Business News of Thursday, 2 December 2021
Cocoa sector has been accused of promoting deforestation
Decline in world market prices affects government’s ability to offer loans
Cocoa production expands to 1 million tons
The Agricultural Policy Research in Africa (APRA) has said the cost of cocoa farming has increased significantly (land, labour, inputs) but are not reflected in international prices and price fluctuations.
According to the centre, this results in declining profit margins, relatively high input prices, and increasing strains on large number of farmers to intensify production with high inputs.
In the last few years, world market prices have dropped sharply affecting ability of government to raise syndicated loans from cocoa and to supply cocoa services.
Also in the last decade, cocoa production expanded to nearly 1 million tons from under 200,000 tons in 1980s. This has been achieved by state pricing reforms and subsidized inputs for farmers that have encouraged them to rehabilitate and replant old cocoa plantations.
The research conducted by APRA show that average yields still remain low between 300-400 kg/ha (as compared to potential of 1,000 kg/ha).
Over 60% of farmers are estimated to be poor and most farmers are unable to follow extension recommendations because cost of inputs are comparatively high in relation to their profit margins.
Meanwhile, the cocoa sector has also been accused of promoting deforestation which also results in increasing cost of production and vulnerability of cocoa to infections, pests and premature old age.
APRA wants stakeholders to create more diverse agroforests with different income generating products to hedge risk against fluctuating prices, including fruit trees – e.g. cola, allanblackia, coffee, and non-timber forest products and also focus on raising incomes rather than maximising yields.