Identifier
Created
Classification
Origin
06ABIDJAN1093
2006-09-29 16:39:00
UNCLASSIFIED
Embassy Abidjan
Cable title:  

COTE D'IVOIRE'S PALM OIL SECTOR

Tags:  EAGR ETRD ECON IV 
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VZCZCXRO5142
RR RUEHMA RUEHPA
DE RUEHAB #1093/01 2721639
ZNR UUUUU ZZH
R 291639Z SEP 06
FM AMEMBASSY ABIDJAN
TO RUEHRC/USDA FAS WASHDC 0123
RUEHC/SECSTATE WASHDC 1972
INFO RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 02 ABIDJAN 001093 

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ETRD ECON IV
SUBJECT: COTE D'IVOIRE'S PALM OIL SECTOR


UNCLAS SECTION 01 OF 02 ABIDJAN 001093

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ETRD ECON IV
SUBJECT: COTE D'IVOIRE'S PALM OIL SECTOR



1. Summary. Cote d'Ivoire's palm oil production has
increased steadily in recent years, and its exports have
nearly doubled. However, it still accounts for only one
percent of world production and half of one percent of world
exports. Palm oil also directly accounted for less than 1
percent of GDP in 2005 but much of the oil is processed into
secondary products for the domestic or export markets.
Producers here are concerned about the long-term future of
their sector due to higher costs and lower yields than the
big Southeast Asian producers, but Cote d'Ivoire's production
is nevertheless expected to increase significantly in coming
years. Although Cote d'Ivoire may never become a major palm
oil producer, it is at least holding on to its niche in West
Africa. End Summary.


2. Table 1 shows Cote d'Ivoire's palm oil production.
Except for a dip in 2002/2003, which industry sources tell us
was the result of both bad weather and political instability
after the September 2002 rebellion, production has increased
steadily in recent years. Production increased by a total of
31 percent from 2001/2002 to 2004/2005, and is projected to
increase by another 6 percent in 2005/2006. Cote d'Ivoire's
share of world production has remained steady at about 1.0
percent.

Table 1 -- Cote d'Ivoire Palm Oil Production
(000 metric tons)

2001/2002 260
2002/2003 234
2003/2004 308
2004/2005 340
2005/2006 360 (P)
Figures are for marketing years from October to September.
(P) - Projection.
Source: U.S. Department of Agriculture


3. Table 2 shows Cote d'Ivoire's palm oil exports, which
increased by 87 percent from 2002 to 2005. The country's
share of world exports went up slightly to half of one
percent over this period. Almost all of the exports go to
nearby West African countries. The biggest export increases
have been to Senegal, Ghana and Mali.

Table 2 -- Cote d'Ivoire Palm Oil Exports
(000 metric tons)

2002 65.3
2003 78.3
2004 109.4
2005 122.1
Source: Ivoirian Ministry of Agriculture


4. Table 3 shows the amount of area under oil palm
cultivation, which grew by 44 percent from 2002 to 2005.

Table 3 -- Cote d'Ivoire Oil Palm Hectares Under Cultivation


2002 176,162
2003 196,359
2004 231,223
2005 254,345
Source: Industry sources


5. Ivoirian palm oil plantations consist of a central
plantation and mill. These mills also process fruit sold by
nearby smallholders/sharecroppers and village cooperatives.
The plantation companies furnish the smallholders with
seedlings, fertilizers, pesticides and technical assistance.
The oil processed by the mills is sold for export or for
further processing into secondary industrial products for the
domestic and export markets. In addition, subsistence
farmers harvest fruit from wild palm oil groves and extract
the oil by traditional methods for local consumption.
According to the Ministry of Finance, oil plantations employ
32,300 workers while another 13,400 are employed in
processing facilities.


6. Privatization of the palm oil industry took place in 1997
when parastatal PALMINDUSTRIE was broken up and sold to three
large, mostly private enterprises: PALM-CI, SIPEF-CI and
PALMAFRIQUE. PALM-CI is the largest palm oil company in Cote
d,Ivoire. It accounts for 2/3 of total production capacity
and operates ten processing plants and 36,000 hectares of
industrial plantations. PALM-CI processes over 70% of the
total palm oil in Cote d,Ivoire, and employs 20,000 farmers
and nearly 7000 salaried employees. Smallholder plantations
working with PALM-CI alone account for nearly 50% of palm oil
plantation area in Cote d,Ivoire with approximately 110,000
hectares. Major PALM-CI shareholders include Unilever ,
SIFCA and the Government of Cote d,Ivoire. According to
PALM-CI, palm oil production in 2004 totaled 199,000 MT, up

ABIDJAN 00001093 002 OF 002


22 percent from 2003. SIPEFCI operates two processing plants
and 12,700 hectares of industrial plantations, while
PALMAFRIQUE operates three processing plants and 7,500
hectares of plantations. PALMAFRIQUE and SIPEF-CI each
increased palm oil production by 13-14 percent between 2003
and 2004.


7. Producers here are concerned about the medium- to
long-term future. While they have managed to hold on to
their regional markets, these companies are finding it
difficult to compete against the large Asian producers. Even
in Cote d'Ivoire's domestic markets, imported secondary palm
oil products such as cooking oil from Southeast Asia are
crowding out their own. The Ivoirians tell us that
electricity costs are more than twice as in Malaysia, while
the average yield per hectare here is less than half of what
it is in Indonesia and Malaysia. Producers here also
complain about high Euro-pegged costs and lack of government
interest in supporting the industry as compared with other
agricultural products such as cocoa and coffee. However,
despite the complaints, Cote d'Ivoire's largest producers are
reinvesting in the sector and palm oil production should
continue to rise over the next few years.
Valle