Cocoa Rally Fuels Bean Theft, Soaring Rents in Cameroon, Nigeria
Pius Lukong and Tolani Awere
(Bloomberg) -- From thieves stealing pods to traders rigging scales — high drama is unfolding in Nigeria and Cameroon’s cocoa markets — as everyone jostles for the massive profits on offer as prices of the chocolate ingredient have soared to their highest in over forty years.
Production shortfalls in West Africa, where much of the world’s cocoa is grown, are driving the rally. With the heart of the harvest season now underway, the rush of unusual developments highlights the fight over the limited supply and complicates how much farmers ultimately benefit from the price gains.
“Thieves are invading the sector, stealing pods and selling to traders,” Charles Etoundi Ngono, a local delegate of Cameroon’s Trade Ministry, said. Unlicensed traders have entered the market and are using faulty scales to cheat farmers, he added.
Cocoa futures traded in New York reached a 46-year high last week as heavy rains and crop diseases hurt West African output. In Ivory Coast and Ghana, the top two nations producing about 60% of the world’s cocoa, industry regulators set the price at which traders buy from farmers. Cameroon and Nigeria, however, operate in a free market system with minimal state control.
A kilogram of beans in the center and littoral production areas of Cameroon currently fetches $3.30, up 26% from the start of the season in October, according to the Cameroon-based Cocoa and Coffee Interprofessional Board.
A single cocoa pod sells between 200 and 250 francs depending on the size, according to a survey of five farmers in the area. “We want to take advantage of the rising price before it’s too late,” Jean-Phillipe Amougou, one of the farmers said, in an interview.
Growers in Nigeria are witnessing a similar frenzy for profits. Land owners in the south-eastern part of the country, which account for 30% of the nation’s 285,000-ton annual output, are pushing up rents, sometimes looking for quadruple the current prices.