How the COVID-19 pandemic impacts soft commodities in West Africa

The Nigeria Export Promotion Council has projected an expected fall in the export of cocoa beans and cashew nuts this year, with anticipated losses of about $160 million. The impact of the COVID-19 pandemic on soft commodities across West Africa has been a significant concern. Edward George, an independent commodities expert, shared his insights on the matter in a recent interview on CNBC Africa. As the global economy grapples with falling oil prices, the soft commodities market presents a potential silver lining for some. The rise in cocoa prices by a third over the last 18 months has provided cocoa producers with the prospect of improved returns on their investments. However, challenges in distribution due to lockdowns, curfews, and transport restrictions have hindered market access for many agricultural producers across the region. George highlighted the importance of addressing these distribution challenges to ensure a steady flow of food and soft commodities to the market. COVID-19 has brought about fears of a resurgence in countries where containment measures were initially successful, leading to discussions about renewed lockdown measures. George emphasized the need for innovative solutions to overcome distribution obstacles within the constraints of lockdown restrictions. From taxi drivers turning to food delivery services to companies leveraging digital platforms for distribution, there have been commendable efforts to ensure the continued flow of essential goods. Looking ahead, the impact of these challenges on prices remains uncertain. While cocoa prices may see an increase due to disruptions in supply chains and labor shortages, staple food items like rice and wheat are also expected to witness price hikes. The situation for West African staples such as yams and cassava primarily hinges on the effectiveness of local distribution networks. The implementation of the living income differential in cocoa exporting countries aimed to uplift farmers' livelihoods by providing an additional $400 per ton of cocoa. However, there are concerns around the transparency and effectiveness of this initiative. George stressed the need for clarity on how the additional income will reach farmers and reiterated the significance of maintaining specialty markets to command premium prices for African exports. The resilience of West African soft commodities in the face of the COVID-19 crisis will depend on the ability to navigate distribution challenges, ensure fair compensation for farmers, and leverage niche markets to drive value.