Cocoa Prices Surge To Record High On Naira Depreciation

Nigerian cocoa farmers and exporters are reaping big as global cocoa prices hit record high, thanks to the steep naira devaluation that has resulted in a sharp increase in the naira income from the export of the beans.

The cost of cocoa – the key ingredient for making chocolate – has almost doubled since the start of the year, and quoted prices on the Internal Cocoa Organisation’s website reached a new historic high of US$5,874 a ton on February 8.

This is because bad weather has battered harvest in top West African growers – Ivory Coast and Ghana, causing a supply shortfall and sending prices surging.

Locally, prices are also surging as the naira continues on a free fall hitting N1,534 at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, data from FMDQ showed.

Findings show that the local price of cocoa per ton at Matori cocoa warehouse in Lagos was N8 million per ton on Wednesday, 14 February, a 344 percent increase when compared to N1.8 million per ton in December of 2023.

Mufutau Abolarinwa, national president of the Cocoa Association of Nigeria, said cocoa farmers and exporters are cashing out from the record surge in global prices of the commodities.

“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,” Abolarinwa said.

“This is one of the times that we cocoa farmers are proud of our profession,” he added.

Lawrence Afere, the founder and CEO of Springboard Farmers’ Co-operative of Nigeria, said some farmers are mopping up the 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 exporting a ton 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 (ICCO).

However, the cocoa association is optimistic that the country will increase its production output 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,” said Sayina Rima, former cocoa association national president 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 Tinubu government to support the cocoa industry so that farmers can help the country generate its much-needed foreign exchange.

The country has two cocoa harvest seasons which include the smaller mid-crop from April to June, and the main crop from October to December.

The main crop accounts for about 70 per cent of Nigeria’s cocoa output while the mid-crop accounts for 30 per cent of the total production for the season.

Nigeria exported agricultural products valued at 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 per cent within the period.

The commodity was mainly exported to the Netherlands, Belgium, Germany, Indonesia, the United States, Malaysia, and Canada, and Italy.