Nigerian cocoa farmgate prices surge on weak naira - farmers

Nigerian cocoa farmgate prices have jumped 39 percent since April hitting an all-time high of 1.25 million naira ($4,111) per tonne this month due to a weak naira and panic buying caused by fears of a drier weather, farmers said on Friday.

The main crop in the world's fourth-largest grower traditionally runs from October to March, but this year's harvest started late in November as farmers struggled with drier weather affecting the size of their pods.
"We are harvesting but not the way we did previously. When you look at the last season we experience a lot of disaster. Many of our cocoa farms were lost due to fire caused by dry weather," farmer Adeola Adegoke, told Reuters.
"The dry season was so long that most of the cocoa trees dried up at a time when we were thinking that they would have done well," said Adegoke who farms 13 hectares in Ondo state, Nigeria's biggest producing area.
The 2016/17 season had started on a slow pace after drought cut the mid-crop harvest by 40 percent, the cocoa association has said. However in August the body lowered its forecast for the season by up to 10 percent to 300,000 tonnes after too much rain exposed trees to black pod disease and as farmers struggle with higher cost.
Adegoke said his trees had not received the amount of rain they would normally get to sustain the harvest and that output for the main crop could slow in December.
Cocoa trees need a delicate balance of rainy and dry weather. Too little rain and they wither; too much and they become susceptible to insects or fungal black pod disease. Beans can also go mouldy if small farmers are unable to dry them outside.
Commodity analyst Robo Adhuse said he expected a moderate output this season due to the time it take required for the trees to recover after the draught.
"The major thing affecting cocoa is the currency situation in Nigeria where the naira is so weak and prices are responding to that," Adhuse said.
Adegoke said farmers had not benefited much from the record high prices due to the ever rising cost of farm inputs.
Farmgate prices were around 900,000 naira per tonne in April, before the central bank abandoned its dollar peg of 197 on the naira in June to allow the naira float. That move led the currency to lose around 40 percent of its value.
Nigeria is facing its first recession in 25 years after a slump in oil revenue hammered government finances and the naira, creating chronic dollar shortages.
(C) Reuters News