Connect with us

Markets

Forex: Cocoa Processors Lose as Farmers Make Profit

Published

on

Cocoa

The President, Cocoa Processors Association of Nigeria, Mr. Dimeji Owofemi, has said that cocoa processors are recording huge losses on cocoa beans as a result of the Federal Government’s foreign exchange market restrictions.

In an exclusive interview with SUNDAY PUNCH, he said that the local price for the product was based on the value of naira to the dollar at the parallel market while operators were compelled to sell their export proceeds at N197 to the dollar as directed by the Central Bank of Nigeria.

In a bid to stabilise the foreign exchange market, the CBN, on February 19, had asked all authorised dealers in oil and non-oil exports to repatriate export proceeds into their domiciliary accounts.

The naira sold for N278 against the dollar at the parallel market on Thursday as against N197 at the CBN FOREX window.

It was gathered that the local price of one tonne of cocoa beans had increased by 20.6 per cent from N580,000 in 2014 to N700, 000 as of December 2015.

This, according to Owofemi, is due to the devalued currency and the awareness among farmers that export proceeds are received in dollars.

Owofemi opposed the reports that stated that capacity utilisation of cocoa processors had increased by 50 per cent, saying that operators were having a hard time procuring raw materials from farmers because they were competing with exporters of the raw beans.

Meanwhile, the President of the Cocoa Association of Nigeria, Mr. Sayina Riman, admitted in a telephone interview with our correspondent that the declining value of the naira was in favour of cocoa farmers because they were making huge profits.

He explained that this was due to the increase in the international market price of the product.

According to statistics from the International Cocoa Organisation, cocoa beans which sold for $2, 952.21 per metric tonne in December 2014 rose to $3,338.7 per metric tonne during the same period in 2015.

Riman said, “Given the fluctuation of the naira and the little increase in the international market price, cocoa prices seem to be better. For the local market price, as of December 2014, we were selling at N570,000 and N580,000, but in December 2015, it was between 680,000 and N700,000 per tonne. The exchange rate is in favour of cocoa farmers.”

In order to discourage the exportation of raw beans and encourage value addition to the cash crop, the CPAN president called on the government to impose taxes on exported raw beans.

He said, “We appreciate that cocoa powder importation has been banned. We cannot tell government to ban cocoa beans export, but it can impose taxes to discourage large amount of exportation and explore other means of generating money. We are saying value should be added to the commodity before exporting. This will generate quality employment and increase the capacity utilisation of industries.”

In terms of local processing of cocoa beans, the Managing Director, Tulip Cocoa Processing Limited, Simon Conway-Jarrett, said that local processors had been able to process about 180,000 tonnes of the beans in a year. But with the right economic conditions, revival of moribund companies and support of the government, he said they would be able to process more than the current production capacity of local farmers.

He advocated the revival of the Export Expansion Grant and the payment of the backlog of the EEG certificates.

Conway-Jarrett stressed that the Export Expansion Grant should be extended to the processed products and not exported cocoa beans.

In addition, Riman requested government’s partnership to continue the school feeding programme in which cocoa powder would be encouraged among children, saying that the product had inherent health benefits.

Punch

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Crude Oil

Nine Oil Producing States Pocket N625bn in 2 Years

Published

on

Oil - Investors King

The federal government has revealed that Nine oil-producing states pocket N625.43 billion as 13 percent oil derivation, subsidy, and SURE-P refunds in just two years.

This was made known in a statement released on Friday by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu.

According to the statement, the states that benefited from the refunds include Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers States. Garba Shehu, however, added that the states still have about N1.1 billion as outstanding benefits due to them. He added that the refund has been accumulated since 1999.

Making reference to the comments made by the Governor of Rivers State, the Presidency noted that the Buhari-led regime will continue to render equal service to all the states regardless of affiliation, Investors King learnt. 

Between October 2, 2021, and January 11, 2022, the presidential spokesman disclosed that the states were paid in eight instalments, while the ninth to 12th instalments are still outstanding. 

Meanwhile, Garba recalled that data obtained from the Federation Account Department, Office of the Accountant General of the Federation,  showed that a total of N477.2 billion was released to the nine states as a refund of the 13 percent derivation fund on withdrawal from Excess Crude Account (ECA), without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04 billion.

“Abia State received N4.8 billion with an outstanding sum of N2.8 billion, Akwa-Ibom received N128 billion with an outstanding sum of N77 billion, Bayelsa with N92.2bn, leaving an outstanding of N55 billion”.

“Cross River got a refund N1.3 billion with a balance N792 million, Delta State received N110 billion, leaving a balance of N66.2 billion, Edo State received N11.3 billion, with a balance of N6.8 billion, Imo State, N5.5 billion, with an outstanding sum of N3.3 billion, Ondo State, N19.4 billion with an outstanding sum of N11.7bn while Rivers State was paid 103.6 billion, with an outstanding balance of N62.3 billion” the statement read. 

According to the presidential spokesperson, states also got N64.8 billion as a refund of the 13 percent derivation fund on deductions made by Nigeria National Petroleum Company Limited without payment of derivation to Oil Producing states from 1999 to December.

Garba concluded that the president has approved the outstanding payment of N860.59 billion from the refunds which will soon be released to the benefiting states. 

Continue Reading

Markets

Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

Published

on

Traders Wall Street

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

Continue Reading

Crude Oil

Oil Revenue into Foreign Reserve Dropped From $3bn Monthly in 2014 to Zero in 2022

Published

on

Oil

The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollar today, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele disclosed.

Speaking at the 57th annual bankers’ dinner organized by the Chartered Institute of bankers of Nigeria (CIBN) in Lagos, the CBN governor noted that there has been a significant loss in foreign reserves due to the naira’s struggle and the rise in demand for forex. 

He added that the sharp increase in the number of Nigerians who are seeking education in foreign countries particularly the UK has resulted in an unprecedented demand for foreign exchange. 

According to him, the number of student visas issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022.

Emefiele also lamented about the level of crude oil theft in Nigeria which has significantly affected the country’s oil production. He noted that crude oil theft has adversely impacted the Country’s foreign exchange reserves.

Investors King had earlier reported that Nigeria has lost its coveted position as Africa’s largest oil producer after oil production dropped below the mark of 1 million barrels per day. 

Nigeria currently trails Angola, Libya and Algeria to the fourth position. 

Meanwhile, on the Naira-4-Dollar scheme which the CBN introduced to boost migrant remittances into the Nigerian economy, the CBN governor noted that the scheme has largely been successful. 

“I am happy to note that, so far, the Naira-for-Dollar scheme has been successful in increasing remittance inflows through our registered International Money Transfer Organisation (IMTOs),” he said.

Emefiele also noted that the introduction of the National Domestic Card Scheme (NDCS) will help to reduce the operating cost incurred by commercial banks while using foreign cards. 

It could be recalled that the CBN earlier announced that it planned to introduce Nigeria-made transactional cards to replace well-known cards such as Visa and MasterCard.

Continue Reading
Advertisement
Advertisement




Advertisement
Advertisement
Advertisement

Trending