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Bag costs threaten Nigeria cocoa exports-producers

Nigerian cocoa producers are urging the government to reinstate a waiver on jute bag import duties or else risk beans from the world’s number four grower being rejected on international markets.

Growers and exporters say they are being forced to use old and sub_standard sacks because the cost of new, hydrocarbon_free bags has more than doubled since January. The newer sacks are designed to preserve the quality of beans by reducing humidity.

Bags that have been used already run the risk of spreading disease or pests, further endangering the cocoa.
“Importers of food_grade bags or hydrocarbon_free jute bags were not willing to import since the waiver was removed,” Hope Sona Ebai, general secretary of the Cocoa Producers Alliance (COPAL), a grouping of producing countries said. “So there is a shortage of bags and people are using old bags or anything they can lay their hands on,” he said.

The cost of new bags has soared since the government removed the import duty waivers in 2007 and the National Cocoa Development Committee (NCDC) withdrew subsidies, dealers said.

Ebai said private investors interested in importing the sacks were concerned about the length of time it took to clear goods from Nigerian ports due to administrative bottlenecks. “If the old sacks people are using are infested, we run the risk of our cocoa being rejected at the port of arrival … To imagine that about 80 percent of West African cocoa is harvested between October and December, it means we have a serious problem on our hands,” Ebai said.

European Union countries, the main consumers of the beans used for making chocolate, ice cream, liquor, cakes, cosmetics and beverages, do not allow the use of substandard sacks for exports.

That means Nigerian cocoa may face rejection unless the government restores the waiver to make new jute bags readily available, said Robo Adhuze, a consultant for the Cocoa Association of Nigeria (CAN).

“The hydrocarbon_free bags were selling at 40,000_45,000 naira a bale at the beginning of the year, but they are now selling at 85,000 naira ($580),” Adhuze disclosed. Buyers want bags made of natural jute, which preserves beans much better than those made with materials from hydrocarbons.

Before the ban, the bags were readily available and cheap in sub_Saharan Africa’s second biggest economy. One bale of the bags makes about 300 sacks, each carrying about 65 kg of beans.

The International Cocoa Organisation, which has no powers to ban cocoa imports from any country, had recommended about four years ago that cocoa producing countries should stop using the sacks and begin to use hydrocarbon_free bags for exports.

Import duty waivers on jute bags were abolished by the finance ministry in 2007 to try to prevent fraudulent deals between importers and corrupt officials, which the authorities said was cheating them of tax revenue.

Some exporters have resorted to bulk shipping of beans, but farmers cannot do bulk collection, Adhuze said. Dealers said farmers were the main losers because when the exporter makes his shipments, he will have to deduct the price of the bags before sharing what profit is left with the grower, whose income is still low despite rising global cocoa prices.


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