Outlook For Nigeria’s Cocoa Bleak, Says Analysts | Independent Newspapers Limited
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Outlook For Nigeria’s Cocoa Bleak, Says Analysts

Posted: Mar 11, 2016 at 12:24 am   /   by   /   comments (0)

Kirk Leigh & Seyi Taiwo Oguntuase Lagos

Nigeria’s cocoa farmers should expect a poor season owing to inclement weather condition and the toll occasioned by disease, experts have warned.
However, the nation’s West African neighbour, Cote d’Ivoire, is set for a bumper harvests, according to the experts.
The expected poor run of cocoa in Nigeria has contributed to the commodity’s prices hitting the roof, soaring to a two-month high Thursday, March 10.
Reuters reports that “May London cocoa was up 10 pounds, or 0.45 percent, at 2,231 pounds a ton, after touching 2,237, the highest since January 4.”
“I think the improved weather in Cote d’Ivoire is positive for that country’s crop, but that the outlook for Nigeria’s light crop is still bleak,” George Edward, Head of Soft Commodities Research Desk at Ecobank told Independent in an email response.
“Serious damage was done to cocoa trees and pods in the dry spell earlier in the season, and we still expect a sharp drop in Nigeria’s light crop, keeping total production in 2015/16 below 250,000 tons”, Edward said.
This is in line with the organisation’s position mid-February in its middle Africa update, where it said Nigeria’s 2015/16 mid-crop output is expected to plummet following a severe dry spell.
Quoting the Cocoa Association of Nigeria, Ecobank said “mid-crop output (April-June), which makes up a third of the total crop, could fall by up to 60% to 23,000 tons. Nigeria’s South Western cocoa belt, producing 70% of output, is suffering from acute dry weather, with no rains since October. This will deal a further blow to Nigeria’s cocoa sector, which is struggling to maintain output above 250,000 tons, well below the level achieved in the late 1960s.”
The research highlighted that despite the bleak prognosis, there is an upside for farmers as “ the weak NGN:US$ exchange rate is helping to boost exports as traders sell off beans rapidly in fear that the central bank could impose capital controls on export revenues”.
Cocoa remains a crop of choice in Western Nigeria for its role in earning foreign exchange that went into building enduring public institutions like universities and hospitals in the old Western region.
Meanwhile, Commerzebank in a market note said that recent rainfall in Cote d’Ivoire has improved prospects for the country’s yield.
“However, it remains to be seen whether the rainfall arrived in time and whether it was enough to prevent crop shortfalls.”
Sayina Riman, National President, Cocoa Association of Nigeria, said the outlook for cocoa yield in the recently ended farming season is poor due to drought for most part of the season.
“The cocoa season ended this February and was heavily affected by drought. So the farmers are not expecting much this season because of this singular reason,” adding that the effect of the drought was severe because of low window for research and development, stressing that there is need for continuous research to bring out drought resistant species.
Most cocoa dealers are in tandem with the views of Riman, saying there remained considerable uncertainty over the crop outlook in West Africa, after a spell of hot, dry weather damaged prospects for production.
“All eyes will be on rains in West Africa in the next couple of weeks,” a senior London-based cocoa futures broker said.
“If rains return, we might have another dip in the market.”
Cocoa farming in Nigeria, as in most of West Africa, is mostly at the subsistence level and each year, farmers lose between 30 percent to 100 percent of their cocoa farm to pests and diseases. The limited number of improved seeds or planting material also means that farmers are harvesting from old trees that produce low yields.
Experts say the limited knowledge of new, more efficient farming techniques has reduced crop yields and incomes, just as lack of organisation among farmers’ groups has limited their ability to purchase supplies at a lower cost. It has also limited access to finance, helpful market information and secure better prices for their produce.
“There is a lack of technology transfer and there is a lack of investment in research and development”, says Alex Bruijini, Policy Minister at the Dutch Ministry of Economic Affairs.
A stifling but age old problem for farmers is that they are price takers as the $100 billion chocolate companies in Europe and the America’s control the price and therefore the industry.
They say while it is difficult for small farmers to cope with the influence of chocolate companies in dictating the prices of cocoa, majority of them work on small farms of not more than two hectares, which is too small to guarantee better returns.
Besides, smallholder farms are mostly cultivated by ageing workers working with ageing tree stocks that are vulnerable to pests and disease, says Oliver Nieburg, analyst with Confectinerynews.com.
In order to make cocoa crop farming more lucrative Riman, therefore, called on government to have active engagements with farmers and other stakeholders.
“In time past, there have always been certain interventions. We only hear it in the newspapers and the farmers hardly get it. This is a new regime and we want to see the active engagement with stakeholders,” Riman said, stressing that cocoa farming is not technologically driven, that it is the handiwork of men and women who toiled daily with their hands to produce cocoa and earn Nigeria respectable foreign exchange after oil.
“We have the best policy in the shelf; there has been cocoa policy with little or no implementation. We only see the policy on the pages of newspapers,” the national president of Cocoa Association of Nigeria said, adding that government as an enabler should engage with stakeholders to make sure that the input and subsidy given by government reach the true farmers not the Abuja or Lagos or government office holder farmers.