Following the decision of Nigeria not to endorse the Economic Partnership Agreements (EPAs) with the European Union, cocoa processing firms in that country have been facing stiff export hurdles, resulting in multi-million dollar losses since the beginning of January.
The EPAs operative mandate was due to have taken effect on January 1, 2008.
According to the processors and exporters of manufactured cocoa products to European countries and ports, the non-endorsement of the agreements by the Federal Government has been attracting stiff penalties in the form of higher duties on exports.
The cocoa processing firms, under the aegis of the Cocoa Processors Association of Nigeria said in Lagos last Friday that the survival of their operations was under serious threat.
The body therefore called on the Federal Government to give effect to all necessary incentives, which had been suspended, as effective cushion against the impending collapse of the sector.
The National Secretary, COPAN, Oladunjoye Felix, who spoke on behalf of the association, said within the short period of the regime of reprisal by Europe against Nigeria, cocoa processors from Nigeria had lost close to $2m.
“The fact is that 90 per cent of Nigerian processed cocoa and raw cocoa go to the European market. Before the end of March 2008, not less than $5m would have been lost by processors.”
According to him, whereas countries like Cote d'Ivoire and Cameroon have been having their products exported to Europe free of duty, Nigerian processors have been losing $6 per tonne.
COPAN members' average export capacity per week stands at 60,000 metric tonnes.
Ghana, Cote d'Ivoire and Cameroon had, earlier in December 2008, endorsed an interim agreement with the EU which makes their exportable products to the EU duty-free.
Felix said, “The non-endorsement of the agreement by the government of Nigeria means every processed cocoa shipped from Nigeria now attracts 4.3 per cent for cocoa butter; 6.1 per cent duty from cocoa liquor and cake.”
This further aggravates the already tight situation in the manufacturing environment caused by poor infrastructure and its attendant high cost of operation. A litre of diesel now goes for between N103 to N106 per litre, depending on location of the factory which had eroded the low margin in the cocoa processing sectors in the country.
“To forestall the collapse of the industry, we call on the government to immediately resume the processing of the balance outstanding of 2005/2006 so as to assist the industry in this difficult situation.”