Nigeria has dropped to the seventh position from fourth as a top cocoa producer in the world, according to data made available by the International Cocoa Organisation.
The President, Cocoa Association of Nigeria, Mr. Sayina Riman, said the review of the rankings was made by the ICO based on the country’s 2015/2016 production projection of 190,000 metric tonnes.
“Nigeria has fallen from four to seven. It is shocking to us. The ranking was announced to us at a meeting that our 2015/2016 production figure leaves us at 190,000 metric tonnes,” he said.
Riman, who said that the 2015/2016 season yielded about 275,000 metric tonnes for the country, expressed optimism that the new planting season would yield between 280,000 metric tonnes and 300,000 metric tonnes provided that the production factors were favourable.
The output of 275,000 metric tonnes fetched the country about $792m in that period based on the ICCO daily price of $2,878.55 per tonne of cocoa beans on September 15, 2016.
This shows that cocoa production rose by 17 per cent from 235,000 metric tonnes in the 2014/2015 planting season to 275,000 metric tonnes in the 2015/2016 season.
The production of individual countries, according to the ICCO, is based on cocoa beans purchased or reaching the ports of the countries concerned and consequently, may differ from the harvested crop.
Riman, however, explained that many exporters were avoiding the ports and were smuggling cocoa beans out of the country, because they were discouraged by the earnings from the commodity, which had been restricted to N305 to $1 adopted as the interbank rate.
According to him, it is not profitable for exporters because the export business is done with loans at 29 per interest rate.
He explained, “Last year, the drought adversely affected our cocoa output and secondly, the monetary policy affected us. We have the limitations of not having free access to our proceeds as they come and some cocoa beans are now being smuggled to other countries so that exporters can have their proceeds there.
“What the CBN is doing, which is not acceptable to the export commodity sector, is that they still want us to change the export proceeds at the interbank rate. The parallel market rate is N420 to the dollar, while the interbank rate is N320.
“Who takes the N100 difference? We understand the system perfectly well that some people may be round-tripping the money. We are borrowing money at 29 per cent interest rate and you are still asking people, without providing any form of incentive, to bring their money and sell at the interbank rate. This is affecting the commodity sector.”
The CAN president stressed, “It is a boost to the economy if they allow us unfettered access to our proceeds. During former President Olusegun Obasanjo’s regime, we found out that our export proceeds through the agricultural sector were about $770m but that was shared because of the monetary policy of the CBN then. We went to the President and they gave us unfettered access. And when that was done, incentives were also added. The proceeds rose from $770m to $12bn.”
Nigeria’s cocoa performance in the global market in the past years had been hampered by dry weather, scanty rainfall as well as old and worn trees.
The Federal Government, during the last administration, targeted a yearly increase that would raise production to around 700,000 metric tonnes in 2016 and one million metric tonnes by 2020.
As such, farmers were provided with early-maturing, high-yielding and disease-resistant beans that mature in about 18 months to replace seedlings with four to five years’ maturity rate.
“We have distributed more than 140 million seedlings of high-yielding cocoa varieties to recapitalise the cocoa plantations, because they are old. That will give us a yield of almost five times. By 2020, Nigeria should be certainly in the one million metric tonnes cocoa production club,” the immediate past Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, had said in 2014.
The Chief Executive Officer, Nigerian Export Promotion Council, Mr. Segun Awolowo, last year said that a drop in cocoa production would adversely affect the target to increase yield.
“We need to scale up production; the idea is to surpass Ivory Coast and Ghana. Ghana is already at 700,000 metric tonnes, and we are still hovering around 240,000 metric tonnes, but the idea was to get to 500,000 metric tonnes in the next few years,” he said.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
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