Post by Trade facilitator on Sept 10, 2013 13:44:56 GMT 1
Cocoa processors seek intervention fund, halt to export subsidy
THE Federal Government may need to expand its intervention fund profile to include cocoa processing, as strategic foil against sliding fortunes of value-addition industry in the country.
This was the position currently being pushed by the industry’s stakeholders, who have even called on the Federal Government to stop subsidy regime for export of raw cocoa beans.
Indeed, the stakeholders, under the aegis of Cocoa Processors Association of Nigeria (COPAN) also decried government’s deliberate action to frustrate activities of the processors through the poor implementation of protectionist polices, especially the Export Expansion Grant (EEG).
According to them, exporters of raw cocoa beans are receiving undue government patronage at the expense of the economy, while creating undue competition against companies in the value-addition process.
Addressing journalists in Lagos, yesterday, Chairman of the association, Dimeji Owofemi noted that value addition to raw cocoa has been decreasing due to dearth of protectionist policy for such effort while export of raw beans continues unabated.
Owofemi added that it has become imperative for the stakeholders to seek government’s commitment and intervention in the sector if the value-addition remains desirable to the government, stressing that an intervention fund should be created for the sector in order to increase access to cheap source of finance for sustainability of cocoa processing.
He said: “Exporting raw cocoa is indirectly helping other economies to grow. Government should review its processes and implement policies that would at least sustain the capacity utilisation of processors’ factories in the overall interest of the national economy.”
Former Chairman of the association, Akin Olusuyi, stated that despite the production capacity of the sector, there is an under-utilisation of made-in-Nigeria processed cocoa.
“Nigeria needs to identify where its interest lies. For each tonne of raw cocoa bean being exported, two jobs are being exported. Exporting agricultural products depresses the nation’s commerce. Government cannot keep paying grants to exporters of raw products when the nation’s processing capacity can be enhanced. Local producers of value-added goods cannot survive this undue competition. The Customs Service no longer accept the Negotiable Duty Credit Certificates (NDCC) given to us. There are so many power interplays in the acceptance of the instrument.
“Aside getting a warehouse, an exporter does not need any form of investment in the country but processing companies employ and add value to the nation’s economy. Government needs to encourage local firms. The EEG as it is been implemented cannot fulfill the mandate for which it was designed. It amounts to double jeopardy when you give export of raw products grants.
“The European Union is deliberately frustrating the value-addition process of cocoa. They tax value-added products but not the raw beans because Nigeria is yet to become a signatory to the Economic Partnership Agreement (EPA). The certificates granted to cocoa processors are lying dormant in our shelves due to the faulty implementation of policies meant to protect local firms”, he added.
One of the association’s members, Akin Laoye explained that getting bank guarantees for offshore products is becoming difficult, coupled with a high interest rate regime that continues to affect the processors’ sustenance and profitability in business.
The Managing Director, Multi-Trex Plc, Yusuf Isiaka further urged the federal government to adopt a consumption policy model, like that of Ghana and Brazil, to boost cocoa consumption in the country.
According to him, the cocoa industry should not be run like the oil sector where only refined products are consumed in the country.
With about 10 cocoa processing companies struggling to remain in production in the country, Owofemi decried inadequate protectionist policy for the processing firms.
“Cocoa processing/grinding entails highly sophisticated, complex and capital intensive manufacturing process. It involves the conversion of dried raw cocoa beans into a variety of value-added cocoa products namely cocoa liquor, cocoa butter, cocoa cake and cocoa powder. Nigerian cocoa processors mainly sell/export their products to buyers, including trade houses and chocolate manufacturers, in the United States and Europe Asia and South Africa.
“Of all the links in the cocoa value chain, processing is the most capital intensive accounting for at least 90 per cent of the total direct investment in the cocoa economy. An average medium-sized cocoa processing factory (10, 000 metric ton capacity) requires a capital outlay of not less than N2 billion in plant and machinery and another minimum of N1 billion as working capital.
“The estimated total direct investment in the eight factories in operation in the country today is put at about N27 billion. Other Investments include infrastructure development like power generation and water supply. A processing factory runs a 24-hour operation in three shifts. Given an average of 20 per cent public power supply, an average factory spends about N10 million per month apart from the high maintenance costs.”
According to Owofemi, cocoa processors, who have invested heavily in the country, should be encouraged if the federal government is true to its diversification cause.
Source: www.ngrguardiannews.com/business-news/132004-cocoa-processors-seek-intervention-fund-halt-to-export-subsidy-
THE Federal Government may need to expand its intervention fund profile to include cocoa processing, as strategic foil against sliding fortunes of value-addition industry in the country.
This was the position currently being pushed by the industry’s stakeholders, who have even called on the Federal Government to stop subsidy regime for export of raw cocoa beans.
Indeed, the stakeholders, under the aegis of Cocoa Processors Association of Nigeria (COPAN) also decried government’s deliberate action to frustrate activities of the processors through the poor implementation of protectionist polices, especially the Export Expansion Grant (EEG).
According to them, exporters of raw cocoa beans are receiving undue government patronage at the expense of the economy, while creating undue competition against companies in the value-addition process.
Addressing journalists in Lagos, yesterday, Chairman of the association, Dimeji Owofemi noted that value addition to raw cocoa has been decreasing due to dearth of protectionist policy for such effort while export of raw beans continues unabated.
Owofemi added that it has become imperative for the stakeholders to seek government’s commitment and intervention in the sector if the value-addition remains desirable to the government, stressing that an intervention fund should be created for the sector in order to increase access to cheap source of finance for sustainability of cocoa processing.
He said: “Exporting raw cocoa is indirectly helping other economies to grow. Government should review its processes and implement policies that would at least sustain the capacity utilisation of processors’ factories in the overall interest of the national economy.”
Former Chairman of the association, Akin Olusuyi, stated that despite the production capacity of the sector, there is an under-utilisation of made-in-Nigeria processed cocoa.
“Nigeria needs to identify where its interest lies. For each tonne of raw cocoa bean being exported, two jobs are being exported. Exporting agricultural products depresses the nation’s commerce. Government cannot keep paying grants to exporters of raw products when the nation’s processing capacity can be enhanced. Local producers of value-added goods cannot survive this undue competition. The Customs Service no longer accept the Negotiable Duty Credit Certificates (NDCC) given to us. There are so many power interplays in the acceptance of the instrument.
“Aside getting a warehouse, an exporter does not need any form of investment in the country but processing companies employ and add value to the nation’s economy. Government needs to encourage local firms. The EEG as it is been implemented cannot fulfill the mandate for which it was designed. It amounts to double jeopardy when you give export of raw products grants.
“The European Union is deliberately frustrating the value-addition process of cocoa. They tax value-added products but not the raw beans because Nigeria is yet to become a signatory to the Economic Partnership Agreement (EPA). The certificates granted to cocoa processors are lying dormant in our shelves due to the faulty implementation of policies meant to protect local firms”, he added.
One of the association’s members, Akin Laoye explained that getting bank guarantees for offshore products is becoming difficult, coupled with a high interest rate regime that continues to affect the processors’ sustenance and profitability in business.
The Managing Director, Multi-Trex Plc, Yusuf Isiaka further urged the federal government to adopt a consumption policy model, like that of Ghana and Brazil, to boost cocoa consumption in the country.
According to him, the cocoa industry should not be run like the oil sector where only refined products are consumed in the country.
With about 10 cocoa processing companies struggling to remain in production in the country, Owofemi decried inadequate protectionist policy for the processing firms.
“Cocoa processing/grinding entails highly sophisticated, complex and capital intensive manufacturing process. It involves the conversion of dried raw cocoa beans into a variety of value-added cocoa products namely cocoa liquor, cocoa butter, cocoa cake and cocoa powder. Nigerian cocoa processors mainly sell/export their products to buyers, including trade houses and chocolate manufacturers, in the United States and Europe Asia and South Africa.
“Of all the links in the cocoa value chain, processing is the most capital intensive accounting for at least 90 per cent of the total direct investment in the cocoa economy. An average medium-sized cocoa processing factory (10, 000 metric ton capacity) requires a capital outlay of not less than N2 billion in plant and machinery and another minimum of N1 billion as working capital.
“The estimated total direct investment in the eight factories in operation in the country today is put at about N27 billion. Other Investments include infrastructure development like power generation and water supply. A processing factory runs a 24-hour operation in three shifts. Given an average of 20 per cent public power supply, an average factory spends about N10 million per month apart from the high maintenance costs.”
According to Owofemi, cocoa processors, who have invested heavily in the country, should be encouraged if the federal government is true to its diversification cause.
Source: www.ngrguardiannews.com/business-news/132004-cocoa-processors-seek-intervention-fund-halt-to-export-subsidy-
