Cocoa boom spurs theft, rental Squeeze for Nigerian farmers
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December 11, 2023284 views0 comments
The high price of cocoa has sparked a rash of criminal activity in West Africa, as cocoa pods are stolen from farms and scales are rigged by traders. The soaring price of cocoa has created an irresistible opportunity for profit, leading to a tense situation in the region’s cocoa market. Farmers are struggling to protect their crops, while traders are doing everything they can to manipulate the market to their advantage. This has created a volatile and uncertain environment for all those involved in the cocoa trade.
The current situation has been exacerbated by production shortfalls in West Africa, which accounts for about 70 per cent of the world’s cocoa supply. With the world’s cocoa producers scrambling to meet the increased demand, prices have reached their highest level in more than 40 years. This has led to an increased scramble for the limited supply of cocoa beans, with farmers, traders, and ‘opportunists’ all fighting for their share. Meanwhile, the high prices have done little to benefit the farmers, many of whom are still struggling to make a living.
As the fight over the limited supply of cocoa has intensified, a number of unusual developments have emerged. Some farmers have resorted to smuggling cocoa beans out of their countries to sell them on the international market, where prices are higher. Others have resorted to selling their beans to speculators, rather than to local buyers, in the hope of getting a better price. Meanwhile, the high prices have led to a surge in the theft of cocoa pods, as thieves seek to cash in on the rising value of the beans. All of these developments are complicating the already complex global cocoa market.
According to the National Bureau of Statistics (NBS), the export of ‘Superior quality Cocoa beans’ from Nigeria in the third quarter of 2023 generated N42.24 billion (over $100 million USD) in foreign exchange, making it the most valuable and highest earning agricultural product exported by the country. The figures suggest that demand for this commodity is on the rise, as it has outpaced other agricultural exports such as sesame seeds, cassava products, and ginger. This is in line with global trends, as the price of cocoa has been increasing in recent months due to supply constraints and rising demand.
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Recently, the price of cocoa futures contracts traded in New York hit their highest level in 46 years, due to a combination of heavy rains and crop diseases that have damaged cocoa crops in West Africa. The record prices in the London cocoa market have been driven by the same factors that have affected the New York market, namely, supply constraints and rising demand. In addition, concerns about the spread of crop diseases such as black pod disease and swollen shoot disease have added to the uncertainty in the market. As a result, there has been a surge in the demand for cocoa futures contracts, as investors seek to protect themselves from potential price spikes.
Some market analysts are predicting that the high cocoa prices will lead to a shift in buying patterns, as chocolate manufacturers and other buyers seek to source their cocoa from other regions such as Indonesia and Ecuador. However, these regions do not have the capacity to meet the rising cocoa demand, nor do they produce cocoa of the same quality as West African cocoa. This is due to the unique climate and soil conditions in countries like Ghana,Ivory Coast, and Nigeria, which are ideal for cocoa cultivation. In addition, the farmers in these countries have generations of experience in growing cocoa and have developed techniques for producing high-quality beans. This has resulted in West African cocoa being in high demand, with buyers willing to pay a premium for it.
In contrast to the regulated cocoa markets in Ivory Coast and Ghana, Nigeria operates a free market system, where prices are determined by supply and demand. This has led to a situation where farmers in Nigeria are seeking to maximise their profits, leading to a frenzy in the cocoa market.
According to a Bloomberg report, landowners in the south-eastern part of the country, where cocoa is grown to a significant level, are increasing rental prices, sometimes quadrupling the current rates. This is being driven by the high demand for cocoa and the lack of state control over the market.
Though many farmers in Nigeria are seeing record profits from cocoa production, the high prices and intense competition for land have also led to some negative consequences. In some cases, farmers are resorting to illegal deforestation and clearing of protected areas to create more space for cocoa cultivation. This has raised concerns about the impact on the environment and biodiversity. There are also fears that the unsustainable expansion of cocoa production could lead to soil degradation and a decline in future yields.
Atangba Bonjo, a cocoa farmer from Ikom, Cross River State, told reporters that his landowner is now demanding N450,000 per year for the 2-hectare farm that he currently leases for N200,000. Bonjo stated that this is part of a broader trend where landowners are exploiting the high demand for cocoa and increasing rental prices, which is putting a strain on cocoa farmers who cannot afford the higher rents. He also expressed concern that the increased competition for land could lead to further exploitation of cocoa farmers.
Many other cocoa farmers have expressed similar concerns about the rise in rental prices and the impact on their livelihoods. They have also raised concerns about the limited support they receive from the government, which has largely left the cocoa sector to be regulated by the market. There are also reports of cocoa farmers being evicted from their land by landowners, who are taking advantage of the rising demand for cocoa. The increasing competition for land and the lack of support from the government are putting additional pressure on cocoa farmers, who are already facing challenges such as low yields and pests.
According to John Kalu, coordinator for the Cocoa Association of Nigeria in the southeast region, the current increase in land rental prices is a result of the recent increase in cocoa prices. He noted that cocoa farmgate prices have risen from N2.7 million per tonne to N4 million per tonne in the last two months, which has led landowners to seek a share of the increased profits. Kalu also estimated that more than 20 per cent of the 18,000 cocoa farmers in the region are affected by the rise in rents, and warned that if the price of cocoa warned that if the price of cocoa were to fall below current levels, farmers who have entered into such contracts could be stuck in a difficult position.
Kalu noted that the cocoa farmers will be negatively impacted if prices were to fall, but that they are also benefiting from the current high prices. He mentioned that the farmers are entering into some unusual but potentially lucrative contracts, which could help them offset the impact of higher rental costs. One example is a contract in which a cocoa farmer leases a plot of land to a company, which then supplies the farmer with the necessary inputs to grow the cocoa. In return, the farmer agrees to sell their entire harvest to the company at a fixed price.