Lagos, October 23, 2008 - A fall in commodities prices triggered by the global financial crisis has almost brought Nigeria's cocoa trade to a halt, with farmers refusing to sell at the rates being offered by buyers.
Farmgate prices in the world's number four grower fell 20 percent to 200,000 naira a tonne on average in the last month, buyers and growers said on Thursday.
"Buying is hectic, the price has been looking downwards for weeks," said Ade Adesida at one of Nigeria's biggest cocoa exporters. "The terminal price determines the local price."
U.S. cocoa futures settled at their lowest levels in nearly 11 months on Tuesday, while London's March cocoa contract tumbled to an eight-month low after funds dumped soft commodities due to the gloomy world economic outlook.
"The main crop harvest has started but cocoa is very scarce. Farmers are complaining that the price is too low, so they are not selling," Bola Awe, a grower in southwest Ekiti state told Reuters.
The April-September mid crop, which is usually cheaper than the main crop because the beans are lighter in weight and lower in quality, sold at 250,000 naira per tonne at the farm-gate last month, raising hopes of higher prices in the new season.
"Everybody is disillusioned because we had prepared our minds for higher prices at the start of the main crop season," said Gabriel Ogar, a farmer in the southeastern cocoa hub of Ikom in Cross River state.
Buyers and growers said bean quality had improved greatly in the last month, with mould levels down to less than 5 percent in some areas in the southwest region, from about 30 percent.
Bean weight is about 330 grammes per 300 beans in the southwest and 320 grammes in the southeast, buyers and farmers said.
Licensed Buying Agents (LBAs), who buy beans upcountry for exporters, said the farmgate price climbed to 270,000 per tonne at the start of the October-March main crop before crashing.
"I've never seen this kind of price crash in the many years I have been in the cocoa business," said Jacob Abiodun, an LBA in Akure, capital of Nigeria's main cocoa growing state of Ondo.
Only farmers who were desperate for cash or had committed themselves by collecting inputs from LBAs on credit were selling their beans at the current price, growers and buyers said.
"Most farmers are hoarding their beans in the hope that the price will appreciate soon," Maduabuchi Ukpabi, a buyer in Umuahia, capital of the southeastern cocoa growing state of Abia told Reuters.
The upcountry price of graded cocoa -- beans certified fit for export by government produce inspectors -- fell 18 percent to 230,000 naira per tonne in the southwest and 200,000 naira in the southeast, in line with the global trend, buyers said.
The price in the port city of Lagos, Nigeria's main export route, weakened 17 percent to 250,000 naira per tonne, while the price in the southeast port city of Calabar was 220,000 naira, buyers and exporters said.