Nigerian Currency

WEAK CURRENCY AND HIGH PRICES A DOUBLE-WHAMMY FOR NIGERIAN COCOA FARMERS 

Nigerian Cocoa farmers are growing concerned that they will soon be unable to afford the necessary farming supplies to carry out their duties. The price of chemicals and other farming inputs is reportedly rising, according to information provided by chemical dealers and traders in the area. This, combined with rising transportation costs and a weakening national currency, could provide real challenges for Nigerian farmers. 

Nigeria hopes to soon join neighbouring countries Cote d’Ivoire and Ghana in benefitting from the Living Income Differential (LID), a pricing mechanism established by the two countries, which pays a set premium to Cocoa farmers on top of what chocolate companies pay for their Cocoa. However, there is still work to be done in Nigeria’s Cocoa sector before they are considered for the LID scheme, and the rising prices of farming supplies could make this move even more important for the survival of Nigeria’s Cocoa farmers.

A Nigerian Cocoa trader, Bayo Anifowose warns, “The cost of chemicals such as fungicides, insecticides and herbicides have risen by at least 50% to 100% because of the naira devaluation. Farmers are not going to be able to afford the inputs.” He goes on to explain that the Nigerian naira (NGN) is currently trading at 415.72 (415.22 at the time of this article) to the US dollar, compared to NGN409 in October. According to Mr Anifowose, the depreciation of the naira has resulted in an increase in the price of chemicals and farming inputs, since most of these are imported. 

Isaac Ashaolu, a chemical dealer in Ibadan, the capital of Oyo state, details some of the price increases for common farming chemicals. According to him, a 50-gram sachet of fungicide that could be used to prevent black pod disease currently sells at about NGN400 (circa US$0.96), up from NGN320 (circa US$0.77) at the start of the year. Similarly, a litre of herbicide that would have cost NGN1,700 (circa US$4.1) in January, now costs NGN4,000 (circa US$9.6).

Cost of chemicals has increased tremendously. Farmers are struggling to buy fungicides and other chemicals, especially now that the rainy season has come with Cocoa susceptible to the black pod disease

Isaac Ashaolu, local chemical dealer

Cost of chemicals has increased tremendously. Farmers are struggling to buy fungicides and other chemicals, especially now that the rainy season has come with Cocoa susceptible to the black pod disease,” explains Mr Ashaolu. He adds that it is not just chemicals that are being driven up in price, as high-quality machetes now cost NGN4,000 (circa US$9.6), when they would have cost just NGN2,000 (circa US$4.8) at the start of the year.

Importers are also struggling with the cost of transporting their chemicals and other supplies from the Lagos ports to West Africa’s Cocoa producing areas, as the price of diesel is also rising. Mr Ashaolu notes that diesel, which cost NGN320 to 400 (circa US$0.77 to $0.96) per litre at the start of the year, has doubled in price to NGN700 to 740 (circa US$1.7 to $1.8) per litre.

“Farmers may face a difficult time in the 2022-23 Cocoa season especially during the harvest of the main crop if the value of the naira does not improve against the dollar. Such an improvement will bring down the cost of farm inputs,” concludes Mr Anifowose.

Atej2*, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

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