Cocoa prices recover amid widening deficit forecasts

Cocoa prices are on the rebound after a recent dip in the market, with the International Cocoa Organization projecting a widening global deficit for the 2023-2024 season. Akin Laoye, CEO of FTN Cocoa Processors, recently shared his insights on the current price movements and the industry outlook in a CNBC Africa interview. Laoye noted that the recent price fluctuations are largely driven by fund managers' activities, rather than physical supply and demand dynamics. While weather-related challenges have impacted cocoa crop yields in major producing countries like Ghana and Cote d'Ivoire, Laoye believes that the market movements have been overly dramatic and anticipates a correction in prices soon. He pointed out that addressing issues like the shoot disease affecting cocoa production requires long-term strategies such as improving seedlings and implementing pest control measures. However, with the current season nearly concluded, significant production increases may have to wait for the upcoming main crop season. Looking ahead, Laoye remains optimistic about the potential for improved yields in Nigeria during the light crop season, considering favorable weather conditions in the region. Discussing Nigeria's cocoa production targets, Laoye emphasized the importance of stimulating farmer interest, particularly among young individuals, by providing incentives and access to land. He highlighted the need for government support in creating schemes that encourage youth participation in cocoa farming, ensuring sustainable growth in the sector. While acknowledging cocoa farming as a traditional family business in many producing countries, Laoye highlighted the need to attract a new generation of farmers and investors to the industry. He dispelled the notion that cocoa farming is a lengthy process, pointing out that modern farming practices can yield competitive returns in a relatively short timeframe. Laoye emphasized the wealth potential in cocoa farming, citing the significant increase in cocoa prices in Nigeria over a short period. He stressed the importance of education and institutional financing to support aspiring cocoa farmers, emphasizing the need to prioritize local farming interests over external investment. Overall, Laoye's insights shed light on the challenges and opportunities facing the cocoa industry, emphasizing the importance of strategic planning and support to ensure sustainable growth and profitability.