Global Crisis Hits Nigerian Cocoa Grinding

Source: Reuters
16/12/2008

Lagos, Dec 16 - The global financial crisis has slashed cocoa grinding in Nigeria, and there have barely been any exports to Europe in the last two months, the Cocoa Processors' Association of Nigeria secretary general said.
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"The global crisis has crippled business, almost everything is at a standstill," COPAN Secretary General Felix Oladunjoye told Reuters in an interview.

About 95 percent of cocoa output from Nigeria, the world's fourth-largest grower, is shipped to chocolate makers in Europe.

Nigeria has the capacity to process about 100,000 tonnes of cocoa per year, grinding roughly 25 percent of national output.

Most of Nigeria's eight functional plants were operating at around 60 percent of capacity due to poor infrastructure, high costs and multiple taxes, but analysts say the economic meltdown has further cut the grinders' capacity to less than 20 percent.

"Most cocoa processors are not producing, the few that are processing are doing so epileptically because there is no demand for processed products in Europe," Oladunjoye said.

The few shipments from Nigeria of cocoa products -- butter, cake, liquor and powder -- were for contracts signed before the crisis but which were delayed for various reasons.

"There have been no new contracts since October. Importers are not importing because they can't get credit from their banks and factories are closing down, nobody can say he is covered," Oladunjoye said.

The government launched an ambitious cocoa revival campaign in 2005 to increase production, local processing and domestic consumption of cocoa products, but incentives from the government are often delayed.

Oladunjoye said there had been no significant increase in domestic consumption in the last three years to make up for the lull in exports since October.

"There is really nothing we here can do about the global crisis but wait until the various bailout programmes initiated by Western countries begin to manifest," Oladunjoye said.