Nigeria risks being blacklisted by the International Cocoa Organisation if traders continue to export beans in old jute sacks, a top official of the Cocoa Association of Nigeria (CAN) said on Tuesday.
Paul Ojong, secretary general of CAN - a grouping of cocoa farmers, buyers, exporters and grinders - said traders were using old sacks because the cost of new ones doubled after a government change of policy on import duty waivers.
The finance ministry in September said no new waivers would be granted while existing ones would be reviewed in an effort to stop corrupt deals between importers and the authorities and to avoid revenue loss for government.
The price of a bale of hydrocarbon-free jute bags - the material recommended by the global cocoa market regulator for making the sacks - has climbed to 60,000 naira ($503) from 30,000 naira previously, Ojong said in an interview. "The sharp increase has forced many people to use old and sub-standard bags for exports which is against international regulations," Ojong said.
"The ICCO does not allow this, Western countries which are the real consumers of cocoa, do not also accept it, so Nigerian cocoa may soon be banned unless the government restores the waiver," Ojong said.
One bale of hydrocarbon-free jute-bag makes 300 sacks that take 65 kg of beans each. The ICCO had previously threatened to blacklist beans and other cocoa-based products from Nigeria over the use of copper sulphate to preserve beans. Ojong said the use of the banned chemical has declined since the government stopped subsidising its importation.
"Farmers can't afford it because it is too expensive, so people who were importing it have stopped because they can't sell it," Ojong said. The world's number five cocoa producer has seen a sharp rise in output since 2005 when it launched an ambitious development programme to lift production by supplying improved seedlings free to farmers and subsidising agro-chemicals.
The programme also aimed at encouraging domestic consumption of cocoa-based products to help depress global supply with the hope of raising international prices. Nigeria's cocoa output grew at an average of 18 percent to 400,000 tonnes in 2006 and officials say it is expected to reach the half-a-million mark next year. But CAN has estimated the 2007/08 crop lower at 300,000 tonnes compared to a little over 200,000 tonnes last season.
While production is rising, local consumption remains low. "The future of cocoa is very bleak because we consume only about one percent of what we produce. Everybody is lamenting about cocoa because of the price problem," Ojong said.