More than $1.5 billion worth of cocoa beans stalled on the piers of the world's largest cocoa producer will be seized by the government if they're not exported by the end of the month, the president of Ivory Coast's cocoa board said Wednesday.
The ultimatum presents an impossible choice to some of the world's largest chocolate producers: either risk breaking European Union sanctions against doing business with sitting president Laurent Gbagbo, or risk having your cocoa beans seized.
Gilbert Ano, president of the Ivorian Cocoa and Coffee Management Committee, said that the state projected tax proceeds of 65 billion West African Francs ($138 million) from the unexported cocoa. If the government does not receive this by the end of the month, he said it will be forced to collect the equivalent amount in cocoa.
All exporters have until the end of the day Thursday to declare their stocks to the government, he said.
Major exporters contacted for this story declined to comment on the board's order.
The announcement came two days after Gbagbo announced a plan to nationalize the West African nation's cocoa industry, a move the U.S. said "amounts to theft."
"It is another desperate act in his campaign to cling to power," spokesman P.J. Crowley had told reporters in Washington.
The U.N. declared Gbagbo the loser of the Nov. 28 presidential vote, but he has refused to cede power despite international pressure and maintains control of the country's security forces. More than 400 people have been killed since the disputed election.
Cocoa exports in Ivory Coast came to a halt in mid-January when internationally recognized president Alassane Ouattara called for an export ban to starve his rival financially.
Most major exporters, including American firms Cargill and Archer Daniels Midland, as well as Swiss firm Barry Callebaut, complied with Ouattara's cocoa ban because the E.U. had put sanctions against Ivory Coast's ports, effectively preventing any exports from leaving the country.
"It's a sign that the (cocoa) ban is beginning to hurt Gbagbo," said commodities strategist Kona Haque, though she doubted whether the gambit would work as Gbagbo will have trouble finding buyers for the beans.
"The Chinese and Russian markets can't absorb all that cocoa," said Haque, who works with Macquarie Bank in London.
The Cocoa Board estimates that more than a third of the beans from the latest harvest _ 440,000 tons _ are waiting in the two principal ports of Abidjan and San Pedro for export. In addition to that, 40,000 tons are still on the farms, said Christophe Douka, president of the individual cocoa producers' union.
"We asked Gbagbo to do this because we're being held hostage by the multinationals," he said. Since Ouattara's export ban in January, the companies stopped buying beans, he said.
While there isn't much left of this harvest, a smaller crop due in August is expected to be 450,000 tons, Douka said. "Gbagbo will give us a better price, and the internationals will have to buy from him, they have no choice," he said.
A similar effort to corner the cocoa market and drive prices up was attempted by Ivory Coast's first president in the late 1980s. It was a complete failure as the nation's entire harvest rotted in warehouses and millions of farmers lost their livelihoods.
"If no cocoa is exported from (Ivory Coast), it will only be a question of time before consuming countries run out of stocks," said a joint-statement issued in February by the Federation of Cocoa Commerce and the European Cocoa Association.
"The impact on both producing and consuming countries' industries is impossible to predict but it will jeopardize lots of jobs and assets worldwide," the statement said.
The E.U. sanctions were one of a series of efforts by the international community to financially isolate Gbagbo's government. The United States froze the assets and issued a travel ban on a list of close Gbagbo allies. But the greatest damage was perhaps caused by the regional central bank, which cut Gbagbo off from state coffers, then prevented all international banks from transferring money in or out of the country.
Since then, diplomats and analysts have been debating how long Gbagbo can last on his reserves alone, though Gbagbo has defied expectations each month by making payroll, guaranteeing the loyalty of the army and police.
He hasn't hesitated to nationalize key industries, including the national electricity company, two major french banks, the central bank offices and the stock exchange.
On Monday, Gbagbo added to his state seizure by announcing that the state would nationalize all cocoa exports, though any details of what would be done with current stocks were left out.
Even if Gbagbo is able to seize the cocoa, Haque doubts he will be able to export it on his own.
"Which ships will take the beans?" she asked.