Why Nigeria’s plans to partner Cameroon on cocoa premium will not work


* The two countries have had informal talks – producer group

* Move comes after Ivory Coast, Ghana moved to lift prices

* Cameroon trade ministry unaware of plan, trader sceptical (Adds quotes, details)

By Chijioke Ohuocha

LAGOS, Oct 10 – Nigeria aims to team up with Cameroon to agree a premium for their cocoa with buyers, the vice president of the World Cocoa Producers Organisation told Reuters, after top growers Ivory Coast and Ghana moved to boost prices for their crops.

A top cocoa trader at one of the world’s biggest agriculture trade houses did not see how Nigeria and Cameroon could team up, because Nigeria does not have a central cocoa authority, unlike Ivory Cost, Ghana and Cameroon.

“I believe the Nigeria and Cameroon prices will move up in line with Ivory Coast and Ghana … because of supply and demand,” said the trader.

“If Nigeria becomes too cheap, everyone will buy Nigeria and the market will adjust higher automatically, but not because they teaming up,” the trader added.

Farmgate prices in Nigeria rose to around 720,000 naira ($2,353) per tonne from 650,000 naira in September.

Despite being the world’s leading cocoa producers, the two countries exert limited influence over international prices. Cocoa producing countries have sought ways to protect farmers from market swings after global overproduction sent prices crashing in 2016-17, and oversupply has meant a slow recovery.

World Cocoa Producers Organisation Vice President Sayina Riman, who doubles as president of the Cocoa Association of Nigeria, said Ivory Coast and Ghana had effectively agreed a $400 per tonne premium above global prices for their cocoa, and that Nigeria wanted to follow suit to protect its farmers.

Nigeria has had informal discussions with Cameroon, Riman said.

“We are talking to Cameroon to see if we can become a regional bloc … and see if we can get our buyers who know our quality to give us better differentials,” he said in a telephone interview.

“We need to approach it as a bilateral discussion,” he said.

Peru has said it would propose a minimum price of $3,200 per tonne to its regional growers, which together make up 17% of global output, after the moves by West African producers.

Nigeria and Cameroon both account for around 10% of global production and have the potential to more than double output within five years, Riman said. The countries share a border and similar weather.

Riman said private sector representatives in Nigeria would hold talks with the government this month to map out a plan after which the country would formally engage with Cameroon.

He said Nigerian officials had also met with Dutch and British officials about boosting cocoa exports to Europe rather than selling beans through third party buyers in Asia.

Cameroon’s trade ministry is unaware of the Nigerian plans, said its spokesman, Serge Eric Epoune, while a source at the country’s National Office of Cocoa and Coffee, who did not want to be named, said talk of the plans were just “rumours”.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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