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03 March 2014

Why Cote d' Ivoire, Ghana Lead Nigeria in Cocoa Production.

The Cocoa Association of Nigeria (CAN) has identified clear government policy as the primary reason why Cote d' Ivoire and Ghana By have outperformed Nigeria in the production of the commodity.

CAN pointed out that even if Nigeria meets its current cocoa production goals, it will still lag behind the region's leaders in cocoa output - Cote d'Ivoire, which produces around 1.4m tonnes a year; and Ghana, which averages 900,000-950,000 tonnes, and saw a spike to 1.1m in 2011/2012.

"These countries have been able to outperform Nigeria partly due to clearer government policy towards the sector, including robust support of it," CAN said in a statement.

CAN however noted that with the Nigerian government now increasingly rolling out measures and incentives to improve agricultural production and development across the board, cocoa is well poised to benefit.

The association said the government effort should also include ensuring that the sector can remain competitive even if prices ease in the longer term.

Nigeria's cocoa production is expected to rise by 10 per cent in the 2013/14 season, boosted by higher prices and the planting of more disease-resistant strains of beans, although the CAN says it is still putting together data for this season, which has two stages - the main harvest running from September to March and a second, smaller crop from June to August, though periods can vary depending on the weather.

Nigeria's annual output has been between 200,000 and 250,000 tonnes in recent years, only rising to 270,000 in 2012/13, according to the CAN. The industry had peaked in the early 1970s, when output reached 300,000 tonnes per year. Then Nigeria ranked second in the world, behind Brazil. It experienced a decline to 90,000 tonnes in 1999, as farmers replaced cocoa plantations with other crops, but the segment has since been revived, thanks to increased plantings in the middle of the last decade.

In June, the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, reiterated government's plans to double output to 500,000 tonnes by 2015 as it has been looking to spur activity in several key agricultural sectors - ranging from cassava to oil palm, as well as cocoa - with a host of initiatives to strengthen yields, revive dormant land, improve efficiency and enhance infrastructure.

In this respect, the Cocoa Research Institute of Nigeria (CRIN) has been distributing high-yield, disease-resistant beans which mature in around 18 months, which is considerably quicker than the 4-5 year maturity of traditional beans. The new varieties yield 1.5 tonnes of cocoa per hectare on average, three times more than the older crop, according to the minister.

CRIN is also working to boost productivity by training farmers in harvest techniques, crop spacing, weeding, pest control and the use of fertilisers.

While Nigeria works to improve productivity, rising global prices are also having a demand-pull effect on output.

Data from the ICO show global average prices rose 17 per cent in 2013, partly due to the expectation that dry weather in West Africa would affect yields. Farm-gate prices for Nigerian beans surged by 40 per cent to N420,000 ($2527) per tonne, up from N300,000 ($1805), in the year to January 23, according to the CAN.

International cocoa prices rose to a two-and-a-half-year high on January 27 as demand continued to outstrip supply, with inventories falling, the international press reported.

In the week before, US stockpiles of cocoa beans declined 3.3%, while the price of cocoa for delivery in March increased by 3.5 per cent $97 to $2889 per tonne on the ICE Futures US exchange, the highest price since September 2011 and the second 3.5 per cent rise in three trading sessions. The price of cocoa butter - used in chocolate manufacturing - also rose.

Singapore-based Olam International, one of the world's largest cocoa traders, expects a global shortfall of 185,000 tonnes between supply and demand for the year ending September 2014, as consumption rises by 3.5 per cent . Output is already slowing in West Africa as the harvest - which has been affected by rainfall - comes to an end. Continuing rising demand for chocolate in emerging markets may lead to a sustained deficit, pushing prices further upwards, analysts suggest.


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