouring Ghana, the Cocoa and Forests Initiative reduced forest loss to an average of 26,000 ha per annum over the three years to 2021. The government is currently planning to expand forested cover to 20% of the total territory by 2030. A tree-planting campaign will assist in these efforts, with plans to plant 3bn trees on government land over the next decade. In the longer term, the country aims to develop a more sustainable forestry industry while at the same time cracking down on illegal farming and deforestation.

Fisheries

Around 70% of fish production in Côte d’Ivoire comes from artisanal fleets, which land a combined 100,000 tonnes of fish per year. The sector makes a 0.4% contribution to GDP, employing around 70,000 people directly and another 400,000 indirectly. It is also responsible for a share of the country’s international trade flows, with the main export being processed tuna and the main import frozen fish from neighbouring countries and Europe.

Smoked fish accounts for around 65% of all fish traded domestically, and most smoking is done by artisanal outfits. However, as electrification and refrigeration spread throughout the country, along with campaigns to encourage more sustainable use of wood for fish smoking, the relative weight of smoked fished in the local market is likely to wane.

Outlook

In the short term, with high fertiliser and fuel prices impacting farmers in the first half of 2022, productivity and profitability may be dampened in the year ahead. At the same time, discussions over government support continue; eventual measures would help to ease some of the financial burdens on farmers from international headwinds.

In the longer term, mobilising investment in areas such as irrigation and sustainable practices will head off some of climate change’s impact on output and future harvests. Rising private sector involvement along the agricultural value and supply chains is expected to make future investment more attractive to both local and international players, and achieve higher capacity utilisation rates and greater profitability across a variety of segments.

At the same time, enforcing strict regulations on deforestation and other environmental concerns will help to protect access to high-value markets around the world. Investing in local value addition – a principal goal of the government’s medium-term strategy – also presents a significant opportunity for investors, both local and foreign, to participate in the development of a future-ready economy.