In Nigeria, efforts to claw back some of the foreign-exchange earnings lost to falling oil prices are causing delays in exports ranging from cocoa beans to cashew nuts, and adding to a problem that the central bank sought to address in the first place.
The country is the world’s fifth-biggest producer of cocoa beans, a key ingredient in chocolate. As Africa’s largest economy, it also fell into a recession last quarter.
About 100,000 tons of cocoa beans are trapped at the ports and another 100,000 tons of a variety of agricultural commodities are in warehouses around the country, Pius Ayodele, president of Cocoa Exporters Association of Nigeria, said. It now takes an average of 40 days, instead of seven, to get approvals to clear a container for shipping.
That’s after the central bank started insisting on additional documentation to ensure export proceeds are returned to the country.
The oil-price plunge has worsened dollar shortages in Africa’s largest producer of the fossil fuel. While crude contributes less than 10% to Nigeria’s gross domestic product, it accounts for about 90% of foreign-exchange earnings and half of government revenue.
The shortage of hard currency is also adding to the gap between the official exchange rate and that on the parallel market. That spread, now more than 20%, has created an incentive for exporters to divert dollar proceeds to unofficial channels.
Mounting Losses
The slowdown in trade flows since October has caused a loss exceeding 500 billion naira ($1.3 billion) in non-oil revenue for exporters, according to Tola Faseru, president of the National Cashew Association of Nigeria.
Some traders have cash-flow problems and default on loans due to the gridlock at ports, the exporters association’s Ayodele said.
And while it’s a struggle to get shipments out of the country, the 2020-21 cocoa crop in world’s fifth-largest producer of the chocolate ingredient could exceed initial estimates by as much as 27% to reach 270,000 tons.
Reduced production by global chocolate manufacturers adds to their problems. Nigerian cocoa sellers are struggling to find buyers willing to enter into new forward contracts because many factories have shut operations because of the pandemic, said Mufutau Abolarinwa, president of the Cocoa Association of Nigeria. International buyers are complaining of heavy stockpiles of unsold beans, he said.
—Tope Alake and Tolani Awere in Lagos
Charted Territory
Getting more people around to world to cut down on eating beef could save lives by reducing heart attacks and curbing global temperature rises, according to The Lancet medical journal.
Today’s Must Reads
Grain drain | China, the world’s top food consumer, is stepping up efforts to safeguard the nation’s grain areas as part of a drive to protect supplies. Separately, rigorous testing of inbound frozen food could cause China’s meat imports to plunge 30% next year.
Protein boost | France plans to boost output of high-protein crops to cut its reliance on soybean imports amid a push toward self-sufficiency and concerns about the crop’s links to deforestation.
Beer craze | Australian barley growers could soon be raising a glass to India’s swelling cohort of beer drinkers, who are being eyed as a potential market for some of the country’s excess stocks of the grain, after its biggest buyer China all but halted imports this year.
Bean counters | Coffee traders are just starting to come to grips with the extent of Brazil’s weather woes as prospects for next year’s harvest shrivel in the hot and dry conditions. Meanwhile, coffee-crop losses in Honduras, Central America’s top producer and exporter, may increase to almost 10% after hurricanes damaged vast stretches of the country’s infrastructure.
Milk money | Canada has promised funds to dairy and poultry farmers whose market share was hurt by free trade deals with Europe and countries on the Pacific Rim.
Oat cuisine | North America’s best-performing food producer is going big on oat milk. SunOpta has spent more than two decades focusing on natural and organic foods, making products such as frozen fruit, soy milk and fruit bars. The latest push, though, is the milk substitute made from oats.
Meat and greet | Eat Just, a maker of meat and egg substitutes, has been approved to sell its laboratory-created chicken in Singapore, which becomes the first government to allow the sale of cultured meat.
Squeeze the day | Citrus growers in Europe got an unexpected lift this year when people sought to boost their immune systems with vitamin C, but now even that coronavirus bright spot is fading.
Rubbish situation | Food delivery workers have been praised as heroes for keeping society nourished during the pandemic. But the downside to all that convenience has been a massive pileup of waste.
On the Bloomberg Terminal
Global exposure | Unilever’s 60% sales exposure in developing-markets should drive faster growth, though a tough 1H21 is likely across those historically fast-growth markets, including India, where complete and swift closings amid the virus pandemic won’t recover quickly.
Canned heat | Campbell Soup’s sales momentum may continue through fiscal 1H, in our view, though product unavailability may limit some gains if demand spikes are pronounced.
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