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.
Crude Oil Drops on Wednesday as U.S. Oil Inventories Jump Unexpectedly
Global oil prices fell by 1 percent on Wednesday after data from the U.S. Energy Department showed that the United States oil inventories unexpectedly rose by 4.3 million barrels last week. More than the 1.9 million barrels predicted by experts.
The unexpected increase in United States inventories weighed on crude oil prices on Wednesday, erasing $1.31 or 1.5 percent from Brent crude oil after it rose to a seven-year high on Tuesday. While the U.S West Texas Intermediate (WTI) dipped by $1.09 or 1.3 percent to $83.56 a barrel.
Still, gasoline stocks declined by 2 million barrels across the United States, a situation likely to push pump prices even higher.
“The market continues to deplete Cushing crude oil inventories and that is impacting the Brent-WTI spread and ultimately we’re going to see crude oil diverted from the Permian up to Cushing rather than going to the Gulf Coast,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
However, the shaky COVID-19 recovery in most economies has led to doubts over the sustainability of rising oil prices.
“(Some) countries are falling into an autumn Covid-19 case spike,” said Louise Dickson, senior oil markets analyst at Rystad Energy, “which poses downside risk for oil demand growth in the very near-term and could provide a soft pressure on oil prices.”
Brent Crude Oil Extends Gain to $86.66 a Barrel Amid Tight Supply
Tight global oil supply pushed Brent crude oil, against which Nigeria oil is priced, to a multi-year high of $86.66 per barrel on Monday at 3:30 pm Nigerian time.
Oil price was lifted by rising fuel demand in the United States and tight global supply as economies recover from pandemic-induced slumps.
“The global energy supply crunch continues to show its teeth, as oil prices extend their upward march this week, a result of traders pricing in the ongoing rise in fuel demand – which amid limited supply response is depleting global stockpiles,” said Louise Dickson, senior oil markets analyst at Rystad Energy.
Goldman Sachs on the other hand is predicting a further increase in Brent crude oil to $90 a barrel, citing a strong rebound in global oil demand due to switching from gas to oil. This the bank estimated may contribute about 1 million barrels per day to global oil demand.
The investment bank said it expects oil demand to reach around 100 million barrels per day as consumption in Asia increases after the devastating effect of COVID-19.
“While not our base-case, such persistence would pose upside risk to our $90/bbl year-end Brent price forecast,” Goldman said in a research note dated Oct. 24.
Earlier this month, the Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+ agreed to continue increasing oil supply by 400,000 bpd a month until April 2022 despite calls for an increase in global oil supplies.
The decision bolstered the price of Brent crude oil above $84 per barrel and expected to push the price even further to $90 a barrel. Low global oil supply amid rising demand for crude oil will continue to support oil prices in the near term.
“Despite the recent power cuts and impacts to industrial activity in China, oil demand is likely instead supported by switching to diesel powered generators and diesel engines in LNG trucks, as well as by a ramp up in coal production,” Goldman Sachs stated.
U.S. and Ghana Inaugurate New $64.7 Million Energy Infrastructure Investment at Pokuase
U.S. Ambassador to Ghana Stephanie Sullivan joined the President of Ghana H.E. Nana Akufo-Addo and other Ghana government officials to formally inaugurate the Pokuase Bulk Supply Point (BSP) in Accra today. The U.S. Millennium Challenge Corporation (MCC) funded the $64.7 million (GH₵ 391.9 million) electrical infrastructure project under the Ghana Power Compact.
“The Pokuase Bulk Supply Point represents sustainable infrastructure investment by the United States with Ghana that will benefit hundreds of thousands of Ghanaians now and into the future,” remarked Ambassador Sullivan at the inaugural event. “It will help deliver more reliable power to the people, places, and businesses of Accra that drive increased economic activity benefitting families, businesses, and communities.”
This represents a flagship investment under the Millennium Challenge Corporation’s Ghana Power Compact. The Pokuase BSP will reduce outages in the power system, help stabilize voltages, and improve the quality and reliability of power supplied to the northern parts of the capital city of Accra. It will also reduce technical losses in the power transmission and distribution system, contributing to the financial viability of the Electricity Company of Ghana (ECG) and the Ghana Grid Company (GRIDCo) in the long term. The Pokuase BSP is now the largest-capacity BSP in Ghana at 580 megavolt amperes (MVA) and will directly benefit 350,000 utility customers.
The Government of Ghana implemented the project through the Millennium Development Authority (MiDA). MiDA formally handed over the new power substation to ECG and GRIDCo in today’s ceremony.
The Pokuase BSP is the first major construction project to be completed under the Ghana Power Compact. The $316 million compact is helping the Government of Ghana improve the power sector through investments that will provide more reliable and affordable electricity to Ghana’s businesses and households. The compact is also funding a BSP at Kasoa and two primary substations at Kanda and Legon, in addition to other power sector investments, energy efficiency programs, and women’s empowerment programs within the power sector. The compact program will officially close on June 6, 2022.
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