Coronavirus pandemic is expected to cause significant hardship to the non-oil export sector, as Nigeria is projected to lose over $160 million to cocoa and cashew exports in 2020. Agricultural exports like Cocoa, Sesame and Cashew exports are predicted to suffer, due to the pandemic that has lockdown economies of nations across the globe.
This was disclosed by the Nigerian Export Promotion Council in a report, which was seen by Nairametrics, titled Impact assessment of and Policy Responses to the Coronavirus Pandemic on Agricultural Exports: Early evidence from Nigeria.
What it means: A fall in exports of over $100 million is expected in the cocoa sector due to the declining prices, which can be attributed to the falling demand in Europe. Though Sesame exports are likely to prove more resilient due to a smaller decline in prices and more diversified export markets, Cashew exports are expected to shed $60 million. This is expected owing to the Vietnam Cashew Association’s guidance to enterprises within the country to carefully consider before importing raw cashew.
While other nations had prohibited exports of certain food products, such a move would be practically difficult for Nigeria to make. The reason is simple and that is because the most populous black nation exports Cocoa, cashew and Sesame to cater to foreign demand.
Findings revealed that the exports of the three commodities, in 2018, led to foreign exchange earnings of about $800 million for Nigeria, which means they accounted for over 70% of all agricultural exports. But for the COVID-19 outbreak, the proceeds from the commodities would suffer setbacks by the end of 2020.
What you need to know: About 280,000 metric tonnes of cocoa beans are produced annually in Nigeria, and about 90% of this exported. That means the impact of the development would be felt more on Cocoa, as it is particularly vulnerable.
It stated, “Over the last decade, cocoa has been the top-performing non-oil export product in Nigeria. Commodity markets have taken a major hit, and this does not apply solely to crude oil. The price of Nigerian cocoa beans stood at $2880.63/tonne on 03 February 2020 (source: ITC market price information). It has now fallen to $2440.94/tonne as of 30 March 2020 (source: ITC market price information). This is a fall of $439.69 per tonne.
“Assuming production stays the same this year, this translates to a loss in export earnings of around $110.8 million across the year. However, if the lockdown in Nigeria in Lagos, FCT and Ogun state, spreads to cocoa producing states such as Ondo and Cross river, then production will evidently fall, generating a further loss in foreign exchange.”
Meanwhile, the demand for Nigerian cocoa is at risk of recording a further decline. For instance, Europe remains the epicentre of the COVID-19 pandemic and over 81% of Nigerian cocoa was exported to Europe in 2018, with 65% going to the Netherlands and Germany alone.
Though the price change seen in Sesame seed has not been drastic as cocoa, the value has also dropped by $60 per tonne from $1.270 per tonne to $1,210/tonne.
On its own part, Cashew exports have been on the increase after NEPC targeted the scale-up production in Nigeria. “Production is now around 200,000 metric tonnes, with semi-processing plants common around the country. However, as of 2018, 90.5% of cashew exports were still raw cashew nuts, accounting for over $162 million.
‘For both the raw and semi-processed cashew, the exports go almost entirely to Viet Nam and India. This puts Nigeria at major risk should these two countries choose to limit their imports of raw and semi-processed cashew, due to fears over falling demand for the final product. Indeed, the Standing Committee of the Viet Nam Cashew Association (Vinacas) has warned enterprises in the country to carefully consider before buying raw cashew from West Africa due to implications of the pandemic, It added.
Source: Nairametrics
