Weather, disease to hit West Africa cocoa output

Subject Outlook for cocoa production in West Africa. Significance Erratic rainfall and outbreaks of black pod disease in Ghana, along with ethical concerns in the Ivory Coast, are driving market fears of global cocoa shortfalls for the coming 2015-16 harvesting season. Anticipating a supply crunch, cocoa futures on the London-based ICE Futures Europe and the New York-based ICE Futures US exchanges today traded at highs of 2.21 pounds per metric tonne (MT) and 3.28 dollars per MT respectively. Impacts The expansion of French retailers such as Carrefour in Ivory Coast should provide opportunities for marketing locally produced chocolate. Opposition to genetically modified cocoa crops could hamper their adoption in Ghana, marring climate resilience initiatives. If effective, clampdowns on poor labour conditions in Ivory Coast could reduce remittance flows to poorer neighbouring states. Firms providing accreditation services in response to rising demand for 'ethical' cocoa could be hampered by poor data.

Significance While the overall number of incidents is fewer than a dozen since the rise of the region's jihadist insurgencies in the early 2010s, the trend lends credence to growing warnings about the jihadist threat to coastal West African countries. Concern has focused on Ivory Coast and Benin, but there is also nervousness about Ghana, Togo and even Senegal. Impacts Western governments will boost security assistance to coastal states. Intelligence sharing and joint operations will not forestall cross-border hit-and-run attacks. Most regional states will resort to security-focused responses whose abuses drive jihadist recruitment.


Subject West Africa ports development. Significance Economic growth and rising trade volumes with Asian countries are straining West Africa's commercial port capacities. Various port infrastructure projects are underway as states compete to become shipping gateways for the region. Ever larger container ships are also forcing states to offer deeper water berth ports. Ivory Coast, Ghana and Nigeria are leading the race. Impacts Low oil prices should not affect port expansion as the costs are borne by competing private sector operators. The question of whether the operator-driven port model delivers equivalent benefits to individual economies will grow as profits rise. European private sector port operators continue to dominate, but competition from Asian companies such as DP World is growing.


Subject Outlook for Islamist militancy in West Africa. Significance Over the past four months Islamist armed groups have carried out high-profile attacks in Burkina Faso, Ivory Coast and Mali. Such incidents are not new in the Sahel, but the methods and scale have changed. To some extent this mirrors changes seen in Nigeria, Kenya, the Middle East and Europe, where attackers explicitly target civilians in a bid to attract media attention. Impacts The risk of further attacks is unlikely to shift positive investor sentiment towards Ivory Coast, which is driven by strong GDP growth. Airport security will likely come under fresh scrutiny given recent bombings and hijackings in Somalia and Egypt respectively. Cameroon is vulnerable to further attacks given its involvement in the regional anti-Boko Haram force.


Subject West Africa cocoa outlook. Significance Strong demand for chocolate is helping to lessen the global cocoa supply glut. This could underpin a more stable recovery in prices amid bumper crops in the world’s top two cocoa growers, the Ivory Coast and Ghana. On the supply side, efforts to reduce production will likely face headwinds over practical fiscal and livelihoods considerations. Impacts The stability of global consumption growth may be clouded by one-off domestic factors driving growth in some countries. Output restrictions in Ivory Coast and Ghana may be undermined if planned Nigerian and Cameroonian increases of cocoa materialise. Quality issues will be a natural hedge against smuggling in Nigeria and Cameroon where beans are sold at a discount.


Subject West Africa cocoa prospects. Significance Global cocoa markets are expected to remain oversupplied during the 2017/18 planting season, with Ivory Coast and Ghana -- which together account for 60% of world supplies -- expected to produce 1.9 million tonnes and 850,000 tonnes respectively. Thereafter, the slump in prices could deter investments in plantations, particularly in Ivory Coast where the farm gate price has been slashed. This could could sow the seeds of a new boom cycle -- especially if it compounds longer-term supply bottlenecks that have resulted from underinvestment in rehabilitating ageing and diseased tree stocks. Impacts Deforestation from cocoa farming will come under increased scrutiny as a result of international goals to combat climate change. Health trends in Western markets could reduce structural appetite for cocoa products amid flagging demand in emerging markets. Farmers are likely to switch to other crops like rubber and palm oil if prices fail to recover quickly.


Subject Prospects for West Africa in 2018. Significance Ruling coalitions will emphasise economic recovery (Nigeria) and foreign investment gains (Ivory Coast), while fragile transitions beckon for post-conflict states (Sierra Leone). Militant terrorist threats are plaguing countries across the region (Burkina Faso, Mali, Niger, Nigeria), heaping added pressure on ruling alliances to improve counter-terrorism preparedness.


Subject West African Cocoa. Significance Having amended a June proposal for a cocoa price floor of 2,600 dollars per metric tonne (mt), Ivory Coast and Ghana are seeking to enforce compliance with a revised plan that instead includes a 400-dollar-per-mt Living Income Differential (LID) to improve cocoa farmers' livelihoods. The LID applies to purchases starting in the 2020/21 season; compared to 2019/20 forward sales at this time last year, current sales for 2020/21 are down by two-thirds. To ensure LID compliance, the two cocoa regulators -- the Ivorian Coffee and Cocoa Board (CCC) and Ghana Cocoa Board (Cocobod) -- have vowed to monitor whether chocolate companies and processors' sustainability programmes can co-exist to mutual benefit. Impacts Both governments will maintain pressure for LID compliance, as they seek to demonstrate efficacy in improving rural livelihoods. The future LID price incentive to farmers may come into conflict with Ivory Coast’s stated goal to limit cocoa production from next year. Third-party certification schemes and in-house sustainability programmes will face pressure to demonstrate equivalent impact to the LID.


Author(s):  
Kenneth Ofori-Boateng ◽  
Baba Insah

Purpose – The study aimed at examining the current and future impact of climate change on cocoa production in West Africa. Design/methodology/approach – A translog production function based on crop yield response framework was used. A panel model was estimated using data drawn from cocoa-producing countries in West Africa. An in-sample simulation was used to determine the predictive power of the model. In addition, an out-sample simulation revealed the effect of future trends of temperature and precipitation on cocoa output. Findings – Temperature and precipitation play a considerable role in cocoa production in West Africa. It was established that extreme temperature adversely affected cocoa output in the sub-region. Furthermore, increasing temperature and declining precipitation trends will reduce cocoa output in the future. Practical implications – An important implication of this study is the recognition that lagging effects are the determinants of cocoa output and not coincident effects. This finds support from the agronomic point of view considering the gestation period of the cocoa crop. Originality/value – Although several studies have been carried out in this area, this study modeled and estimated the interacting effects of factors that influence cocoa production. This is closer to reality, as climatic factors and agricultural inputs combine to yield output.


2018 ◽  
Author(s):  
Peter M. Etaware ◽  
Adegboyega R. Adedeji

AbstractBlack pod disease (BPD) has been and still remains a major threat to cocoa farmers worldwide due to its annual recurrence, fast spread and highly destructive nature. The disease has caused great anxiety in many cocoa producing communities due to the inability of indigenous cocoa farmers to determine when and where BPD outbreak will take place. Twelve (12) stations were structured from four important cocoa-producing States in the Southwestern region of Nigeria. An investigation of BPD outbreak was conducted in 2015/2016 within these regions. Infected cocoa pods and topsoil samples were collected for laboratory analysis. Pests attack, cherelle wilt and BPD outbreak were seasonal with 50% chances of occurrence in all the stations. Black pod diseases outbreak was recorded in all the States (100%) during the rainy season. The disease was at its peak in August 2015 in almost all the stations (station 1 (30.0%), station 3 (23.0%), station 11 (16.0%), station 4 (9.0%), station 5 (7.0%), and station 8 (3.0%). The height of disease severity was in September 2015 (station 1 (100.0%), station 3 (96.7%), station 5 (85.7%), station 11 (84.3%), and station 4 (70.0%), with station 8 reaching the 100% mark in October 2015. Most cocoa farmlands are now being abandoned, unless concerted efforts are made to effectively manage the disease, BPD will greatly reduce cocoa production in Nigeria and around the world.


Subject Prospects for West Africa in 2019. Significance Insecurity is weighing on the region’s most significant poll in Nigeria, while new terrorist fronts are testing government popularity in Burkina Faso. The conclusion of an IMF programme will raise profligacy fears in Ghana, while rivals will vie to replace ill or outgoing leaders in Gabon and Ivory Coast.


Sign in / Sign up

Export Citation Format

Share Document