From thieves stealing pods to traders rigging scales — high drama is unfolding in Nigeria and Cameroon’s cocoa markets — as everyone jostles for the massive profits on offer as prices of the chocolate ingredient have soared to their highest in over forty years.

Production shortfalls in West Africa, where much of the world’s cocoa is grown, are driving the rally. With the heart of the harvest season now underway, the rush of unusual developments highlights the fight over the limited supply and complicates how much farmers ultimately benefit from the price gains.

“Thieves are invading the sector, stealing pods and selling to traders,” Charles Etoundi Ngono, a local delegate of Cameroon’s Trade Ministry, said. Unlicensed traders have entered the market and are using faulty scales to cheat farmers, he added.

Cocoa futures traded in New York reached a 46-year high last week as heavy rains and crop diseases hurt West African output. In Ivory Coast and Ghana, the top two nations producing about 60% of the world’s cocoa, industry regulators set the price at which traders buy from farmers. Cameroon and Nigeria, however, operate in a free market system with minimal state control.

A kilogram of beans in the center and littoral production areas of Cameroon currently fetches $3.30, up 26% from the start of the season in October, according to the Cameroon-based Cocoa and Coffee Interprofessional Board.

A single cocoa pod sells between 200 and 250 francs depending on the size, according to a survey of five farmers in the area. “We want to take advantage of the rising price before it’s too late,” Jean-Phillipe Amougou, one of the farmers said, in an interview.

Growers in Nigeria are witnessing a similar frenzy for profits. Land owners in the south-eastern part of the country, which account for 30% of the nation’s 285,000-ton annual output, are pushing up rents, sometimes looking for quadruple the current prices.

“My landowner is asking for 450,000 naira per year on the 2-hectare farm for which I currently pay 200,000,” said Attangba Bonjo, who grows cocoa on leased land in Ikom in Nigeria’s southeast. “Cocoa farmgate prices have risen to about 4 million naira from 2.7 million naira per ton in the last two months, which I believe the land owners want to have a taste of.”

More than a fifth of the 18,000 farmers in the area are impacted by the rent hikes, according to John Kalu, the zone’s coordinator for the Cocoa Association of Nigeria. The growers will be hurt by this “if cocoa prices were to fall below their current levels.”

However, the skew of the market is not without some benefits for farmers, and they’re making some unusual but potentially lucrative contracts.

Growers in central Cameroon have started selling beans still in pods because they want to lock in the current high prices, Ngono said. Buyers are eager because they want to export more, he added.

In the normal course, farmers cut open the pods with their machetes and let the cocoa beans ferment and dry in the sun for 10-12 days before selling them. Now, in many new deals, these steps are the buyer’s responsibility. They assess the crop and strike a deal. In some contracts the processing is then outsourced back to the farmers, or the buyer might hire workers.

With supplies tight, buying the crop on trees assures traders that a competitor won’t purchase the cocoa ahead of them.

But the volatility concerns Cameroon’s authorities.

The government plans to ban the sale of all cocoa on the market that cannot be traced, to stem theft in the business, Trade Minister Luc Magloire Mbarga Atangana said during a recent tour of the country’s so-called centers of excellence that help cocoa farmers process the beans and find the best bidders for their produce.

Gerrard59:
cc: nlfmod

Cocoa farmers must be making a killing to the extent the beans are pilfered.

Good a thing, unlike Ghana and Ivory Coast, there are no restrictions on the prices Nigerian farmers wish to sell. That is the beauty of capitalism: the free market.

Ghana, as I write, signed a deal with the IMF to trade her future earnings from cocoa for an immediate loan. Terrible decision. I was stunned! The Ghanaian economy must be so terrible for such to have occurred when the president and his finance minister studied at Oxford and Columbia universities, respectively (I wonder what they learnt while there assuming they actually attended classes and paid attention).

https://www.bloomberg.com/news/articles/2023-11-21/ghana-to-sign-costliest-loan-ever-for-cocoa-as-debt-crisis-bites

RepoMan007:
Thanks to aging trees in Nigeria, cocoa yield has dropped and that means higher prices whenever demand becomes strong.
I am sure if the north had the ability grow cocoa as well as the south, they would have priotized the replenishing of the younger more productive trees and processing of cocoa into chocolates. That's a $150b global industry we are comfortably ignoring yet wishing oil will sell higher forever.

Nigeria is largely an agrarian country that should be having six ministries of agric. One for each region. This should help reduce the politics of interregional exploitation that's crippling many things in Nigeria. The least I expect from Tinubu is this if he is serious about improving the system.

Gerrard59:


The same could be said of Ghana and Ivory Coast. These chocolate firms generate money because they spend a lot on marketing. It is like Nike or Adidas - make the shoes somewhere in China, and sell them in the West at high prices due to marketing. Two, the major consumers are Westerners, and the companies selling chocolates are theirs. So it won't be easy to disrupt the system. This is unlike electric vehicles, where China is a major consumer, so she can engineer homegrown EV companies.

Since Africans don't consume chocolates like Westerners and the major companies are in the West, the best alternative is to sell to rich Asians - Japanese, Chinese and South Koreans. Also, target Emiratis and Indians. Another alternative is to encourage private investors to establish companies semi-processing cocoa. The final production takes place in the West. Ednut mentioned having constant electricity to preserve it in good condition. That is another issue.

But then, compared to cassava where the West does not participate, Thailand is the major exporter of value-added products, not Nigeria, which is by far the biggest producer globally. That is where successive governments have to support the private sector to add value to it because the Thai folks did the same thing. The major advantage the Thai enjoy is proximity to China - the major consumer of products derived from cassava. Companies are doing the same in Nigeria, but there is so much work to be done. But it is way easier than upsetting the West in chocolate manufacturing. Palm oil is also a case study - we don't have homegrown companies like Wilmar and Sime Darby, which dominate the industry, even though it is said that Malaysia built their industry with oil palm seeds from Nigeria. The major companies behind palm oil production in Nigeria are dominated by foreigners - Europeans, especially Belgians and South East Asians (Malaysians, Thais and Indonesians).

In conclusion, Nigerians are not really as good at long-term entrepreneurship as we claim to be.

Corrections:
Cool..

Gerrard59:


I explained it here:

I have agree with you on the aspect of being almost impossible to process to the taste of the west locally. They have big firms and what they call artisan cocoa users / hobbyists. The big firms there have high standards and reputation.
The artisan chocolate hobbyists are simply irreplaceable.
One thing we can still do is process it based on unbeatable raw material prices e have and try to sell everywhere else and perhaps, in the big markets too because inflation has a way of opening up new market trends and room for new actors. Milk and sugar for example is the most combined ingredient in chocolate making. We have one if not the cheapest milk rates in the world. Sugar too is a similar story.

rsogbuyi:
Good afternoon everyone. I want to create a WhatsApp group chat for fall 2024 student visa applicants where we can collectively search for dates, majorly in Lagos (Abuja too can join). If you’re interested, email me your phone number so that you can be added to the group.

It’s a group to help each other