Nigeria Cocoa Processors Face Cost Barriers to EU Exports

Michael

Staff member
Administrator
UF Member
Nigerian cocoa-processing companies say the cost of exporting their products to Europe has been inflated by 30 percent because of a stalemate in agreeing new trade terms with the European Union.

Nigerian cocoa butter and cake exports are charged from 4.2 percent to 6.1 percent of freight-on-board values as taxes at EU ports without an agreement, Felix Oladunjoye, executive secretary of the Cocoa Processors Association of Nigeria, or Copan, said in a phone interview today from Lagos, the commercial capital. Nigeria is the only country in West Africa yet to sign the Economic Partnership Agreement protocol on free trade by the EU and African, Caribbean and Pacific countries, he said.

“It makes Nigeria-origin cocoa butter and cake less competitive in the international market,” Oladunjoye said. “It is a direct loss of revenue to the local processing industry.”

Apart from having to export at a cost disadvantage, many of them are burdened by unserviced debts estimated collectively at about 40 billion naira ($241 million), preventing new credit lines from banks, according to Akin Olusuyi, managing director of Ile-Oluji Cocoa Products Ltd. and vice president of Copan.

Eight processing companies located in the main cocoa-growing region in the southwest have a combined installed capacity of 155,000 metric tons a year. Since 2011 they’ve run at 25 percent to 27 percent of installed capacity, according to Oladunjoye. Processors also struggle to obtain beans in a local market dominated by exporters’ buying agents, he said.

Incentive Plan

Nigeria is the world’s fourth-biggest producer of cocoa after Ivory Coast, Ghana and Indonesia. Nigeria produced 350,000 tons of cocoa in the 2013-2014 season, according to the Agriculture Ministry. Cocoa rose 0.1 percent to $3,112 per ton as of 15:36 p.m. in London, according to data compiled by Bloomberg.

A government incentive plan to encourage exporters of agricultural items with subsidies ranging from 5 percent to 15 percent has been slow to come into effect, according to Oladunjoye. A backlog of applications going back to 2011 is still awaiting approval at the Finance Ministry, he said.

Three phone calls to numbers listed for Nigeria’s Trade and Investment Ministry went unanswered. Finance ministry officials weren’t immediately available to comment, an official who answered its phone number said.

Nigeria had in May rejected the proposed trade agreement with the EU because it requires abolition of import duties for manufactured goods from Europe, saying it would lead to dumping of goods and loss of jobs.
 
Top