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Ivorian government to reduce export taxes for cocoa products

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ABIDJAN (Reuters) – The Ivorian government has announced reduced export taxes for cocoa products in a bid to encourage production and processing in the West African country.

Taxes on exports of cocoa butter will fall to 11 percent from 14.6 percent and taxes on cocoa mass will drop to 13.2 percent from 14.6 percent, the government said.

The export tax on cocoa powder will fall to 9.6 percent from 14.6 percent.

Also, trading houses such as Cocoa Barry, Olam and Cargill will be able to increase their processing capacity by 7.5 percent. Smaller processors will be able to expand by 10-15 percent.

The changes are pending formal contracts to be signed between processors and the government.





(Reporting by Ange Aboa; writing by Edward McAllister; editing by Jason Neely)

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Why Tunisia Believes Exports May Ignite Recovery

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Due to political instability and terrorism, Tunisia has been struggling economically. Could exports be the solution?

Tunisia’s economy had been in a fragile condition for many years. Still reeling from the global financial crisis, the Arab Spring uprisings left Tunisia and many other North African economies stagnant as a result of the regional instability. The problem was further compounded by risk adverse foreign investors, who came to view countries in the region as unattractive prospects.

Then came the terrible terrorist incidents of 2015. The attacks were designed to undermine the Tunisian economy, and they were successful in doing so. The portents were dire for a country in which tourism accounted for 14.9% of GDP in 2014, whilst employing approximately 12% of the working population.

Exports as the answer

A full-on financial crisis was fortuitously averted by the slump in global oil prices, combined with a good year for Tunisian exports of olive oil. Olive oil production on the European continent was hampered by a historically poor harvest in 2015. Yet Tunisia enjoyed record harvests, which enabled the beleaguered nation to quadruple its export revenues of olive oil from US$ 250 million in 2014 to in excess of US$ 1 billion in 2015. These factors have helped Tunisia narrowly avoid the fiscal brink; additionally they have illuminated a potential escape route from the economic wilderness.

The boom of last year’s olive oil season has set events into motion, as Tunisia can ill afford to let such a success become a one-off. Fortunately the EU has realized this, and in an effort to assist Tunisia they doubled the country’s olive oil export quota back in September 2015. If high production can be maintained, Tunisia can become a perennial player in this area. However, in a microcosm that reflects the overall Tunisian economy, Tunisian olive oil products are exported in their most basic and least valuable form. Value and jobs can be added by exporting refined, branded bottles as opposed to the current situation: exporting raw olive oil that is refined and branded by Spanish or Italian firms.

Transitioning to the exportation of more diversified and sophisticated products is something that would benefit other sectors within Tunisia. As an example Tunisia currently exports crude oil. However efforts are being made to finance and build the necessary facilities that will allow for the exportation of refined oil products. As with olive oil, this will create jobs and generate more revenue from the countries resources.

What needs to be done

At a recent conference to discuss the promotion of Tunisian exports, the President of the Tunisian Confederation of Industry Trade and Handicrafts, Wided Bouchamaoui, highlighted the value that an increased focus on exportation would bring to the economy: “Tunisia could raise the value of its annual exports to 100 billion dinars in the next decade.”

However, if such targets are to be achieved, continued oversight will be needed. Due to government intervention, the Tunisian dinar has been overvalued for many years, subsequently hampering exportation as Tunisian goods have been comparatively expensive. In an attempt to remedy the situation the Tunisian Central Bank has allowed the Dinar to depreciate in a controlled fashion. Despite this, the currency is still overvalued by as much as 15% according to some analysts. Further controlled depreciation is an ugly necessity, should Tunisia want its goods priced properly on the international market. This would serve as the catalyst to stimulate Tunisian exports and help reduce the trade deficit (US$ 6.6 billion).

The painful fallout from this policy is that for ordinary citizens their savings have lost value and their buying power has been reduced. The government finds itself in a precarious, high stakes situation: risk social unrest by allowing the currency to slide further, or hamstring the export-led recovery by giving in to public pressure.

Additionally, Tunisia has a major problem with illegal cross border imports and exports, a legacy from the Zine El Abidine Ben Ali regime. These activities undermine the country’s legitimate export enterprises, discourage foreign investors and deprive the state of taxable revenues. Whilst the current government has taken some steps to eradicate these practices, more must be done to legitimize all cross border trade.

If managed correctly, the export industry can be used as a major weapon in the Tunisian economic recovery. The benefits are numerous: exports can generate much needed revenue for the nation, tackle high unemployment, rebalance the trade deficit, generate new industries and encourage long-absent foreign investment in the country.

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A great season for Tunisia’s olive oil

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tunisia olive oil

The EU has granted Tunisia a 2 year tax break on the import of olive oil; now it is down to the country to make it a top seller.

Producers of olives and olive oil since Roman times, Tunisia has stuck to a tried and tested method of harvesting this ancient fruit. Due to relatively cheap labor still on offer in the country, the olives benefit from being gathered using a technique of gentle sweeping with small rakes by a mostly female workforce.

Said to help retain the flavor of the olives and cause less damage to the trees, handpicking prevails over the commonly adopted method of machine harvesting in Europe. In order to distinguish themselves on the global market, maintaining the best flavor from their olives and being able to confidently ensure a pure product is paramount. “We can say that our bottled oil is 100% Tunisian and that counts for a lot in specialty shops. This is something Italy cannot always guarantee,” said Lemia Thabet, Executive Director of the Tunisian Technical Packaging Centre.

New lease on life for ancestral industry

Tunisia is the biggest producer of olive oil outside of Europe, yet for such a prolific producer the northernmost country in Africa has up until now remained decidedly in the shadows of its European counterparts. It has settled instead for selling off large quantities of oil to rival countries such as Spain, the biggest producer in Europe, and to Italy, commonly thought of as the home of olive oil. The wholesale olive oil is then mixed with the local kind, by way of improving on what will become the big brands we are all familiar with. In this way the “liquid gold” Tunisia produces is generating far less money than if they had the means to bottle, package and label the product on their own.

Tunisian olive oilOn 10th March, 2016, the European Parliament agreed upon an initiative to allow the country to export tax-free olive oil for two years, limited to 35,000 tons per year. The reason for the tax break is in part due to the particularly bountiful spell that Tunisia has been experiencing compared with the rest of the world. Records released by the Tunisian Ministry of Industry, Mines and Energy showed that for the 2014-2015 season, Tunisia exported more than any other country worldwide. In a record-breaking harvest, overseas sales reached 299,300 tons, which equates to a massive 10 percent of the global olive oil consumption. This earned the country, which has a 3,000-year history of olive-farming, a respectable $976 million. “Our record harvest has coincided with a shortfall in international production,” said Abdellatif Ghedira, the head of the government’s National Oil Office. “This year we are the world’s second-largest producer.”

Olive oil economy

Accounting for over 10 percent of Tunisia’s exports and providing a livelihood for hundreds of thousands of people, it is unquestionable that the olive oil trade is of major importance to the country, coming second to tourism. However, after the devastating effects of 2015’s Bardo Museum terrorist attacks and the Sousse beach massacre, what once was the nation’s linchpin, generating 15 percent of the country’s GDP in 2014, is now a sector worryingly in decline.

Bereft of some one million foreign visitors last year, the economy is in crisis and the security of the nation as well, as the somber climate has given rise to expanding terrorism. Recognizing the terrible blows Tunisia has been dealt over the past year and the promise the country had shown for real democratic change, the EU stepped in. A declaration of political support is the primary reason for implementing the measures, in hopes that it will allow the Tunisian economy enough time to recover. “Exceptional times call for exceptional measures. The proposal is a strong signal of EU solidarity with Tunisia,” said High Representative of the European Union, Federica Mogherini, adding, “Tunisia can count on the EU’s support in such a difficult time.”

Promoting the future

The tax break may come as a temporary relief but other obstacles still lie in the paths of the country’s producers. To truly make a success of this opportunity they first need to contend with a market that is very much geared towards promoting Spanish and Italian olive oil as superior. Also for the most profit to be made the entire production process would have to take place on home turf. “We buy almost all our bottles and stoppers from Italy and that pushes up the price, we should be making our own,” said expert Mounir Ouhrani of Slama Huiles.

While there may be some hurdles along the way, Tunisia can rest assured on the product they have to offer. A country that is covered with 1.7 million hectares of olive trees, almost 20 percent of the olive tree orchards worldwide, they are no small fry. The uniqueness of the olive oil they produce is remarked upon internationally; a particularly rich flavor that due to its high fat content is able to withstand high temperatures while still maintaining its notable nuttiness. Pair this with the traditional way in which the olives are harvested and you have two solid reasons why the North African country could make a successful breakthrough onto the global olive oil market. Given the chance and an audience who are willing to look beyond the norm, olive oil could soon be Tunisia’s number one industry.

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