COMMODITIES-AFRICA: Cocoa Producers Cut Production to Raise Prices

By Toye Olori Reprint | | Print |

Toye Olori

LAGOS, Sep 8 2000 (IPS) - Nigeria and three other West African members of the Cocoa Producers’ Alliance (CPA) – Cameroon, Cote d’Ivoire and Ghana – have set up a monitoring committee to supervise the destruction of some 250,000 tonnes excess cocoa beans, in an effort to boost prices.

According to a report from the CPA secretariat here, the decision to set up the committee was taken in Accra, Ghana during a two-day consultative meeting of Ministers and representatives of the four countries’ cocoa sector.

“The technical committee on the destruction of cocoa beans in the countr ies will allocate specific tonnages to be destroyed by each country which supply about two million tonnes of the commodity annually to the world market,” said the report obtained by IPS this week.

The four countries which jointly produce 70 per cent of world cocoa, had a meeting in Abidjan, Cote d’Ivoire in July, where they agreed to destroy 250,000 tonnes of excess cocoa beans beginning in October, the start of the 2000/ 2001 cocoa year.

Figures made available to IPS show that from late 1998 to date, the price of cocoa has nose-dived from an average of 1,794 dollars to about 800 dollar s per tonne. Cocoa price reached a 20-year low in May.

Sona Ebai, Secretary-General of the International Organisation of Cocoa Producers, told journalists here late August that the four nations have been seriously affected by the fall in the world prices of cocoa due to structural over-production.

IPS learnt that over-production by the Cocoa Producers Alliance and low quality cocoa beans in recent times by some of the producing countries such as Nigeria, had been a major problem.

Local cocoa merchants have also blamed the 1997 Asian financial crisis an d the Russian crisis for the lowering of prices.

As a result of these problems European consumers reduced consumption of chocolate, the main product from cocoa beans. Chocolate manufacturers and beverage companies subsequently reduced prices to the African cocoa produ ces, said Christopher Abiodun, a Nigerian cocoa merchant.

The CPA’s Ebai said the Association “believes that considering the cur rent market fundamentals, and all other things being equal, the withdrawal and destruction of 250,000 tonnes of cocoa will be beneficial to member countries”.

Among the benefits, he said, are the reduction of the end-of- season free stocks from 1.3 million tonnes to 913,000 tonnes, the reduction of the stock-to-grinding ratio from the current 45.2 per cent to 28.7 per cent a nd the increase in the world prices to a maximum of 924 pounds sterling , (1,32 7 dollars) per tonne.

Kwame Peprah, Ghana’s Minister of Finance, according to a report, agrees that by the withdrawal, the alliance would be able to achieve its aim.

Peprah was quoted as explaining at the Accra meeting, that the decision t o withdraw the cocoa from the market would not harm farmers’ harvest since steps have been taken by respective governments to compensate them.

The four major cocoa producers resolved that the cocoa withdrawal and destruction mechanism would be financed by the cocoa sector in each membe r country.

The 11-member Cocoa Producers’ Alliance of which Nigeria is one of the founding members, was formed in 1962, with Lagos as the secretariat and Nigeria as the international headquarters.

Nigeria has a long history of cocoa cultivation dating back to early 1890s.Total yearly production of cocoa in Nigeria over the past 25 years averaged 300,000 tonnes but this has plunged to the current level of 150 ,000 tonnes per year. The sharp drop, according to producers, is due mainly to the neglect of agriculture since the discovery of oil in the country.

In addition to reduced acreage under cultivation, the introduction of the market liberalisation in 1986 has also resulted in reduction in quality a nd Nigerian cocoa no longer attracts premium prices in the international mar ket.

According to agricultural experts here, the government’s hands-off policy under liberalisation, has brought about more profit for the farmers but comprom ised the quality of cocoa exported from the country.

“The get-rich quick syndrome of most Nigerians, the middle-man role by s ome emergency cocoa exporters and smuggling of the produce ,have combined to reduce quality of cocoa beans from this country and this has caused a discrimination in the international market,” says Akinwale Ojo, Executive Secretary of Cocoa Association of Nigeria (CAN).

Industry sources say poor quality translates to an average loss of about