It’s boom times for Nigerian cocoa farmers and exporters as global cocoa prices have hit a record high, even as the steep devaluation of the country’s currency has boosted the naira equivalents of their export revenues.
The cost of cocoa – the key ingredient for making chocolate – has almost doubled since the start of the year, with quoted prices on the Internal Cocoa Organisation’s website reaching a new historic high of $5,874 per tonne on February 8.
The price surge comes as bad weather has battered harvest in top West African growers – Ivory Coast and Ghana, causing a supply shortfall.
Locally, prices are also rising on the back of the continued depreciation of the naira, which fell to an all-time low of N1,534 per dollar at the Nigerian Autonomous Foreign Exchange Market on Monday, data from FMDQ showed.
BusinessDay findings show that the local price of cocoa at Matori cocoa warehouse in Lagos was N8 million per tonne on Wednesday, a 344 percent increase when compared to N1.8 million per tonne in December 2023.
Mufutau Abolarinwa, national president of the Cocoa Association of Nigeria, said cocoa farmers and exporters are benefitting from the record surge in global prices of the commodity.
“As we speak, the farm-gate price is between N6.5 and N 7 million. We are still in the main-crop season ending early March,” he said. “This is one of the times that we cocoa farmers are proud of our profession.”
Lawrence Afere, founder and CEO of Springboard Farmers’ Co-operative of Nigeria, said some farmers are mopping up the cocoa beans from neighbouring West African countries to sell to exporters.
“This is one of the moments that it is exciting to be a cocoa farmer as prices keep surging daily,” he said.
“The naira devaluation and surge in global prices owing to a shortfall from top producers is benefitting cocoa farmers greatly. Exporters are selling a tonne for between N8 and N8.5 million,” he added.
Nigeria, the world’s fourth-largest cocoa producer and supplier, saw the value of its global supply decline by 3.4 percent to 280,000 metric tonnes in the 2022–2023 season, according to the International Cocoa Organisation’s latest data on global production.
However, the cocoa association is optimistic that the country will increase its production for the 2023-2024 cocoa season.
“With what we are seeing now, we expect an increased output next month when the mid-crop season commences,” Sayina Rima, former national president of the cocoa association, said from his Ikom farm in Cross River State.
“Farmers are happy that prices are surging,” he said, adding that several farmers are now expanding production as it is more profitable growing the commodity.
He urged the President Bola Tinubu government to support the cocoa industry so that farmers can help the country generate the much-needed foreign exchange.
The country has two cocoa harvest seasons: the smaller mid-crop (April to June) and the main crop (October to December).
The main crop accounts for about 70 percent of Nigeria’s cocoa output, while the mid-crop has a share of 30 percent.
Nigeria exported agricultural products valued N798.5 billion in the first nine months of 2023, according to data from the country’s foreign trade report.
Out of the total agricultural products exported in the first nine months of 2023, cocoa accounted for 26.23 percent within the period.
The commodity was mainly exported to the Netherlands, Belgium, Germany, Indonesia, the United States, Malaysia, and Canada, and Italy.
London-based Capital Economics said on Wednesday that the cocoa crop in West Africa looks set to suffer heavily this year as unusually heavy rainfall caused by El Niño has complicated harvesting and also contributed to the spread of diseases such as black pod and swollen shoot virus.
“Côte d’Ivoire and Ghana account for around 60 percent of global cocoa production and we estimate that output in both countries will fall by 20 percent or so this year,” Jason Tuvey, deputy chief emerging markets economist, said in a note.
Prices are unlikely to stay at these elevated levels, particularly given signs that cocoa demand is faltering, according to the economic research firm.
“But we think that they will still average around $4,550 per tonne over this year as a whole compared with an average of $3,300 last year and $2,500 in 2020-22,” it said.
Capital Economics said producers will need to adapt ahead of the EU’s Deforestation Regulation coming into force at the end of this year. Under the new law, cocoa is one of the commodities that must be proven not to originate from an area deforested after December 31, 2020.
“Failure to comply will result in goods being refused and the exporter subject to a fine as well as a possible trade ban,” Tuvey said.
