NIGERIA – Agro Traders Limited, a Cocoa processing and export company in Nigeria is set to receive US$5.55 million (N2bn) to boost cocoa processing and exports.

The funding will be provided by Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) with 50 per cent credit risk guarantee for the working capital facility.

According to a report by The Punch, the move will enable the company to export 22,000 metric tonnes of cocoa.

As part of the capital injection, the Nigerian Export-Import Bank and United Bank for Africa will be financing the purchase, storage, processing and export of 22,000 metric tons of cocoa beans.

While proposing similar collaborations with specific development finance institutions that have mutual objectives, NIRSAL is wooing all commercial banks to open up their balance sheets to agriculture.

The investment also seeks to support smallholder cocoa farmers who supply the commodity to the cocoa processor by providing a guaranteed offtake market for their produce every year.

However, heavy rainfall and poor sunshine across Nigeria’s cocoa-growing regions have been seen to likely dampen the commodity output this season. Besides preventing mould, sunny weather is also needed for a bigger bean size.

As the world’s fourth-biggest cocoa producing country, the condition has also been seen to present the likelihood of the blackpod disease which largely affects bean quality.

Sayina Riman, president of the Cocoa Association of Nigeria (CAN), said the 2018/19 season has seen flash floods and considering cocoa trees are at the fruiting stage ahead of the main crop, the weather could affect pod formation.

The International Cocoa Organization (ICCO) has forecast the 2018/19 output will be 245,000 tonnes, whereas CAN had forecast a 30% rise from last season’s estimate of 250,000 tonnes, reports Reuters.

Riman said the association was now waiting for the end of the mid-crop before revising its figures.

He said farmgate prices have declined to around US$2,353 (N720,000) per tonne from N850,000 in January.

However, prices could recover after the world’s two biggest producers – Ivory Coast and Ghana – agreed last week to impose a price floor of US$2,600 per tonne on the chocolate ingredient, Riman said.

Nigeria was not involved in that decision, Riman said, but added that there had been concerns over the price of the commodity. He said the issue would be on the table at the next ICCO meeting in September in Ivory Coast.