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Investor Relations

Focal point: Côte d’Ivoire

By Arouna Coulibaly, Head of Cocoa for Côte d’Ivoire, Olam Cocoa

Côte d’Ivoire (CDI) is the top cocoa producing origin in the world. This is due to efforts made by the Conseil Café Cacao (Council for Coffee and Cocoa or CCC), agri-businesses like Olam Cocoa and NGOs over the last five years to ensure more sustainable cocoa farming, which supports farmer and community revenues and improves farmer livelihoods. As a result, quality has significantly improved and should continue to do so.

The CDI government remains committed to this trend in order to achieve a realistic target of 2.0 million MT by 2020. Upcoming government supported operational incentives for the CDI grinding sector, including tax incentives are expected to boost national industrialisation and are likely to change the dynamics of the broader cocoa sector.

Positive outlook for processing

With the integration of ADM’s cocoa operations, Olam’s country capacity has more than doubled from 70,000 MT to 150,000 MT.

Our capacity utilisation, previously at 60%, has improved to more than 85% since October 2016, thanks to expanding market opportunities and cocoa bean availability and quality. Our team and their technological skills have also enabled us to differentiate and innovate products and SKUs.

Olam Cocoa has been working to expand its capabilities in origin processing in CDI, especially those of sustainable cocoa beans, and we hope that the new processing industry incentives introduced by the CDI government will help ease financial burden and encourage grinders to increase their scale and scope in the country.

Expanded processing capacity and the use of innovative new technologies within Olam Cocoa’s CDI processing factories provide a stepping stone for us to achieve the next level of value addition for destination market factories. The primary and secondary processed cocoa products that we generate for export are optimised for downstream processing. For example, our CDI produced cocoa cake can be milled into cocoa powder in our factory in Spain. Our cocoa liquors in unique and more flexible use formats, such as ingot blocks, produce better results during the melting process when used in our customers’ confectionery product applications.

Our enlarged presence also allows us to dedicate and prioritise greater origin resources to engage in industry policy formulation discussions and ensure that our inputs have a positive impact. For example, Olam Cocoa played a lead role in the successful restructuring of the GEPEX group of exporters (which accounts for more than half of the country’s cocoa exports). The group now drives more constructive interactions between the CDI government and public institutions, an important and positive development for the industry and civil society.

Greater beans volume

Prior to our acquisition of ADM’s cocoa business, we ranked amongst the top five buyers of CDI’s beans. Today, we are well-positioned to be amongst the top three, if not the No. 1 buyer, with a procurement market share of 15-20%, in the ongoing cocoa season for 2016/17 which is expected to be better than the crop year 2015/16.

Our sustainability volumes for each crop season typically range between 60% and 70% of total volumes – which we expect to increase steadily over the next three years as we pursue our goal of 100% sustainably sourced cocoa worldwide by 2020. Currently, we are working with more than 80,000 farmers (approximately 250 co-operatives) and we continually engage with them to solidify a capable sourcing network that is ready to deliver 200,000 to 250,000 MT of sustainable cocoa in a normal crop year.

Looking to 2017 and the future, we are targeting to reach a total annual capacity of 300,000 to 400,000 MT. To this end, we are working to strengthen our current relationships with supply chain partners and grow sustainability volumes.