Is state interventionism making a comeback in African agricultural commodity markets and beyond? The question deserves to be asked in view of developments in recent months on the cocoa and natural vanilla markets. Markets that have, moreover, great similarities, these characteristics can be perceived as being criteria for this type of policy to be implemented.

Madagascar represents this year 77% of the world production of vanilla; Ivory Coast and Ghana together accounted for 61.7% of cocoa production in 2019/20, according to figures from the International Cocoa Organization.

In February 2020, following the collapse of the world price of vanilla, which is traded over the counter, the Malagasy government decreed a single minimum export price, regardless of the quality of the pods, of $ 350 per kilo for the 2019/20 campaign which ends in May. For the 2020/21 campaign, taking into account the collapse of the price on the world market, the minimum export price has been set at $ 250. Admittedly, it has been lowered by $ 100 but remains roughly $ 75 $100 higher than the export price from other producing countries such as Papua New Guinea or Indonesia. Of course, each origin has its specificities and therefore its price, the vanilla from Madagascar this year being particularly of good quality, but perhaps not at this level of differential.

On the cocoa side, Côte d'Ivoire and Ghana introduced in July 2019 a decent income differential (DRD or LID) of $ 400 per tonne which is systematically added to each contract concluded since the start of the current campaign. 2020/21, on October 1st (read our information: Launch of the Ivory Coast-Ghana Cocoa Initiative).

The three countries have shown that they want to safeguard the planter in these periods of falling prices and market turbulence. But this policy implemented in the three countries has, in fact, caused the opposite effect: international buyers are slowing down their purchases, fighting with the producing countries. As a result, the price to the planter falls or falls because demand is not there for export.

If in Côte d'Ivoire and Ghana, the planter benefits from a guaranteed minimum purchase price for his cocoa, this is not the case in Madagascar where the planter is alone in front of the market. But, even in Côte d'Ivoire, the information coming from the production belts shows that growers have to sell off their production at a price below the guaranteed price to find a buyer for their cocoa beans. Even the cooperatives have difficulty paying the growers for the cocoa they bring to them because they have trouble then evacuating it to the ports of Abidjan and San Pedro since exports have fallen (read our information: Chocolate makers postponed their shipments of cocoa from Côte d'Ivoire creating overstocking). In addition, we also know, but at the global level, a shortage of ships which still constrains exports.

Moreover, if on November 11, 2020, in the final communiqué which closed the meeting between the Coffee-Cocoa Council (CCC) and the Ghana Cocoa Board (Cocobod), it is said that "prices to producers in the two countries have been adequately increased, with all of the DRD having been paid directly to the cocoa farmers", it is questionable since the farmers have difficulty in selling at the official guaranteed price.

The similarities - with their differences, of course - are striking between the policies pursued by these leading producer countries of the cocoa and vanilla markets, but also by the reaction of the market and, more particularly, of buyers and the industry who do not do not hesitate to question this policy, certain that only market liberalism can enable producers to improve their living conditions. Because we cannot imagine that companies and multinationals which have developed over the last decade strategies for the sustainability of the sectors and the improvement of the living conditions of the growers with whom they work can sweep away a policy that is presented as favorable to the producer. So, either the sustainable development strategies of the sectors are smoke and mirrors, or the companies and multinationals know, by experience or by philosophy, that state economic interventionism does not allow producers to be better off. And one would not think that these global economic actors draw lessons and conclusions from the stabilization funds and other similar organizations that were now working more than 30 years ago in a very different economic and political context.

From there, one can wonder. If the Ghanaian-Ivorian and Malagasy strategies prove to be successful, one can imagine that these policies will be implemented for many other products where the world supply is highly concentrated, such as, for example, Côte d'Ivoire for walnuts of cashew. But if these policies prove unsuccessful, one can imagine other policies such as that of Indonesia which, each month, sets its tax on the export of crude palm oil according to its anticipation of the world price on the next month. This measure, which pursues other objectives than those displayed by Côte d'Ivoire or Madagascar, does not raise - or no longer - any argument or controversy.

It should be noted that Indonesia is also looking into its export policy since it modified its tax policy for the export of crude palm oil at the end of last year (read our weekly column on the raw materials markets first dated December 4, 2020. Whereas previously Indonesia imposed a fixed export tax of $55 per ton, regardless of the world price, now its levies are progressive, ranging from $55 to $255, depending on the levels of price: at $670 per tonne of crude palm oil or less, the levy will be $55 per tonne and it will increase by $15 for each price increase of $25. to subsidize its ambitious biodiesel program.

However, where the shoe pinches is that the reference base is always the world market with its vagaries, its fluctuations and its speculations often light years away from the concerns and daily life of the planters….