Will production concerns in West Africa underpin cocoa prices?

Cocoa prices are on the rise as crop production concerns in West Africa continue to underpin prices. Farmers in Cote D'Ivoire and Ghana have reported that cocoa trees are beginning to suffer from the effects of the seasonal dry and dusty Harmattan winds, with leaves turning yellow and cocoa pods withering. Akin Laoye, the CEO of FTN Cocoa Processors, shed light on the recent price movements and production outlook during a recent interview on CNBC Africa. Laoye highlighted that the crop outlook for Nigeria looks promising this year, but emphasized the need for long-term planning to take full advantage of the growth potential. He stressed the importance of a 24-month planning period to effectively navigate the production challenges and maximize yield in Nigeria. With 22 states in Nigeria having the capacity to grow cocoa, Laoye called on the government to make cocoa farming more attractive to farmers by providing them with access to land, capital, and necessary support systems. One of the key concerns raised during the interview was the need for government support to boost cocoa production in Nigeria. Laoye identified access to land and capital, along with support for seedlings and chemicals, as crucial factors for farmers. He highlighted the potential of cocoa farming to attract young entrepreneurs and graduates if the government could provide necessary resources and financial backing to kickstart cocoa production initiatives. Discussing the European Union's deforestation regulation, Laoye acknowledged the impact it could have on cocoa prices. The regulation entails that European buyers must ensure that cocoa sourced from regions that are not contributing to deforestation. Laoye expressed confidence in Nigeria's ability to meet these requirements, emphasizing the industry's efforts to comply with regulations and ensure sustainable practices. With international cocoa prices expected to remain volatile, Laoye addressed the additional layer of uncertainty stemming from trade tariffs. He emphasized that cocoa markets are sensitive to global trade dynamics and highlighted the potential for disruptions and price fluctuations due to trade actions by major trading blocks. Despite the challenges, Laoye remained optimistic about the industry's resilience and the continued demand for cocoa products. In conclusion, the interview highlighted the challenges and opportunities facing cocoa production in West Africa, with a particular focus on Nigeria's potential to enhance its role in the global cocoa market. As industry stakeholders work towards addressing production concerns and regulatory requirements, the future of cocoa farming in the region remains contingent on effective planning, government support, and sustainable practices.