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ADM shuts down Ivorian cocoa processing plant

By Jane Byrne , 10-Mar-2011
Last updated the 10-Mar-2011 at 14:10 GMT

Leading cocoa processor and exporter, Archer Daniels Midland (ADM), said it has suspended cocoa plant operations in the Ivory Coast and is shifting production elsewhere, due to heightened political tensions in the West African producer country.

A spokesperson for ADM told ConfectioneryNews.com that its Ivorian operations have been suspended since the first week of March, and she added: “We are currently leveraging our cocoa processing operations in Ghana, Singapore, Brazil, the US and Europe to meet our customers’ needs.”

The spokesperson said that the company's foremost concern was the well-being of its employees, and as a result shut down processing facilities there.

With escalating violence and the number one producer of cocoa beans on teetering on the edge of civil war, Keith Flury, senior analyst at agri-commodities specialists Rabobank said that “what is going to happen in the Ivory Coast is anyone’s guess”.

However, speaking to ConfectioneryNews.com last week, he said the upcoming cocoa production was likely to be affected, with the mid-crop, expected to be harvested in mid April and May, going to be impacted if farmers can not get credit and if there is no labour available due to restricted travel in the country.

And while EU and US based producers are currently covered, Flury maintains that cocoa prices could surge further if the mid crop harvest is impeded. If this is the case, then many end users will have to come on the market to buy, added the analyst.

Laurent Pipitone, interim director of economics and statistics division of the International Cocoa Organisation (ICCO) told ConfectioneryNews.com today that there are approximately five months of cocoa stocks so that there is “not any reason to be concerned as long as the export ban does not last too long.”

Cocoa bean exports from the Ivory Coast have ceased since the end of January, following a call from president-elect of the Ivory Coast, Alassane Outtara, for a suspension of all exports including cocoa and coffee until 15 March, in a bid to cut off funding from his rival Gbagbo following on from last December’s disputed elections in the country.

Exports have all also been hindered with the imposition of EU sanctions on trade with the Ivory Coast.

EU Council Regulation 25/2011, which entered into force on 15 January 2011, blocks most business transactions between Europe and any of the people or entities on the sanctions list, which includes the country’s two main ports, as well as cocoa and petroleum companies.

According to Pipitone, as a result of these measures, there are 475,000 tonnes of cocoa beans piled up in the Ivorian ports of Abidjan and San Pedro, awaiting export.

And while the ICCO forecasts a cocoa supply surplus for the trading year October 2010 to September 2011, and that there will be more cocoa available than demand, the production figures are taking into account the beans sitting at those two ports.

“But if the 475,000 tonnes have not reached the market by September, then it would look like there is a deficit in the trading year,” added Pipitone.

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