Ivorian farmers see cocoa smuggling on the rise, Posted by Menelik Zeleke

January 27, 2011 4:44:37 PM

* Trucks laden with cocoa spotted heading for Ghana

* Contraband volumes seen growing as ban call bites

* Tens of thousands of tonnes trafficked so far

* Ghana stepping up measures to protect crop quality

(Adds Ghana comment paragraph 4)

By Loucoumane Coulibaly and Ange Aboa

ABIDJAN, Jan 27 (Reuters) - A small but increasing flow of cocoa beans is being smuggled out of Ivory Coast as exporters halt shipments from the top grower due to a political crisis, sending global prices to one-year highs.

Exporters are mainly complying with presidential claimant Alassane Ouattara's call for a month-long ban on exports in a bid to starve revenues from incumbent Laurent Gbagbo, who has refused to quit despite U.N.-certified results of a Nov. 28 poll showing Ouattara won.

Around 35,000-40,000 tonnes -- less than the amount that normally comes into the West African country's main ports each week -- has been smuggled east across the border to Ghana since the start of the season on Oct. 1, Ivorian industry sources estimated. A Ghanaian industry source estimated the volume was lower, at no greater than 30,000 tonnes.

But that figure is expected to rise in coming weeks as producers race to find alternative buyers for a harvest which will start to deteriorate if held in the bush for too long.

"Last Tuesday I counted 36 trucks loaded with cocoa go through my village en route to Ghana between four and nine o'clock," said Attoungbre Kouame, a farmer in the border region of Abengourou, by telephone.

"The farmers reckon the contraband traffic will grow because exporters are not buying the cocoa anymore," he said.

Farmer Etienne Yao confirmed similar activity in the south eastern region of Aboisso.

"The contraband traffic is continuing and it will increase," said Yao. "If the exporters don't buy, prices will drop and instead of the farmers being stuck with it, they will prefer to sell to Ghana."

ICE second-month cocoa gained $8 or 0.24 percent to $3,346 by 1605 GMT on Thursday.

Industry sources said earlier this week that many exporters continued to buy cocoa for now but did not actually register it for export -- the point at which the ban applies.

However, officials at export firms told Reuters Ivory Coast's cocoa warehouses were nearing full capacity, with around 50,000 tonnes of spare space -- the equivalent to around a week's usual port arrivals -- at Abidjan and San Pedro ports.

Ivorian industry sources said authorities were seeking to clamp down on smuggling into Ghana, and that some of it was being discreetly taken across the border by motorbike or even bicycle, which helped explain the low volumes until now.

GHANA ON ALERT

The head of Ghana's industry regulator Cocobod told Reuters on Thursday it was stepping up measures to block Ivorian beans -- viewed as being of lower quality -- from getting into the Ghanaian supply chain.

"Even though we haven't yet recorded any case of smuggled cocoa from Ivory Coast, we believe it is necessary to strengthen existing measures on the ground to safeguard the quality of our beans against possible inflows," Cocobod Chief Executive Tony Fofie said in an interview.

A Cocobod source said no more than 30,000 tonnes of Ivorian cocoa had entered the country so far this season, an amount too small to affect the quality of Ghana's overall crop which is forecast to hit a record 800,000 tonnes.

Patrick Achi, spokesman for the Ivorian government nominated by Ouattara, said up to 80 percent of exporters have complied with the export ban. Even though Gbagbo still is deprived of revenue from smuggled cocoa, Achi said Ouattara could not condone the illegal activity.

"The one-month timeframe is not so long that operators will take the risk to export large amounts through smuggling routes." Achi warned, however, the impact to cocoa and other industries would be serious if the deadlock is longer.

A separate cocoa route through the north, which has been operating since the 2002-2003 civil war, takes supplies from the rebel-held towns of Man and Vavoua out through Burkina Faso in and then down through Togo into the port of Lome.

Tax is deducted as cocoa heads north -- thus not going to the Gbagbo government in the south -- and the beans are dried and processed in the southern Burkinabe town of Bobo Dioulasso before being trucked through to Lome.

"It's pretty lively at Vavoua at the moment. We have got a lot of cocoa this year, which means we have already sent around 50,000 tonnes to Lome since the start of the season," said local merchant Alexis Yameogo.

Two industry sources, who asked not to be named, said that if the ban lasted and exports through Ivorian ports remained blocked, use of this route is likely to increase. (Writing by Mark John; editing by William Hardy)