Required Report - public distribution

**Date:** 5/4/2004

**GAIN Report Number:** IV4006

IV4006

**Cote d\'Ivoire**

**Coffee**

**Coffee Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Susan Reid

U. S. Embassy

**Prepared by:**

Antoine Anzele

**Report Highlights:**

Post forecasts 2004/2005 coffee production to continue to be down due to
persistent producer price deterioration, a lingering unstable political
situation and increasing farm neglect. The marketing of the 2003/2004
crop started in the first week of February, 2004 and has been lackluster
due to low prices and the absence of buyers. In 2003, green coffee and
product exports accounted for 2.6 percent Cote d'Ivoire's total export
earnings. Green coffee exports were down in 2003 and are expected to
continue to fall in 2004 due to low world market prices and reduced
domestic supply.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Abidjan \[IV1\]

\[IV\]

**Table of Contents**

[Executive Summary 3](#executive-summary)

[Production 5](#production)

[Consumption 6](#consumption)

[Trade 6](#trade)

[Stocks 7](#stocks)

[\_Toc25646890](#__RefHeading___Toc25646890)

# Executive Summary

Post forecasts 2004/2005 coffee production to continue to decline due to
persistent producer price deterioration, a lingering unstable political
situation and increasing farm neglect. World market prices remain
depressed and this is reflected in low producer prices. Farmers consider
the current producer price too low to make it worth their while to
increase production. Several Successive years of prevailing low prices
have led to general farmers' despair. Coffee production is gradually
declining as farms have been left unattended for years; they are being
overrun by bushes and many trees are being left unharvested.
Agricultural Specialist field travels in the producing areas in late
April 2004 indicate that tree flowering and cherry formation were less
than the same period in 2003. Many trees were unharvested with their
cherries found dried on the branches. With a few exceptions, bushes
covered all the farms visited. Interviews with farmers revealed that
some have started intercropping coffee trees with either cocoa or rubber
or oil palm.

The marketing of the 2003/2004 crop started in the first week of
February 2004. Marketing activities have been lackluster due to low
prices and absence of buyers. Marketing activities have been
intermittent as farmers have only sold their coffee when there is an
urgent family need or an occasional good buyer.

The BCC (Bourse du Café et du Cacao) set the indicative minimum producer
price of green coffee at 225 F CFA/kg in January 2004 up from 200 F
CFA/kg in 2003. However, with the exception of Capral/Nestle (soluble
coffee processing company) that has been buying green coffee at 235 F
CFA/kg, farm prices have been ranging between 115 F CFA/kg and 190 F
CFA/kg.

Domestic coffee processing fell in 2002/2003 and is expected to continue
to be down in 2003/2004 due to the unfavorable political situation.

Green coffee and product exports accounted for 2.6 percent of Cote
d'Ivoire's total export earnings in 2003, about the same level of 2.4
percent in 2002. Green coffee exports were down in 2003 and are expected
to continue to fall in 2004 due to low world market prices and drying up
of domestic supply. Green coffee exports for the first three months of
2004 were 431,467 bags compared to 519,567 bags in 2003.

The ending stocks level is expected to fall in 2003/2004 because the
depressed market and political instability discourage exporters from
maintaining stocks. However, for several years, farmers have been
maintaining large on-farm stocks in the form of cherries in anticipation
of price recovery.

Exchange Rate: U.S. \$1 = 553 F CFA on May 11, 2004.

  ------------------- ----------- ---------- ---------- ---------- ------------- ----------
  **PSD Table**                                                                  

  **Country**                                                                    

  **Commodity**       **Coffee,                                    (1000         
                      Green**                                      HA)(MILLION   
                                                                   TREES)(1000   
                                                                   60 KG BAGS)   

                      2003        Revised    2004       Estimate   2005          Forecast

                      USDA        Post       USDA       Post       USDA Official Post
                      Official    Estimate   Official   Estimate   \[Old\]       Estimate
                      \[Old\]     \[New\]    \[Old\]    \[New\]                  \[New\]

  **Market Year                   10/2002               10/2003                  10/2004
  Begin**                                                                        

  Area Planted        1492        1492       1490       1490       0             1485

  Area Harvested      950         950        850        850        0             750

  Bearing Trees       1630        1630       1657       1657       0             1675

  Non-Bearing Trees   243         243        215        215        0             197

  TOTAL Tree          1873        1873       1872       1872       0             1872
  Population                                                                     

  Beginning Stocks    1484        2786       779        2283       45            1526

  Arabica Production  0           0          0          0          0             0

  Robusta Production  1817        2019       1300       1444       0             1350

  Other Production    0           0          0          0          0             0

  TOTAL Production    1817        2019       1300       1444       0             1350

  Bean Imports        0           0          0          0          0             0

  Roast & Ground      0           0          0          0          0             0
  Imports                                                                        

  Soluble Imports     0           0          0          0          0             0

  TOTAL Imports       0           0          0          0          0             0

  TOTAL SUPPLY        3301        4805       2079       3727       45            2876

  Bean Exports        2025        2025       1600       1750       0             1600

  Roast & Ground      4           4          4          4          0             4
  Exports                                                                        

  Soluble Exports     428         428        430        380        0             360

  TOTAL Exports       2457        2457       2034       2134       0             1964

  Rst,Ground Dom.     32          32         0          33         0             34
  Consum                                                                         

  Soluble Dom.        33          33         0          34         0             35
  Consum.                                                                        

  TOTAL Dom.          65          65         0          67         0             69
  Consumption                                                                    

  Ending Stocks       779         2283       45         1526       0             843

  TOTAL DISTRIBUTION  3301        4805       2079       3727       0             2876
  ------------------- ----------- ---------- ---------- ---------- ------------- ----------

# Production

Post forecasts 2004/2005 coffee production to continue to decline due to
persistent producer price deterioration, a lingering unstable political
situation and increasing farm neglect. World market prices remain
depressed and this is reflected in low producer prices. Farmers consider
the current producer price too low to make it worth their while to
increase production. Several successive years of prevailing low prices
have led to general farmers' despair. Coffee production is gradually
declining as farms have been left unattended for years; they are being
overrun by bushes and many trees are being left unharvested. Increasing
numbers of unharvested trees have also adversely affected crop
flowering. The lingering unstable political situation has created
insecurity in the West, the leading producing area. Most farmers who
fled their farms at the onset of the hostilities are yet to return to
their farms. The political crisis which has engendered ill-feelings
towards migrant populations has sparked a mass exodus of migrant farm
labor to their countries of origin. This situation has resulted in farm
labor scarcity with attendant high costs detrimental to coffee
production. A greater proportion of the producing areas in the West are
still under rebel control, with most of the crop marketed in neighboring
countries. However, resumption of transport and trade between government
and rebel-held zones has slightly eased informal exports to neighboring
countries. Elsewhere, in the Center-West, occasional flare-ups in
insecurity as witnessed in early 2004 in the Ouragahio district
negatively impacted production activities. Similar factors have
contributed to low production in 2003/2004.

Post has revised upwards its 2002/2003 and 2003/2004 production
estimates. Previous Post production estimates were really marketed
production. This is the portion of farmers' harvest, which was sold to
the various buying agencies. This represented over 98 percent of total
harvest before the advent of the price crisis, which started about five
years ago. Since then, farmers' sales to buying agencies are estimated
to have dropped by 10-15 percent due to rising on-farm storage. In
2002/2003, sales to agencies represented about 90 percent of the total
harvest, and is estimated to increase to about 92 percent in 2003/2004
due to declining storage space, farmers' despondency and continued
gloomy price perspectives.

Field travels in the producing areas in late April 2004 indicate that
tree flowering and cherry formation were less than the same period in
2003. Many trees were unharvested with their cherries found dried on the
branches. With a few exceptions, bushes covered all the farms visited.
Interviews with farmers revealed that some have started intercropping
coffee trees with either cocoa or rubber or oil palm. This method is
intended to ensure farmers' livelihood in the future, should the gloomy
situation persist and they eventually decide to cut down the coffee
trees.

The marketing of the 2003/2004 crop started in the first week of
February 2004. Marketing activities have been lackluster due to low
prices and an absence of buyers. Marketing activities have been
intermittent as farmers only sold their coffee when there was an urgent
family need or occasional good buyer. Many farmers continue to hold on
to their previous harvest and awaiting improvement in prices. SIFCA-COOP
(the marketing wing of the main national farmers cooperative group --
ANAPROCI) is the leading coffee buyer upcountry for the current season.
The buying activities of CAPRAL/NESTLE, the soluble coffee processing
firm, have declined in the current marketing period due to the large
carry-over stocks from the 2002/2003 harvest. Its purchases in 2003/2004
were expected to be about 167,000 bags, down from 500,000 bags in
2002/2003.

The BCC (Bourse du Café et du Cacao) set the indicative minimum producer
price of green coffee at 225 F CFA/kg in January 2004 up from 200 F
CFA/kg in 2003. In the 2003/2004 marketing year, with the exception of
Capral/Nestle which has been buying green coffee at 235 F CFA/kg, with a
10 percent increase or decrease for quality, farm prices generally
ranged between 115 and 190 F CFA/kg. With this farm price range,
producers have been receiving between 30-60 percent of world market
price depending on green coffee quality.

The quality of green coffee has fallen considerably with farmers'
nonchalant attitude towards production. Farmers are reluctant to spend
efforts on quality and usually deliver unsorted green coffee to the
buying centers. These centers hire assistants to sort out defective and
black beans at a rate of 20-25 F CFA/kg. The acceptable quality level of
green coffee is a maximum of 10 percent foreign materials (black and
broken beans). Some purchasing agents insist on green coffee free of
foreign materials and discount for the presence of any defective
material.

# Consumption

Domestic coffee processing fell in 2002/2003 and is expected to continue
to be down in 2003/2004 due to the unfavorable political situation.
Soluble coffee accounts for 95 percent domestic coffee processing. It is
undertaken by one firm, CAPRAL/NESTLE, that processes about 460,000 bags
of coffee annually. The remaining 5 percent of domestic green coffee
processing goes into the production of roasted and ground coffee and is
undertaken by five firms.

# Trade

Green coffee and product exports accounted for 2.6 percent of Cote
d'Ivoire's total export earnings in 2003, about the same level of 2.4
percent in 2002. Green coffee exports were down in 2003 due to lower
world market prices and the drying up of domestic supply. Similar
reasons will account for the expected fall in the 2004 exports. Green
coffee exports for the first three months of 2004 were 431,467 bags
compared to 519,567 bags in 2003.

Soluble coffee exports fell in 2003 and are expected to continue fall in
2004 due to the downturn in industrial supply. Exports in CY 2003 were
400,140 bags (in green coffee equivalent) compared to 458,900 bags in CY
2002. Exports for the first three months of 2004 were 86,667 bags
compared to 120,120 bags for the same period in 2003.

Cote d'Ivoire: Soluble Coffee Exports in CY 2002 and CY 2003

(Green Coffee equivalent in 60 kg bags)

  ----------------------- ----------------------- -----------------------
                          2002                    2003

  Greece                  312,910                 192,660

  Senegal                 37,050                  52,520

  Mali                    54,288                  19,673

  Nigeria                 13,910                  50,743

  Burkina Faso            13,867                  23,313

  Others                  26,875                  61,231

  Total                   458,900                 400,140
  ----------------------- ----------------------- -----------------------

Source: Statistiques du Commerce Exterieur de la Cote d'Ivoire - 2003
(Provisional Report)

  --------------------- -------------- --------------------- --------------
  **Export Trade                                             
  Matrix**                                                   

  **Country**                                                

  **Commodity**         Coffee, Green                        

  Time Period           Jan-Dec        Units:                60 kg bags

  Exports for:          2002                                 **2003**

  U.S.                  24283          U.S.                  21833

  Others                               Others                

  France                43500          France                383033

  Belgium               469100         Belgium               143550

  Italy                 198717         Italy                 176083

  Poland                47833          Poland                12117

  Algeria               873333         Algeria               929067

  Spain                 108600         Spain                 139883

  Germany               30050          Germany               14017

  Morocco               71371          Morocco               56900

  Portugal              71067          Portugal              56083

  Tunisia               33600          Tunisia               11733

  Total for Others      1947171                              1922466

  Others not Listed     470983                               67984

  Grand Total           2442437                              2012283
  --------------------- -------------- --------------------- --------------

Source: Statistiques du Commerce Exterieur de la Cote d'Ivoire -- 2003
(Provisional Report).

# Stocks

The ending stocks level is expected to fall in 2003/2004. This is
because the depressed market and political instability discouraged
exporters from maintaining stocks, while declining harvested crop and
continued low prices are reducing holdings of on-farm stocks. Stocks
indicated in the PS&D represented mainly on-farm stocks. For several
years, farmers have been maintaining large on-farm stocks in the form of
cherries in anticipation of price recovery.