Falling cocoa prices have left indebted farmers in Cameroon struggling to pay off loans, limiting their ability to prepare their plantations for next season, farmers and local banks said on Thursday. Bumper crops in major producers around the world sent cocoa prices crashing last season, and despite lower output expected this season markets in London and New York are struggling to rebound.
That in turn has driven down farmer earnings, particularly in Cameroon, the world's fifth biggest producer, as traders shy away from purchasing its beans - generally viewed as low-quality due to their smoky flavour. "In November I sold cocoa at 850 CFA francs ($1.50) per kilo. Yesterday I sold at 725 CFA francs. Next week it will be 700," said Francois Noah Edoudoua, who farms three hectares in Cameroon's Centre Region.
Farmers' cooperatives typically secure financing from local financial institutions, mainly microfinance groups, in order to buy pesticides and fertiliser. They pay those loans back after selling their crops but this season the proceeds are in many cases not enough to cover the debts.
"We took on 52 million CFA francs in debt. We've already reimbursed 15 million but with prices falling every week we won't be able to pay it all back," said Vendelin Ntingah, member of a cooperative of 728 farmers near the town of Ntui. Complaints against farmers defaulting on their loans are becoming increasingly frequent in local police stations.
Frederic Tuekam heads the agricultural loans portfolio for microfinance group Acep Cameroon, which has lent 3.5 billion CFA francs to cocoa farmers this year. "Normally borrowers should have begun reimbursing on November 15. They're in the red on our balance sheet. The reimbursement rate isn't even at 30 percent," he said. "Last year we reached 97 percent."
Many microfinance organisations have been forced to roll over outstanding debts into next season. But that, authorities say, has left them without the liquidity needed to issue new loans. The result is that many farmers will not be able to secure financing for inputs, potentially leading to a drop in yields and overall output next season. "The real problem is the price," Joseph Ndjana, a local representative of Cameroon's trade department, told Reuters. "The microfinance institutions are in a bad situation due to planters who can't pay back their debts."
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