Domestic shippers in the world’s top cocoa producer are losing market share to foreign-backed competitors as exporters become ensnared in the fallout of the liquidation of Saf-Cacao.
Cocoa shippers in Ivory Coast are struggling to raise finance for the buying and storing of beans as lenders curb their exposure to the sector. Stung by about $261 million in unpaid debts by Saf-Cacao, formerly one of the biggest cocoa exporters before a court ordered the company’s liquidation in July, banks have curtailed their lending to minimize the risk of accumulating further losses.
Since the start of the new season last month through Nov. 11, foreign-based exporters such as Cargill Inc., Olam International Ltd. and their local units have accounted for 72 percent of all cocoa arrivals at the two major ports in Abidjan and San Pedro, according to documents with government data seen by Bloomberg. That compares with 62 percent in the previous season through September, the documents showed.
The situation “is leaving local traders without access to cash and banks uneasy about financing the next campaign,” said Vincent Le Guennou, managing director of Emerging Capital Partners, which has a majority stake in pan-African lender Oragroup SA.
It “has been dragging on for too long now.”
Price speculation was at the root of an about-turn in fortunes for Saf-Cacao, which purchased the second-highest volume of cocoa from Ivory Coast two years ago.
After cocoa reached a six-year high in July 2016, the company was one of several local shippers who bet on further gains and was then caught wrong-footed, defaulting on 15,000 metric tons of cocoa for the annual season through September last year, according to an audit of the industry by KPMG.