High cocoa prices drive smuggling surge, alarming traders
At the town of Gbapleu, a rope tied between two metal barrels separates Cote d'Ivoire from Guinea. A thin trickle of traffic passes through the border post, mostly motorbikes or cars stuffed with passengers and overburdened with food and household items tied to their roofs.
For those who want to avoid the scrutiny of officials, there are other routes.
Scattered throughout the region are dirt tracks that snake through the forests and grassland. After dark, motorcycle couriers arrive at warehouses in Ivorian towns near the frontier and load up with two or three sacks of cocoa, each weighing about 65 kilograms. From around 10 p.m., the riders set out for the border in a convoy, dodging the checkpoints to carry beans into Guinea.
It's a dangerous, but lucrative business.
If they're caught, smugglers face up to 10 years imprisonment or a fine of 50 million CFA francs ($86,640).
But the smugglers can earn over $240 a week, more than three times the country's living wage. The trade has become increasingly worth the risks as cocoa prices have spiked.
"God has been on our side this season,' said Fred, a smuggler in the border town of Danane, who asked to be identified by a pseudonym to avoid retribution.
Prices for cocoa on the global market have nearly tripled since 2023, reaching around $13,000 per ton in December, before falling back to around $9,000. Adverse weather and disease outbreaks have exacerbated supply issues caused by decades of underinvestment in major producing countries, leading to severe shortages.
But as prices soar, farmers in Cote d'Ivoire, the largest exporter of the crop, have found it hard to cash in.
The cocoa trade in the country is controlled by a government-run regulator, the Conseil du Cafe-Cacao (CCC), which sets prices. The current CCC price is about a third of the global market price, which has created a powerful incentive to smuggle crops into neighboring countries that don't have the same central pricing.
The surge in smuggling has made it harder for international buyers to source beans, as Ivorian suppliers struggle to fulfill their contracts. It has made traceability more difficult, a major problem for companies trying to address long-running issues of deforestation and child labor in their supply chains. For the Ivorian government, smuggling has cut revenues, undermining its national budget and its ability to invest in the long term future of the cocoa industry.
Fermented cocoa beans dry in the sun on a farm in Azaguie. |
Bloomberg
"There is a huge loss of Ivorian harvest,' Arsene Dadie, director of domestic marketing at the CCC, said in an interview in Abidjan, Cote d'Ivoire's commercial hub.
The CCC sells cocoa crops months ahead of harvest, which helps them to set a guaranteed price for farmers at the start of the season. That meant that as prices rallied last year, regulators had already committed to sell most of their cocoa well below the global market price.
Farmers typically sell to brokers and middlemen who aggregate the crops and sell to major buyers, such as Barry Callebaut, Cargill, Olam Group and Touton.
Ghana, the world's second-largest producer, has a similar setup to Cote d'Ivoire, with the Ghana Cocoa Board acting as a central buyer. Output in Ghana fell to its lowest in more than a decade last season. Smuggling exacerbated the supply shortfall.
In April, prices in Guinea, Togo and Liberia were more than double those the CCC was offering, creating an arbitrage that some farmers and middlemen couldn't resist exploiting.
The scale of the smuggling can be estimated from the growing disparity between Guinea's production and exports.
Guinea hasn't appreciably invested in increasing its domestic cocoa crop, but in the 2023-24 growing season, shipments from the country rose 15% over the previous year, according to data provider Trade Data Monitor.
That growth has continued.
In the first three months of the current season, starting October, Guinea's cocoa shipments were more than twice the previous year.
"You can assume that Guinea has been enjoying nice prices and increasing its production, so maybe a 10% increase would be a good accomplishment already but not enough to move from 25,000 to 95,000 tons,' said Fabrice Laurent, founder of cocoa research firm Forestero.
The bulk of Guinea's cocoa ends up in Europe, with the Netherlands accounting for about 70% of all Guinean exports between January and December, according to Trade Data Monitor data.
A cocoa-processing plant in Abidjan, Cote d'Ivoire |
Bloomberg
Over the 2023-24 season, beans arriving for export at Ivorian ports dropped by 30%. Some of the drop is down to bad weather that battered crops, but Laurent estimates that around 100,000 tons were smuggled out of the country, mostly into Guinea, Togo and Liberia.
That compares with the total harvest of about 1.7 million tons. With every smuggled ton of beans, the country is losing out on export duties. The cocoa sector accounts for about 40% of Cote d'Ivoire's export revenue, making it a vital source of foreign exchange.
The rise in illicit flows has left buying agents struggling to find enough cocoa to fulfill their contracts with international traders.
Last year, exporters faced significant losses after both Ivory Coast and Ghana were unable to honor presold contracts.
Frustrated traders in Abidjan, speaking on condition of anonymity to discuss sensitive information, said they were torn between breaking the law and overpaying to source supply, or failing to meet their obligations.
Several admitted that they are now paying a premium over farm gate prices to secure beans, in defiance of CCC rules against overpaying.
Cocoa traders typically hedge their physical purchases by selling futures contracts. Delayed cocoa shipments last season forced traders to buy back their short positions and initiate new ones at a time of rapid price inflation, with futures climbing from roughly $3,000 to $11,000 per ton.
One of the traders said that they lost £2,000 ($2,700) on every ton's worth of defaulted contracts, as they were forced to roll over futures contracts at higher prices.
The rise in smuggling complicates chocolate makers' efforts to improve traceability in their supply chains. Consumers are increasingly conscious of human rights and environmental risks in the cocoa business, which has put pressure on companies to invest in understanding where their beans are grown.
At the moment, traceability is largely voluntary, but that will change for large companies in Europe when the European Union Deforestation Regulation (EUDR) comes into effect on Dec. 30. The law will require that traders provide documentation tracing supply back to the farm level.
"People are bracing for EUDR and even though supply was tight, major traders were not willing to buy cocoa just from anyone,' Jonathan Parkman, head of agricultural sales at Marex Group, said. That makes smuggling a top concern for traders and buyers, he added.
A delivery truck waits to unload sacks of cocoa beans at a re-bagging facility in San-Pedro, Cote d'Ivoire. |
Bloomberg
Several traders in Abidjan and middlemen in the western towns of Danane and Duekoue spoke of their experience on condition of anonymity to avoid reprisals. They said that they felt that the government isn't doing enough to crack down on smuggling, however, and that corrupt officials are aiding the illicit trade in beans across the border.
While smugglers such as Fred move small cargoes of cocoa into Guinea, much of the trade happens in bulk, with organized, politically connected networks moving trucks carrying upward of 30 tons of cocoa at a time, according to smugglers, officials and traders.
That's an expensive exercise, as the smugglers need to have enough capital to buy the beans from farmers or brokers, pay for logistics and spare some money for bribes. Bribes range from $8,000 to $21,000 per truck, according to smugglers and traders who asked not be named so they could discuss sensitive information.
"It's the influential business people who have mastered the art of smuggling these goods, also working with civil servants who are happy to get their cuts from it, so it's a chain,' Ndubuisi Christian Ani, a Nigeria-based analyst at the Institute for Security Studies think tank, said.
The CCC's Dadie said that the government has stepped up its anti-smuggling efforts. "It's a well-organised network but the CCC is working with the local anti-smuggling system to increase monitoring,' he said.
This season the military was deployed to the border, and the Ministry of Interior has set up regional anti-smuggling committees with the regulator. They are tasked with publicizing and combating illegal cocoa sales, a CCC spokeswoman said. "As soon as the taskforce was set up, we seized three trucks and saw that a certain number of administrative actors who did not subscribe to this vision were sanctioned,' Dadie said.
In a statement, Fidele Sarassoro, head of Cote d'Ivoire's national security council, said that anti-smuggling operations set up in October last year had achieved "significant results,' including the seizure of more than 590 tons of cocoa, and the arrest of 34 people. In February, Ivorian customs seized a stock of 2,000 tons of cocoa, worth around $19 million, which had been falsely declared as rubber.
The leakage of crops, on top of the other structural challenges to the industry, is leading to frustration throughout the supply chain.
In Duekoue, a town 400 kilometers from Abidjan, Abdul Baudula, the head of a farmers' cooperative that aggregates beans, said that the organization failed to meet its collection targets last season, partly because farmers sold their crops to smugglers.
"How do you convince a farmer to accept less money when another trader is offering more?' Baudula said. "We can't control climate change, but smuggling should be something the government can address.'
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Japan Times
5 days ago
- Japan Times
High cocoa prices drive smuggling surge, alarming traders
At the town of Gbapleu, a rope tied between two metal barrels separates Cote d'Ivoire from Guinea. A thin trickle of traffic passes through the border post, mostly motorbikes or cars stuffed with passengers and overburdened with food and household items tied to their roofs. For those who want to avoid the scrutiny of officials, there are other routes. Scattered throughout the region are dirt tracks that snake through the forests and grassland. After dark, motorcycle couriers arrive at warehouses in Ivorian towns near the frontier and load up with two or three sacks of cocoa, each weighing about 65 kilograms. From around 10 p.m., the riders set out for the border in a convoy, dodging the checkpoints to carry beans into Guinea. It's a dangerous, but lucrative business. If they're caught, smugglers face up to 10 years imprisonment or a fine of 50 million CFA francs ($86,640). But the smugglers can earn over $240 a week, more than three times the country's living wage. The trade has become increasingly worth the risks as cocoa prices have spiked. "God has been on our side this season,' said Fred, a smuggler in the border town of Danane, who asked to be identified by a pseudonym to avoid retribution. Prices for cocoa on the global market have nearly tripled since 2023, reaching around $13,000 per ton in December, before falling back to around $9,000. Adverse weather and disease outbreaks have exacerbated supply issues caused by decades of underinvestment in major producing countries, leading to severe shortages. But as prices soar, farmers in Cote d'Ivoire, the largest exporter of the crop, have found it hard to cash in. The cocoa trade in the country is controlled by a government-run regulator, the Conseil du Cafe-Cacao (CCC), which sets prices. The current CCC price is about a third of the global market price, which has created a powerful incentive to smuggle crops into neighboring countries that don't have the same central pricing. The surge in smuggling has made it harder for international buyers to source beans, as Ivorian suppliers struggle to fulfill their contracts. It has made traceability more difficult, a major problem for companies trying to address long-running issues of deforestation and child labor in their supply chains. For the Ivorian government, smuggling has cut revenues, undermining its national budget and its ability to invest in the long term future of the cocoa industry. Fermented cocoa beans dry in the sun on a farm in Azaguie. | Bloomberg "There is a huge loss of Ivorian harvest,' Arsene Dadie, director of domestic marketing at the CCC, said in an interview in Abidjan, Cote d'Ivoire's commercial hub. The CCC sells cocoa crops months ahead of harvest, which helps them to set a guaranteed price for farmers at the start of the season. That meant that as prices rallied last year, regulators had already committed to sell most of their cocoa well below the global market price. Farmers typically sell to brokers and middlemen who aggregate the crops and sell to major buyers, such as Barry Callebaut, Cargill, Olam Group and Touton. Ghana, the world's second-largest producer, has a similar setup to Cote d'Ivoire, with the Ghana Cocoa Board acting as a central buyer. Output in Ghana fell to its lowest in more than a decade last season. Smuggling exacerbated the supply shortfall. In April, prices in Guinea, Togo and Liberia were more than double those the CCC was offering, creating an arbitrage that some farmers and middlemen couldn't resist exploiting. The scale of the smuggling can be estimated from the growing disparity between Guinea's production and exports. Guinea hasn't appreciably invested in increasing its domestic cocoa crop, but in the 2023-24 growing season, shipments from the country rose 15% over the previous year, according to data provider Trade Data Monitor. That growth has continued. In the first three months of the current season, starting October, Guinea's cocoa shipments were more than twice the previous year. "You can assume that Guinea has been enjoying nice prices and increasing its production, so maybe a 10% increase would be a good accomplishment already but not enough to move from 25,000 to 95,000 tons,' said Fabrice Laurent, founder of cocoa research firm Forestero. The bulk of Guinea's cocoa ends up in Europe, with the Netherlands accounting for about 70% of all Guinean exports between January and December, according to Trade Data Monitor data. A cocoa-processing plant in Abidjan, Cote d'Ivoire | Bloomberg Over the 2023-24 season, beans arriving for export at Ivorian ports dropped by 30%. Some of the drop is down to bad weather that battered crops, but Laurent estimates that around 100,000 tons were smuggled out of the country, mostly into Guinea, Togo and Liberia. That compares with the total harvest of about 1.7 million tons. With every smuggled ton of beans, the country is losing out on export duties. The cocoa sector accounts for about 40% of Cote d'Ivoire's export revenue, making it a vital source of foreign exchange. The rise in illicit flows has left buying agents struggling to find enough cocoa to fulfill their contracts with international traders. Last year, exporters faced significant losses after both Ivory Coast and Ghana were unable to honor presold contracts. Frustrated traders in Abidjan, speaking on condition of anonymity to discuss sensitive information, said they were torn between breaking the law and overpaying to source supply, or failing to meet their obligations. Several admitted that they are now paying a premium over farm gate prices to secure beans, in defiance of CCC rules against overpaying. Cocoa traders typically hedge their physical purchases by selling futures contracts. Delayed cocoa shipments last season forced traders to buy back their short positions and initiate new ones at a time of rapid price inflation, with futures climbing from roughly $3,000 to $11,000 per ton. One of the traders said that they lost £2,000 ($2,700) on every ton's worth of defaulted contracts, as they were forced to roll over futures contracts at higher prices. The rise in smuggling complicates chocolate makers' efforts to improve traceability in their supply chains. Consumers are increasingly conscious of human rights and environmental risks in the cocoa business, which has put pressure on companies to invest in understanding where their beans are grown. At the moment, traceability is largely voluntary, but that will change for large companies in Europe when the European Union Deforestation Regulation (EUDR) comes into effect on Dec. 30. The law will require that traders provide documentation tracing supply back to the farm level. "People are bracing for EUDR and even though supply was tight, major traders were not willing to buy cocoa just from anyone,' Jonathan Parkman, head of agricultural sales at Marex Group, said. That makes smuggling a top concern for traders and buyers, he added. A delivery truck waits to unload sacks of cocoa beans at a re-bagging facility in San-Pedro, Cote d'Ivoire. | Bloomberg Several traders in Abidjan and middlemen in the western towns of Danane and Duekoue spoke of their experience on condition of anonymity to avoid reprisals. They said that they felt that the government isn't doing enough to crack down on smuggling, however, and that corrupt officials are aiding the illicit trade in beans across the border. While smugglers such as Fred move small cargoes of cocoa into Guinea, much of the trade happens in bulk, with organized, politically connected networks moving trucks carrying upward of 30 tons of cocoa at a time, according to smugglers, officials and traders. That's an expensive exercise, as the smugglers need to have enough capital to buy the beans from farmers or brokers, pay for logistics and spare some money for bribes. Bribes range from $8,000 to $21,000 per truck, according to smugglers and traders who asked not be named so they could discuss sensitive information. "It's the influential business people who have mastered the art of smuggling these goods, also working with civil servants who are happy to get their cuts from it, so it's a chain,' Ndubuisi Christian Ani, a Nigeria-based analyst at the Institute for Security Studies think tank, said. The CCC's Dadie said that the government has stepped up its anti-smuggling efforts. "It's a well-organised network but the CCC is working with the local anti-smuggling system to increase monitoring,' he said. This season the military was deployed to the border, and the Ministry of Interior has set up regional anti-smuggling committees with the regulator. They are tasked with publicizing and combating illegal cocoa sales, a CCC spokeswoman said. "As soon as the taskforce was set up, we seized three trucks and saw that a certain number of administrative actors who did not subscribe to this vision were sanctioned,' Dadie said. In a statement, Fidele Sarassoro, head of Cote d'Ivoire's national security council, said that anti-smuggling operations set up in October last year had achieved "significant results,' including the seizure of more than 590 tons of cocoa, and the arrest of 34 people. In February, Ivorian customs seized a stock of 2,000 tons of cocoa, worth around $19 million, which had been falsely declared as rubber. The leakage of crops, on top of the other structural challenges to the industry, is leading to frustration throughout the supply chain. In Duekoue, a town 400 kilometers from Abidjan, Abdul Baudula, the head of a farmers' cooperative that aggregates beans, said that the organization failed to meet its collection targets last season, partly because farmers sold their crops to smugglers. "How do you convince a farmer to accept less money when another trader is offering more?' Baudula said. "We can't control climate change, but smuggling should be something the government can address.'
Japan Times
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- Japan Times
Chinese researchers charged with smuggling toxic fungus into U.S.
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Japan Times
24-05-2025
- Japan Times
Boat driver arrests up as EU eyes tighter smuggling laws
After days at sea making the risky crossing from West Africa to the Canary Islands, migrants typically face hours of questioning by Spanish authorities trying to identify — and detain — the drivers of the boats they came on. But those drivers usually are neither the ringleaders nor profiteers, and they are being wrongfully charged under European Union counter-smuggling rules, nongovernmental organizations say. This summer, as the European Parliament is expected to finalize its position on proposed updates to EU counter-smuggling legislation, those NGOs are warning that the proposals risk perpetuating injustices and fail to target criminal organizations. The legislation, called the Facilitators Package, spells out the crimes entailed with intentionally helping people enter or move through the EU. Advocates like Daniel Arencibia, a lawyer based on the island of Gran Canaria, argue the focus should shift from pursuing boat drivers to prosecuting criminal organizations. Once drivers are arrested, authorities rarely track down who received money for organizing the crossings, he said. "In the Canary Islands, the drivers going to prison do not receive a single dollar for their activity," Arencibia said. "They come because they want to find a better life," he said. Arencibia works on cases of accused migrants in the Canary Islands, where nearly 47,000 people arrived illegally in 2024. He has been documenting arrests made under people-smuggling laws in the Atlantic region of Spain. For a third year in a row, the number of migrants accused under these laws across Europe increased in 2024, with 91 migrants facing legal proceedings, a 20% increase on 2023, according to an April report. The year-on-year increase reflects an intensified drive to identify smugglers among people arriving irregularly in Europe, said Silvia Carta, author of the report by the Platform for International Cooperation on Undocumented Migrants (PICUM). Over 80% of documented legal proceedings in 2024 — including 142 people accused of acting in solidarity with migrants — involved charges of facilitation of entry, transit or stay or migrant smuggling. The PICUM report showed most migrants are acquitted, often because cases are built on poor evidence. However, Carta said some cases in which the accused did not have legal support might not have been counted. Survivor or smuggler? Most of those facing criminal charges are accused of steering a boat, driving a vehicle across a border or managing passengers on board, according to the PICUM report. The accused have included survivors of deadly shipwrecks, such as nine Egyptian men accused of piloting a boat that sank off the coast of Greece in 2023, killing hundreds of passengers. For a third year in a row, the number of migrants accused under people-smuggling laws across Europe increased in 2024, with 91 migrants facing legal proceedings, a 20% increase on 2023, according to an April report. | reuters The men were detained for a year before the case was dismissed in May 2024. The investigative journalism outlet Solomon later found that Greek authorities knew the men were not part of the criminal network that organized the voyage as early as a month after the disaster. PICUM found charges also have been brought against people for distributing food or drink on board boats, using a map or helping their children. "Parents responsible for their children automatically fulfill the definition of facilitation because they're facilitating someone else's entry," said Carta. In one case, a Congolese woman faces five years in prison after being accused of smuggling her daughter and niece to Italy in 2019. The trio used fake identity documents to travel by plane to apply for asylum. Lawyers on the case have requested a ruling from the European Court of Justice on whether the Facilitators Package should apply when a person has not profited from helping others enter illegally. The United Nations defines migrant smuggling as obtaining financial or material benefit for procuring someone's illegal entry. The EU's Facilitators Package currently does not require financial gain as a criteria for the crime of facilitating entry. The proposed update introduces the element of financial or material benefit, but Carta said an element of criminal intent or exploitation should also be included. "The legal text should be extremely precise in narrowing down what can be criminalized," she said. A European Commission spokesman said the aim of the proposed updates was to target smugglers. "Our position is clear — humanitarian assistance should not be criminalized. What must be criminalized, is facilitating illegal entry, transit or stay in the EU in particular when it's done for profit," the spokesman said. Beyond the boat driver The European Parliament's committee on Civil Liberties, Justice and Home Affairs (LIBE), which oversees EU policy and legislation in those areas, criticized the Commission for failing to carry out an impact assessment on the proposed legislative update. It commissioned a substitute study, published in March, that found the Facilitators Package does not distinguish between exploitative action or action based on solidarity, whether by family members or humanitarian actors. The study calls for the definition of migrant smuggling to fully align with the U.N. protocol and says the new directive should focus specifically on criminal groups. It wants the Commission to withdraw the proposed update until it carries out an impact assessment. The LIBE committee also wants an exemption for humanitarian assistance to be made legally binding and to scrap new offenses that criminalize the public instigation of irregular migration such as via social media.
