20120311
Reuters
OSSEIKRO, Ghana (Reuters) - In the dusty town of Osseikro just inside Ghana's border with Ivory Coast, the only billboard for miles welcomes visitors with the order: "Stop Smuggling Cocoa".

But the garish sign, put up by Ghana's cocoa sector body during this year's harvest, has done little to deter smuggling through a town which is a hotspot for the illicit trade.

"All of our cocoa is going to Ghana this year because of the prices," said Eric Comoe, head of a cocoa-growers cooperative in the Ivorian town of Abengourou, 30 km (20 miles) over the border.

"For the country it's a problem because when there's smuggling they don't get the tax. But for the farmers it's good," he acknowledged.

West Africa accounts for nearly three-quarters of world cocoa output and Ivory Coast and Ghana are the number one and two producers of the main ingredient of chocolate.

The smuggling is a problem because it deprives Ivory Coast of much-needed revenues as it seeks to rebuild after last year's civil war, and also skews the production data on which the cocoa industry's investment decisions are based.

While it has always gone on, smuggling spiked during the four-month conflict last year as hold-ups at Ivory Coast's two main ports prompted many farmers to funnel beans through Ghana to the east and north to Burkina Faso en route to port in Togo.

Industry estimates put the real size of last year's harvest in Ivory Coast at around 1.7 million tonnes against the some 1.5 million tonnes that were officially declared - suggesting around 200,000 tonnes were smuggled out unrecorded.

Yet even with the war over, the higher prices for cocoa in Ghana mean exporters and analysts forecast up to 145,000 tonnes of Ivory Coast's crop will be smuggled out to the country, and to a lesser extent to Guinea and Liberia, by end-April.

A reform of the Ivorian sector to ensure price guarantees for its farmers may over time change that. But for now, farmers in its eastern region get an average 700-750 CFA francs a kg ($1.40-1.50) compared to Ghana's set price of around 1,000 CFA.

"The price premium in Ghana was almost $900 per tonne at the start of the season but more recently has been close to $500 per tonne," said one commodities fund manager, noting the premium remained despite a recent increase in Ivorian prices.

POLICE LACK RESOURCES

Four trucks brimming with cocoa beans stood confiscated outside the deserted customs office in Abengourou on Sunday.

During a brazen attempt to cross into Ghana at the official border crossing in January, the trucks were stopped by customs, local cocoa dealers said.

This followed the Ivorian government move to step up its efforts to catch smugglers by deploying dozens of extra border patrol agents to eastern cocoa-growing towns late in December.

Local dealers said that while the capture of the four trucks had made smugglers more careful, it had not stopped the activity.

"Comparing the number of lorries they pick up and the number that go through, it's no comparison," said Comoe.

Customs officials who spoke on the condition of anonymity said they were insufficiently resourced to tackle the problem.

"We don't have cars or communication systems," said an Ivory Coast customs official.

The Ivory Coast cocoa body CGFCC was not available to comment.

Much of the illegal cocoa trade happens away from the official border crossing in the bush on narrow dirt tracks, easily navigated by motorbike, local dealers explained.

Trucks move the cocoa to nearby the border and then motorbikes carry around three 60-kg bags at a time via these tracks into Ghana, where it is re-bagged as Ghanaian cocoa.

Given the border regions share similar soil and weather, the beans should in theory be similar. However, Ghanaian cocoa officials insist their beans benefit from better handling, fertilization and crop spraying and so are far superior to Ivory Coast beans. Ivorian farmers disagree, saying they are capable of growing cocoa that is undistinguishable from Ghana's.

FOR THE MIDDLE-MAN, BUSINESS IS GOOD

In Osseikro, the premises of a middle-man, who said he sells large trade houses beans sourced from Ghanaian cooperatives and farms, is fronted by motorbikes on sale at 400,000 CFA each.

Emmanuel Yeboah says the bikes are merely a good second business and denies the existence of any major cross-border smuggling. But, wherever the beans which he handles originally come from, he confides that business is good.

"This year I get a fridge, freezer, a lot of things with my commissions," said Yeboah, who makes around 100 CFA per kg of cocoa he sources.

As part of its planned cocoa industry reforms, Ivory Coast plans to reintroduce stabilized prices next season, to shield local farmers from price swings and to combat smuggling.

But even then it is not expected that Ivory Coast and Ghana will set identical prices and any gap will still provide an incentive for smuggling.

Ivory Coast's cocoa reform aims to give farmers between 50 and 60 percent of the so-called CIF (Cost, Insurance and Freight) export price, while Ghana sets prices with the aim of giving farmers up to 70 percent of the CIF price.

Exporters estimate that if you take the Ivorian government proposal of giving farmers 50-60 percent of the price, the farmer is still not going to get much more than 600-700 CFA, based on current prices. ($1 = 495.7170 CFA francs)