Cocoa Prices Drop As COVID-19 Bites Harder

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 Cocoa farmers in Nigeria are counting their losses as the price of the commodity continues to plummet due to the second wave of COVID-19, which has been ravaging many consuming countries, especially Europe and America recently. 

The farmers lamented that the cost of inputs is going up while the price of cocoa is dropping drastically. 

They said that cocoa beans, which used to be sold for between N1.1millon to N1.2million per meteric ton, now sells for N850,000. 

Some of the farmers and stakeholders in the sub-sector, in separate telephone interviews, shared their opinions with DAILY INDEPENDENT. 

They stressed that the country needs to improve on value addition in order not to find itself in a situation where the commodity will be stranded and begging for buyers who may never come due to unforeseen circumstances. 

Adeola Adegoke, national president of the Cocoa Farmers’ Association of Nigeria (CFAN), said that the farmers are not immune to COVID-19, adding that players in the cocoa sub-sector also see the disruptive tendencies of the pandemic from the production to the consuming nations. 

“We know that the Europeans and the Americans are the major consumers of chocolate and that is actually the end-usage of the beans. 

“We are also seeing Asians embracing the consumption of chocolate now. They are also part of those people requesting for more beans. 

“The second wave of COVID-19 is already having a setback in terms of export. Some of these destinations we are actually exporting cocoa beans are on lockdown; some of the companies these contacts are coming from are deeply affected. 

Adegoke also said that the Central Bank of Nigeria (CBN)’s policy in terms of exportation of cocoa beans has in one way or the other created a kind of slow exportation of the beans. 

“Majority of these countries today have been shut down and that is actually the major challenge we are having, and why the prices are falling now. Many of these goods are at the warehouses of our exporters waiting, because we have this kind of pandemic that has ravaged many of these consuming nations. 

“I believe that the COVID-19 has impacted negatively, especially this second wave, because it is majorly affecting Europeans and Americans, as these are the major countries consuming chocolate and making use of the beans,” he added. 

Speaking further, Adegoke noted that there has been a rise in dollar and that it is believed that the rise would definitely have a great impact on bean export. 

“That is why we still believe that a ton of cocoa should be going around N1.5million. This, to me, is as an average cocoa farmer thinking but I know that the law of demand and supply is playing a major role in commerce. 

Sayina Riman, former national president of Cocoa Association of Nigeria (CAN), said cocoa price has been on a downward trend, adding that it has affected the farms and the farmers negatively. 

He said this is because prices of inputs are going up and the price of cocoa is drastically reducing. 

Riman pointed out that the exporters are not finding it easy with the Central Bank of Nigeria (CBN’s) policy on export proceeds, which has turned the commodity export of the country and keeps devaluing cocoa in the face of lack of buying strength for the exporters. 

He said internationally, because of the shutdown and the lack of activities in consuming countries, prices are also dropping. 

He stated that in all, the worst hit in this are farmers who put in so much in labour and resources to produce a ton of cocoa and are not getting commensurate returns for it. 

Oba Dokun Thompson, the Oloni of Eti-Oni, an international cocoa trader, noted that last year, there was much rainfall and with the excess rains, cocoa output on the whole was affected. 

He also noted that the fluctuating exchange rate also affected cocoa, stressing that with the lockdown at the moment; the indication is that the exporters do not even know what to do with their cocoa. 

“We are hoping that they are not going to store it for so long in their warehouses. It is as if it wants to lead to a glut because there is nowhere to sell it. 

“If the lockdown in Europe goes beyond February into the time of the light season which is March, April, there might be a problem in prices because there will be so much at the same time and there could be a glut,” he added. 

Speaking further, he said the exporters and wholesale buyers are not as enthusiastic as they would normally be at this time of the year as their trade is also dependent on a healthy economy in Europe and the United States. 

“The going rate for cocoa within the last three to four weeks has dropped by about N200 per kg first because of the erratic fluctuation in the Naira/Dollar rate and secondly, due to the uncertainties brought about by the second wave of COVID-19 last month. 

However, Adegoke noted that the season, which started October 2020, has been very stable and it is hoped that there will be a better all-round development of the cocoa economy of Nigeria. 

“We are looking forward to the injection of support for the production. The support the cocoa farmers got in a very little way would definitely translate us to strengthen the system in terms of production and productivity and we are also looking forward to more support in terms of going for the second Anchors Borrowers’ Programme (ABP) for cocoa production support for the 2021 season. 

“We are also looking at strengthening of the sector in terms of value addition because we know that if there is support in the area of production and productivity, it will increase the farmers’ income and it will as well increase our production in terms of export, which shows that Nigeria as at today, exports 90 per cent of our beans in raw form. 

“We as an association will collaborate with other value-chain operators in terms of creating value addition to make sure that there is higher processor and higher creation of value addition in terms of production, consumption and making available cocoa varieties. 



Source: Daily Independent

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