Rising cocoa prices leave farmers poorer
Even at the global price of about $3,200 per ton, local cocoa farmers are not smiling to the bank because it is has not impacted on their profits, the President, Federation of Agriculture Association of Nigeria (FACAN), Dr Victor Iyama, has said.
On the average, he said growers receive about six per cent of the price that consumers in rich countries pay for chocolate.
The problem, according to him, is that prices have not risen enough to give farmers an incentive to continue producing cocoa.
Iyama said farmers receive a fixed price from agents of chocolate manufacturers at the season.
The price offered by agents of chocolate manufacturers, he said, limits their ability to make profit when prices go up.
While the profits of multinational chocolate companies have increased, he said cocoa farmers receive only a part of the world market price for beans.
According to him, it is the big companies in chocolate manufacturing that are making high profits.
While the companies are competing for higher market shares and profits, Iyama said thousands of cocoa farmers bear the costs by getting less and less share from the revenues.
Iyama stressed the need for chocolate manufacturers and consumers to pay a fair price for chocolate so farmers can receive a living wage and have sufficient income to invest in better equipment, seeds, and fertilisers, with potential for expansion.
He said prices of both imported and local farm inputs used on cocoa farms have been escalating. These include fertilisers, insecticides, weedicides, pesticides and farm machinery.
Because of low revenues, he said farmers cannot invest in the maintenance of existing trees or in planting new trees on their plantations. About 40 per cent of the cocoa crop is lost yearly due to incorrect maintenance.
Declining real producer prices combined with rising costs of production, means shrinking income incentives and consequent reduction in production.
If the negative economic conditions on cocoa farms persist, he said the reduction in production and exports is likely to continue in the coming years.
With limited income, he said cocoa farmers and their families are losers in a lucrative cocoa and chocolate industry.
He said farmers spend so much per hectare to produce cocoa per tonne.
For this reason, Iyama said cocoa farmers deserve price increase because they put in a lot of effort to ensure good quality cocoa.
He said cocoa prices need to go higher up 5000 to stimulate production as demand will keep rising.
The price of cocoa is likely to remain a key development concern, yet it is unclear what policy tools are needed to ensure that farmers benefit more directly.
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