Lagos, Sept 30 - Nigeria's 2009/10 cocoa main crop due to start this week is expected to be much larger than last season's, dealers said on Wednesday, but many fear trading could be affected by the country's banking crisis.
Nigeria, the world's fourth largest grower, has seen a steady rise in annual output since the government launched an ambitious cocoa revival programme four years ago that has raised annual output from around 200,000 tonnes to between 450,000-500,000 tonnes, according to government figures.
"The main crop harvest is just starting and we are expecting a bumper harvest because weather conditions were very good," Ukpabi Maduabuchi, a grower in the southeastern state of Abia, told Reuters by telephone from the state capital Umuahia.
There were heavy downpours in the months leading to the harvest and good sunshine in September enhancing flowering and pod development, said Maduabuchi, who is a local official of the Cocoa Association of Nigeria (CAN) -- a grouping of growers, buyers, processors and exporters.
Cocoa farming has become increasingly popular in Africa's most populous country thanks to soaring global commodity prices, which have boosted local prices to record highs.
The farm-gate price of Nigerian cocoa was flat at 360,000 naira ($2,407) per tonne on average in the last month, but 44 percent higher than a year ago.
EXPORTERS CASH STRAPPED
Farmers may find it more difficult to sell their crop to exporters this season.
Dealers said export companies and other small businesses are struggling to secure loans due to the country's lingering banking crisis.
The central bank last month injected $2.6 billion into five banks and sacked their top management, saying reckless lending and lax governance allowed them to become so weakly capitalised they posed a systemic risk.
"There will be a lot of cocoa but no money to trade due to the crisis in the banking sector," said Ade Adeshida, who works for one of Nigeria's biggest cocoa exporters.
"Cash flow will be slow because I don't think any bank will be willing to finance cocoa business this season," he added.
Dealers said they are under increasing pressure from banks to pay their outstanding debt and have been given less short-term lending options.
"Exporters who took money from banks are having problems," buyer Jacob Abiodun told Reuters from Akure, capital of Nigeria's top growing southwestern state of Ondo.
"The banks are no longer willing to give them new loans so they do not have as much money to buy cocoa this year as they had last year, especially with the high prices."