COM-WATCH
AFRICA
ISSUE 37 | JUNE 2014
COCOBOD TO SEEK ALMOST US$2 BILLION FOR NEXT LOAN Full Story On Page 9
Mali Government Calls For 36% Jump In Cotton Output
17
Omnicane To Invest US$250M In Ghanaian Sugar Production
27
EU Tropical Log Imports Down 54% To End February 2014
33
COM-WATCH
AFRICA
ISSUE 37 | JUNE 2014
Contents
03 /
17 /
30 /
19 /
33 /
Fish
Timber
05 /
21 /
39 /
06 /
25 /
13 /
27 /
General
04 /
Cashew & Groundnut
Cassava
Cocoa
Coffee
1
Cotton, Textiles & Leather Goods
Foodstuffs
Palm Oil
Sugar
Tea
Tobacco
THE AFRICAN COMMODITY REPORT Brought to you by CMA CGM / DELMAS Marketing Website: www.delmas.com Email: lhv.marketing@delmas.net Tweet: @DelmasWeDeliver
Rachel Bennett
Dominic Rawle
Cocobod To Seek Almost US$2 Billion For Next Loan
9
Mali Government Calls For 36% Jump In Cotton Output
17
Omnicane To Invest US$250M In Ghanaian Sugar Production
27
EU Tropical Log Imports Down 54% To End February 2014
33
CMA CGM Marseille Head Office 4, Quai d’Arenc 13235 Marseille cedex 02 France Tel : +33 (0)4 88 91 90 00 www.cmacgm.com
Disclaimer of Liability CMA CGM / DELMAS make every effort to provide and maintain usable, and timely information in this report. No responsibility is accepted for the accuracy, completeness, or relevance to the user’s purpose, of the information. Accordingly Delmas denies any liability for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any published information. Conclusions drawn from, or actions undertaken on the basis of, such data and information are the sole responsibility of the reader.
2
COMMODITY NEWS
GENERAL
Tanzania Crop Price Buffer Planned The Tanzanian government is establishing a Crop Price Stabilisation Fund to insulate farmers from fluctuations in the world market prices. The fund, which will start operating during the financial year 2014/15, will start with 4-crops: cotton, coffee, cashew nuts and tobacco. In years when the world price is high some of the returns are paid into the fund while the accumulated revenues are used to bring up prices during years when prices are low. Low prices paid to farmers rendered them unable to make consistent investments to produce sustainable output thus famers needed to be incentivize to produce more, including securing markets, good prices and making value addition to the crop. [Daily News 15/05/14]
3
COMMODITY NEWS
CASHEW / GROUNDNUT
Gambia GGC Purchases 34,000 Tonnes In 2013/14 Season The Gambia Groundnut Cooperation [GGC] has declared the 2013/14 trade season “successful�, after it purchased 34,000 tonnes of groundnut. This season was the best so far. GGC is distributing 25% commission to farmers and as the rainy season draws closer it is also issuing fertilizer on loan. [Daily Observer 24/05/14]
Guinea Bissau Guinea Bissau Sets Aside Billions For Purchase Of Cashew The Guinea Bissau government has set aside 12 billion CFA Francs [US$256 million] to purchase cashew nuts from agriculture cooperatives and trade intermediaries at a cost of 250 CFA F/kg, against the price of between 50-100 CFA F by some traders. The funds released by government will be able to purchase 50,000 tons of cashew nuts from farmers. A few weeks ago, farmers had accused some brokers of trying to sabotage the cashew nut business by proposing to buy the product from farmers at a cost of 50 CFA F. In 2011, the government introduced a tax of 50 CFA F/kg, a move that earned the country US$20 million that year. However, during its last evaluation, the International Monetary Fund [IMF] called for the suspension of the tax, as had equally been demanded by the association of exporters. [Xinhua 27/05/14]
4
COMMODITY NEWS
CASSAVA
Cameroon Cassava Processing: Government Makes Good On Old Promise The government of Cameroon has kept its promise to help farmers increase production and encourage cassava transformation by supporting groups embarking on a large scale cassava processing initiative. A new cassava pasta is the first of several products which government plans to produce in the months ahead and compete with imported wheat used for the production of pastries, spaghetti and pasta presently in the market. [Nouvelles 26/05/14]
Ghana Large Scale Cassava Production Beverage manufacturer, Kasapreko Company Limited [KCL], has acquired 40% shares in Caltech Ventures Company Limited. Caltech has acquired 3,000 ha of land at the Hodzo near Ho for large-scale production of cassava to be processed to produce a number of products including ethanol, high quality cassava flour and electricity. Ghana currently imports 60 million liters of ethanol annually, while KCL, the only beverage manufacturer with a bulk storage facility in Ghana, also imports 25 million liters of ethanol in bulk from Brazil, Pakistan, USA and France. [Spy Ghana 21/05/14]
5
COMMODITY NEWS
COCOA General Higher West Africa Farmer Prices Won’t Fill Global Cocoa Gap Ivory Coast expected to raise farmer price above 800 CFA
Farmers hope for prices between 900/1,000 CFA
ICCO forecasts global 2013/14 deficit of 115,000 tonnes
West African cocoa output is unlikely to rise enough to stave off a global supply deficit forecast until at least 2015/16. Global cocoa market prices are near 2-1/2-year highs, but fixed prices in top growers Ivory Coast and Ghana are seen by some as too low to incentivise higher output, meaning world prices will have to stay higher for longer. A source at Ivory Coast’s finance ministry noted the country would raise the fixed farmer price above 800 CFA F/kg [USA$1.67] for the season starting on Oct. 1, from the current season’s 750 CFA F. The Ivorian government abandoned a decade of sector liberalisation at the start of the 2012/13 season and began auctioning its anticipated crop to guarantee a minimum price for farmers. That price was fixed at 750 CFA francs [$1.57] per kg at the start of the country’s main crop harvest in October and was maintained into the April-to-September mid-crop. Ivory Coast had finished selling its 2013/14 cocoa crop by early January, auctioning off more than 1.45 million tonnes of beans, taking advantage of world cocoa prices that rose 20 % last year on fears of a global supply deficit. Forward sales for the 2014/15 season were already at 780,000 tonnes at that point. A high farmer price for next season’s Ivorian crop is likely to pile pressure on neighbouring Ghana. As much as 100,000 tonnes of Ghanaian cocoa have been trafficked into Ivory Coast so far this season and the situation could worsen if the price gap between the 2-countries widens further. Ghana has had a fixed price for decades and is expected to raise it in the coming season. Traders and analysts, however, said the anticipated increases were not enough to encourage more output from farmers. The world already faces 2-consecutive deficit years, with the International Cocoa Organization [ICCO] forecasting a 2013/14 global cocoa shortfall of 115,000 tonnes. Ivorian farmers reinforced the idea that they would need a price closer to 1,000 CFA francs to ramp up production. Analysts forecasts a global 2013/14 cocoa deficit. Liffe cocoa futures rose around 20% in 2013, supported by the gap between supply and demand. Around 100,000 tonnes of additional cocoa production is needed each year to meet growing demand, and traders said cocoa-growing countries with liberal markets had already responded to higher world prices. [Reuters 16/05/14]
6
COMMODITY NEWS
COCOA ADM Names Grain Chief To Run Cocoa Unit After Dropping Sale Plan Archer Daniels Midland Co has appointed a veteran grains trader to run its niche cocoa operations in a management reshuffle just weeks after the U.S. agribusiness scrapped plans to sell the business. Ian Pinner has been named president of global cocoa, where he will oversee the cocoa press operations which extend from Ivory Coast to Germany to Brazil. He is replacing Scott Walker who will become vice president of oilseeds portfolio optimization. The changes come as ADM prepares to divest its chocolate manufacturing operations after ditching plans to sell the cocoa business in its entirety following the collapse of longrunning talks. [Reuters 07/05/14]
Hershey Joins CocoaAction Initiative The Hershey Company will become a founding member of CocoaAction, a new strategy to align the cocoa sustainability efforts of the world’s largest cocoa and chocolate companies. CocoaAction creates a new level of coordination and commitment to promote cocoa sustainability in West Africa. Under the auspices of the World Cocoa Foundation, which will facilitate the implementation of the industry-wide strategy, CocoaAction seeks to build a rejuvenated and economically viable cocoa sector for at least 300,000 cocoa farmers - 200,000 in Côte d’Ivoire and 100,000 in Ghana - by 2020.
CocoaAction Companies ADM; Armajaro; Barry Callebaut; Blommer; Cargill; Ecom; Ferrero; Hershey Company; Mars, Incorporated; Mondelz International; Nestlé; Olam.
By voluntarily working together as an industry, the strategy aims to increase of the impact of the cocoa industry’s numerous sustainability programs. Participating companies have committed to providing the necessary means to achieve a transformation of the cocoa sector. The governments of Ghana and Côte d’Ivoire have formally endorsed CocoaAction as the industry’s aligned effort to support their national cocoa sustainability plans. [Hershey 21/05/14] More details on the CocoaAction strategy are available at the World Cocoa Foundation website: http://worldcocoafoundation.org/wp-content/uploads/FINAL-CocoaAction-CDI-Press-Release-English_05202014.pdf
Cameroon Cocoa Exports Drop 48% In April Cameroon had exported 146,417 T of cocoa beans by end-April since the start of the 2013/14 season in August, down from 199,147 T during the same period the previous season, according to National Cocoa and Coffee Board [NCCB] data. Cameroon shipped 3,043 T of beans in April, down from 3,207 T in March and 5,849 T in the same month a year ago. 10-companies exported beans in April, up from 7 in March. Producam topped the list with 1,003 tonnes, followed by Olam Cam with 860 T, and Ets Ndongo Essomba with 301 T. For the 2nd consecutive month, Sic-Cacaos and Chocolaterie Confiserie du Cameroun [CHOCOCAM] made no purchases. Cameroon’s cocoa season runs from August 1 to July 31, with the main crop harvest period from October to January/February and the light crop harvest from April/May to July. National output hit a record of 240,000 T in the 2010/11 season before dropping to 220,000 T in 2011/12 due to attacks by pests and diseases and a prolonged dry season. It rose to 228,948 T in 2012/13. [Reuters 25/05/14]
Magnetised Cards For Cocoa / Coffee Exporters To Limit Fraud To clean-up cocoa and coffee sales in Cameroon, the CICC announced it will from next season be providing exporters with magnetised cards. The move aims to limit fraud. The new IDs will be provided to exporters at the start of the next season and will be the only proof of regularised status for cocoa-coffee buyers, authorising them to engage in the purchase of beans in Cameroon. [Business in Cameroon 22/05/14]
7
Cote d’Ivoire Oct-Apr Cocoa Product Exports Up Over 4% Exports of semi-finished cocoa products from Ivory Coast were 238,598 tonnes from October to April of the 2013/14 season, up more than 4% compared with the same period last year. Investments in cocoa processing facilities in Ivory Coast have increased local grindings since 2008. In 2010, the nation overtook the Netherlands to become the world’s top cocoa grinder with a capacity of 532,000 tonnes of beans, which are transformed mainly into cocoa butter and powder. Ivory Coast grinds around 35%^ of its beans locally but aims to process half of its average annual production of roughly 1.4 million tonnes domestically as part of reforms launched last season. The following are official figures for cocoa product exports in tonnes, including a breakdown of cocoa powder, butter and chocolate. [Reuters 26/05/14]
Apr 2014
Mar 2014
Apr 2013
Abidjan
12,522
22,559
20,488
San Pedro
11,903
13,359
10,495
Total
24,425
35,918
30,983
Cumulative from Oct
238,598
214,173
228,773
939
2,597
4,452
2,370
6,159
5,005
nil
nil
nil
Powder - Abidjan Butter - Abidjan Chocolate - San Pedro
Cocoa Farmer Price Falls Despite Heavy Grinder Demand Cocoa merchants in several of Ivory Coast’s main growing regions have begun paying farmers less than the government guaranteed minimum price amid complaints of small bean size and poor road conditions. Grinders, however, continued to pay bonuses for shipments arriving at the country’s two ports of Abidjan and San Pedro in order to ensure supplies. The mid-crop marketing season in Ivory Coast opened on April 1, with the government maintaining the minimum farmgate price of 750 CFA F/kg [US$1.59] set at the start of the main crop in October. Buyers say that the beans are too small and often buy at 700-725 CFA F/kg. A lack of merchants operating in the bush has also driven down prices as little competition for the growing volumes of beans now being harvested. Traders are expecting a strong mid-crop harvest in Ivory Coast. Earlier concerns over poor weather have been dispelled with the arrival the rainy season’s regular showers which in turn damaged roads, making it harder for merchants to reach plantations deep in the bush. Analysts now predict a better than expected crop in West Africa after forecasts of a supply deficit boosted prices 20% last year. Meanwhile cocoa with a bean count above 120 beans/100g is not allowed to be exported as beans. And since the mid-crop produces smaller beans than the main crop, the lion’s share of total volumes is typically purchased by local processors. Ivory Coast set a minimum price port entry price of 830 CFA F/kg this season with a price ceiling of 845 CFA / kg. However some large grinders are now paying above the maximum price allowed offering up to 860 CFA F because the bean quality is good. [Reuters 07/05/14]
Rains Complicate Cocoa Bean Drying Abundant rains occurred in most of Ivory Coast’s main cocoa-growing regions which should help mid-crop development, but growers are struggling to dry their beans. Farmers noted harvesting was intensifying with large stocks of beans waiting to be collected from plantations. In the coastal region of San Pedro, farmers said that while 2-weeks of heavy showers were helping their trees, they were struggling to prepare their beans for pick-up by merchants and worried there would be a lot of mould in the shipments. In western Duekou farmers were certain they would have problems to properly ferment and stock their beans in the bush. Ivory Coast introduced stricter quality standards, including for mould and moisture levels, as part of a drive implemented last season that exporters have credited with improving the reputation of the country’s cocoa. [Reuters 29/04/14]
8
COMMODITY NEWS
COCOA Ghana Cocobod To Seek Almost US$2 Billion For Next Loan The Governor of the Bank of Ghana [BoG] Dr Henry Kofi Wampah has hinted that the country’s cocoa industry regulator, Cocobod will this year go for about US$1.8 billion for its syndicated loan. Last year Cocobod signed a US$1.2 billion syndicated loan from international banks for the 2013/14 cocoa crop purchases as against US$1.5 billion for 2012/13. The credit facility between Cocobod and a consortium of international and local banks was led by French lender Societe General. The Cocobod syndicated loan is used to purchase cocoa beans from farmers. Last year the offer was oversubscribed by 75%. The increased figure is as a result of a higher projection of cocoa yield this year. Ghana aims to raise its production to an average of 1 million tonnes annually from 800,000 tonnes through improved farming methods and better incentives. [Ghanaweb 08/05/14]
9
Ghana Cocoa Main Crop Purchases Reach 750,122T By May 1 Cocoa purchases declared to Cocobod Ghana’s industry regulator reached 750,122 tonnes by May 1, since the start of the main crop on Oct. 18, up 17.45 % on the previous year. The purchases, which covered 28 weeks of the 33-week main crop season, were up from 638,654 tonnes declared in the same period last year. Ghana is hoping to buy around 850,000 tonnes of cocoa during its October-May main crop harvest. Total purchases for the 28th week rose to 17,170 tonnes from an average of 10,000 tonnes in the past 3-weeks. Buyers say the rise in the latest output figure indicated that purchases were on target as projected. [Reuters 15/05/14]
Currency Fall Deepens Ghana’s Cocoa Smuggling Troubles Cedi has slipped 23% against dollar this year
Farmers seeking to cash in on I. Coast's higher price
Trafficking likely to continue
Ghana’s falling currency has fuelled smuggling of as much as 100,000 tonnes of cocoa into neighbouring Ivory Coast since October, reversing a trend. Cocoa smuggling between the world’s 2-biggest cocoa producers is common, but over the past decade it has mainly involved Ivorian beans being taken illegally to Ghana. That has changed this season. Ghana’s cedi currency, which the government has struggled to prop up, has fallen nearly 23% against the dollar so far this year, while Ivory Coast’s europegged CFA franc has remained stable, making the country’s official farmer price around 24% higher than Ghana’s. Exporters said the Ivorian price is now seen as more attractive by Ghanaian farmers, who can make bigger profits selling their output to smugglers. Estimates of smuggled volumes rang from 40,000 to 80,000 tonnes of beans, while exporters in Ivory Coast put the figure at between 50,000 and 60,000 tonnes. Bean arrivals at Ivorian ports reached around 1.3 million tonnes by May 11, according to exporters’ estimates, up more than 10% from the same time last season. Ivory Coast’s October-to-March main crop opened on Oct. 2 with its sector regulator, the CCC, fixing a minimum guaranteed farmer price of 750 CFA F/kg [US$1.59]. Ghana’s price of 3,392 cedis per tonne was roughly on par with Ivory Coast’s at the time. Despite the beans lost to smuggling, Ghanaian cocoa output still remains more than 15% ahead of last year’s levels with purchases reaching 704,266 tonnes by April 8 since the start of the main crop. But Ivory Coast decided to maintain its farmer price at the main crop level of 750 CFA F/kg for April-to-September mid-crop cocoa, which is usually sold at a discount. This in turn could further fuel illegal trafficking as Ghana heads towards its light crop in July unless they raise the price. [Reuters 12/05/14]
Processing Companies Owe COCOBOD US$250 Million Five out of the 10 indigenous cocoa processing companies in the country owe the Ghana Cocoa Board [COCOBOD] US$250 million in unpaid bills under the Old Beans Supply Agreement. This has compelled COCOBOD to take drastic measures to halt the continued supply of cocoa beans to the companies to save the board from going bankrupt. The move is likely to affect more than 6,000 workers of the companies and their outsource service providers. The amount owed COCOBOD ranges from US$3 million to more than $50 million per company since 2010.
Cocoa Farmers To Receive Payments From E-Zwich Cocoa farmers would from the beginning of this year’s light crop season receive payments for cocoa sold to the licensed buying companies [LBCs] only from e-zwich and by cheque. The use of cash, the authorities say, would no longer be permitted. apart from the flexibility the e-zwich offered in terms of money withdrawal from all banks, savings and loans companies, it would provide accurate records on the number of cocoa bags sold by every farmer. That would make it easier for the determination of bonuses payable to them. [Ghanaweb 23/05/14]
10
COMMODITY NEWS
COCOA Nigeria Cross River State Plans To Sell 5 Cocoa Farms Cross River State, Nigeria’s 2nd-largest cocoa grower will sell 5-government-owned farms in a bid to boost production of the commodity with private investment. Prospective investors have until May 19 to bid on the cocoa farms, which the government expects to sell before the end of next year. The farms cover 12,129 ha and produce about 50,000 MT annually. Nigeria, the world’s 4th-largest cocoa producer, will probably will see output jump 10% in 2013-2014 season after higher prices last year lead to planting of more disease-resistant plants according to the Cocoa Association of Nigeria. The nation plans to double production to 500,000 tons by next year. The main harvest begins in October and ends in January, while a smaller crop is collected from March through June. [Bloomberg 05/05/14]
Output Seen Rising Less Than Expected Nigeria will probably produce less than originally expected this year as rainfall harms yields in the southeastern part of the country. The Cocoa Association of Nigeria noted production would increase by a small amount, bur would not match the 10% gain forecast in January. The government is to distribute fungicides to help farmers deal with the blackpod threat. Nigeria’s recent measures of distributing fertilizers and early-maturing, high-yielding, disease-resistant beans led the country’s cocoa association earlier this year to expect a bigger crop. The farm-gate prices for cocoa beans increased 12% to N470,000/t [US$2,892] from N420,000 in January, which enables more farmers to buy agrochemicals to protect their crops. Nigeria’s main crop begins in October and ends in January, while the smaller mid-crop season usually begins in March and ends in June. The start and end dates of the seasons may vary each year depending on the weather. [Bloomberg 28/05/14]
11
Daily Spot Price [ICCO]
These are the average of the quotations of the nearest 3-active futures trading months on NYSE Liffe Futures and Options and ICE Futures US at the time of London close. Date
ICCO daily price (SDRs/tonne)
ICCO daily price (US$/tonne)
London futures (ÂŁ sterling/tonne)
New York futures (US$/tonne)
1 May 14
1934.23
3003.70
1823.00
2931.00
2 May 14
1932.99
2999.03
1823.33
2928.67
5 May 14
1932.23
3000.80
1819.67
2937.00
6 May 14
1931.00
3005.85
1816.00
2933.67
7 May 14
1914.90
2980.93
1805.00
2905.00
8 May 14
1911.81
2976.61
1804.67
2899.00
9 May 14
1900.80
2946.70
1796.33
2871.33
12 May 14
1905.79
2950.38
1791.00
2884.00
13 May 14
1929.04
2980.67
1818.33
2905.00
14 May 14
1925.61
2974.68
1818.00
2902.67
15 May 14
1936.08
2986.11
1826.00
2910.67
16 May 14
1943.89
3003.28
1830.33
2931.33
19 May 14
1950.73
3016.78
1840.67
2941.33
20 May 14
1972.20
3048.29
1855.67
2976.00
21 May 14
1982.12
3064.29
1863.00
2991.00
22 May 14
1997.55
3085.73
1880.33
3006.67
23 May 14
2015.46
3107.05
1895.67
3030.33
27 May 14
2018.31
3113.55
1904.33
3032.67
28 May 14
2018.50
3110.24
1910.33
3033.00
29 May 14
2028.69
3125.77
1918.67
3049.00
30 May 14
2044.48
3149.45
1932.33
3064.67
12
COMMODITY NEWS
COFFEE
Master Blenders to Buy Mondelez Coffee Unit For US$5 Billion JAB Holding Co., the investment arm of the billionaire Reimann family, agreed to pay Mondelez International Inc. US$5 billion in cash to create the world’s 2nd-biggest coffee company. A company led by JAB will combine Mondelez’s coffee unit with D.E Master Blenders 1753 BV, giving it control of brands such as Jacobs. Mondelez will gain a 49% stake in the new company, which will be named Jacobs Douwe Egberts and be based in the Netherlands. The move is the latest step from JAB to consolidate in coffee. The company last year bought Master Blenders, the Amsterdam-based maker of Douwe Egberts, for US$10.4 billion. That transaction, the industry’s biggest deal ever, was followed by purchases of Peet’s Coffee & Tea Inc. and Caribou Coffee Inc. The merged entity will have sales in excess of US$7 billion and be the market leader in countries such as France and Austria. The transaction, which excludes Mondelez’s coffee business in France, should close next year. The purchase of the Mondelez division follows a surge in prices for coffee. Robusta coffee futures have climbed 27% this year to US$2,142/MT in London, and are up 6.6 % in the past 12 months. Arabica coffee futures surged 83% this year in New York to US$2.0305/lb, advancing 42% in the past 12 months.
13
Cameroon Dec-Feb Robusta Exports Down on Year Exports of robusta coffee from Cameroon during the first 3-months of the 2013-2014 season fell compared with a year earlier, figures from the National Cocoa and Coffee Board data showed. Cameroon exported 790 tons of robusta coffee from December through February, down from 1,038 tons it shipped in the same period of the previous season. Cameroon’s robusta coffee season officially runs from December through November the subsequent year. Cameroon exported 194 tons of the crop in February, down from 390 tons it exported in February 2013. Cameroon’s robusta exports have sunk in recent years as farmers have switched to growing crops such as yams, vegetables and cassava, to take advantage of rising food prices as coffee prices on world markets fall. The robusta harvest during the 2012-2013 season was 16,175 tons, down from 36,641 tons in the 2011-2012 season. The government plans to raise robusta output to 100,000 tons by 2020. [Dow Jones 29/04/14]
Nestlé Cameroon To Produce Nescafé Using Locally Produced Coffee As of July Nestlé Cameroon, a subsidiary of the Swiss agro-foods giant, will produce Nescafé using Cameroongrown coffee. Nestlé Cameroon plans to take advantage of its addition to the Cameroonian government’s “indirect refinement initiative” provided for in the Cameroonian Customs code which mandates a reduction in the Customs royalties. According to current practices within the group, the Ivorian subsidiary which produces all Nescafé product sold in Africa [9,000 tonnes] and exported to Poland and Greece [3,000 tonnes], sells the product to all other subsidiaries for the same price. However, while Cameroon pays Customs duties amounting to 30% of imported Nescafé, a country like Nigeria, which shares its highly permeable border with Cameroon, imports its Nescafé duty-free thanks to the free trade zone created by the UEMOA Treaty – a zone to which Nigeria and Cote d’Ivoire belong. [Business In Cameroon 30/05/14]
Cote d’Ivoire Coffee Exports Up 6% Ivory Coast’s coffee bean exports reached 34,672 tonnes from October to April of the 2013/14 season, up more than 6% on the same period last year. The following is data for coffee bean exports in tonnes from the Ivory Coast ports of San Pedro and Abidjan. [Reuters 27/05/14]
Abidjan
Apr 2014
Mar 2014
Apr 2013
3,638
4,390
9,109
San Pedro
1,255
1,263
297
Total
4,893
5,653
9,406
Cumulative from Oct
34,672
29,779
32,564 14
COMMODITY NEWS
COFFEE Kenya Coffee Value Sold At Kenyan Auction Up 24% In First Half The value of coffee sold at Kenya’s auction jumped 24% to US$83.5 million in the half-year to March, driven by improved global prices and better quality crop. Kenya sold coffee worth US$67.3 million in the first-half of the 2012/13 season that runs October to September. Given the dynamics in the global market it is anticipated that high prices will remain. Uncertainty over the performance of the crop in leading producer, Brazil following a prolonged drought, has helped prop up global prices of the commodity. Forecasts of El Niño weather conditions later this year have also lifted prices of the beans. Kenya exports about 90% of its coffee through the Nairobi Coffee Exchange [NCE], and the remainder is sold growers to foreign buyers directly. Officials said 324,247 60-kg bags were sold in the 6-months to March compared with 305,468 the previous year. The average price climbed to US$211.1 per 50-kg bag compared to US$180.7 in the previous year. Kenya expects its coffee export earnings to dip by 3% in the 2013/14 season, mainly weighed down by volatility in global prices. The Coffee Board of Kenya forecasts it will earn 18 billion Kenyan shillings from 50,000 tonnes of coffee produced in the 2013/14 season. Kenya earned around 18.5 billion Kenya shillings from exports of the commodity in 2012/13, down from 27.1 billion a year earlier. Coffee exports were at one time Kenya’s leading foreign exchange earner but have slipped from a record level of 130,000 tonnes in 1987/88. Many smaller coffee farmers, disillusioned with poor earnings, switched to other crops or sold land for real estate. The area of coffee plantations in Kenya has fallen to 109,000 ha from the average of 150,000 ha. [Reuters 19/05/14]
Kenya’s Top-Grade Coffee Price Rises At Auction The maximum price of Kenya’s benchmark coffee grade jumped to $385 per 50-kg bag. Kenya’s main coffee harvest usually runs from November to December, with the highest-quality beans sold first after they are dried and processed. Sales tend to peak around February and March. Kenya’s second, smaller crop tends to be harvested from May to June. Weather can change the timings for harvests and sales. [Reuters 27/05/14]
27th May
20th May
13th May
6th May
29th April
AA COF-AA-KE
$181-$385
$204-$370
$210-$346
$305-$306
$179-$338
AB COF-AB-KE
$125-$283
$180-$272
$195-$244
$205-$270
$201-$276
4,842
20,451
22,941
22,731
23,800
-
5,150
1,740
4,254
2,958
$1.4 million
$1.3 million
$378,901
$967,857
$691,384
-
$208.41
$178.08
$187.80
$192.71
Bags Offered Bags Sold Fetching Average price per bag
20th May [$]
Average Price [$]
13th May Sale [$]
Average Price [$]
6th May Sale [$]
29th April [$]
AA
204-370
312.14
210-346
268.61
305-306
179-338
AB
180-272
247.17
195-244
228.93
205-270
201-276
C
166-241
206.26
188-227
208.73
199-267
137-261
PB
176-282
248.78
238-272
259.99
225-265
201-266
T
102-191
163.05
84-185
121.24
104-206
80-214
TT
177-232
216.66
205-229
216.95
210-250
201-252
GRADE
15
Tanzania Dar’s New Coffee Season Promising Tanzania has entered what is seen as the most promising new coffee buying season, thanks to rising coffee prices in the world market. The 2014/2015 new coffee buying season started on May 1st in Mbeya, Kagera, Kigoma, and Mara which covers Mwanza and Geita when coffee prices in the global market have doubled. Coffee is one of the country’s major exports with production at more than 61,000 tonnes of coffee this season, up from 48,756 tonnes last season. The Northern zone which covers Kilimanjaro, Arusha, Manyara, Tanga and Morogoro regions will start the new season on June 1st and for the Ruvuma zone which covers Iringa and Njombe on July 1st. Coffee buyers must have a licence from Tanzania Coffee Board [TCB]. The board has opened offices within major coffee growing zones as part of its on-going strategies aimed at fast tracking development of the crop. TCB is hoping that the increase in prices will support the nation’s coffee industry development strategy of producing 80,000 tonnes of coffee in 2015/2016. Tanzania is rated as Africa’s 4th largest producer of coffee after Ethiopia, Uganda and Ivory Coast. Large part of last season was bad for coffee farmers after the world experienced a significant fall in coffee prices. Coffee price in the world market have been increasing since late January this year [2014] with significant increases recorded in February. The coffee price increases have been pushed by drought in Brazil, the world’s leading coffee producer. The International Coffee Organization [ICCO] notes the prices increased by 50% since January 2014. [Daily News 06/05/14]
Uganda Uganda Coffee Exports Up 35% Yr/Yr In April Uganda’s coffee exports in April rose by 35 % year-on-year to 336,676 60-kg bags, helped by rising global prices. According to Uganda Coffee Development Authority [UCDA], farmgate prices averaged 1,700 shillings/kg [US$0.67] of raw coffee in April compared to 1,300 in January. [Reuters 19/05/14]
16
COMMODITY NEWS COTTON / TEXTILES & LEATHER GOODS
General ICE Aims For Q4 Launch For New Global Cotton Contract IntercontinentalExchange [ICE - www.theice.com] expects to launch its new global cotton futures contract in Q4 2014, later than previously scheduled. The Atlanta-based exchange had previously aimed to list the contract, the first alternative for merchants, mills and growers to pricing on ICE’s U.S.-only one, in early 2014. The contract will include cotton grown in the United States, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali. Delivery points will be in Australia and Malaysia. Some traders have questioned whether the new contract will attract sufficient liquidity to operate alongside the existing U.S. one, which is used as the global benchmark. Questions also remain over the ability to deliver certain growths to Malaysia and other logistics and grading issues. Supporters of the plan say the product is needed because the existing No. 2 contract, which accepts only cotton grown in the United States, is increasingly vulnerable to price-distorting squeezes. The exchange may consider adding other origins after the initial launch. [Reuters 01/05/14]
Cameroon Cameroon Joins Cotton Made In Africa Initiative Cotton made in Africa [CmiA], an initiative designed to help African cotton farmers, has now extended to around 226,000 smallholder farmers in Cameroon, making it the 7th project country. The initiative of the Aid by Trade Foundation provides assistance in helping cotton farmers help themselves through trade, to improve their living conditions in Sub-Saharan Africa. By joining the CmiA system farmers can now also benefit from the income from license fees which are used to pay for CmiA cotton and are reinvested in the project regions. [Just Style 16/05/14]
Madagascar Socota Textile Group Expansion The Socota group, one of the Malagasy leaders in the textile sector, is looking to expand by the 2017. Cotona produce 21 million m2 of fabrics annually while Cottonline, another of its companies, manufactures 4 million pieces annually. [Ecofin 23/05/14]
Mali Mali Government Calls For 36% Jump In Output The Mali government has called on farmers to boost raw cotton production by 36% to 600,000 tonnes in 2014/2015 to take advantage of high global prices. This level exceeds the state cotton company’s forecast. State company CMDT’s forecast of 525,000 tonnes, is already a gain of more than 19%. Growers noted the target was achievable if the price of inputs is lowered and soil fertility is increased. Mali’s cotton sector is benefiting as higher world prices lure farmers back into fields. Cotton futures prices have risen, reaching a 2-year high in April, on concerns that prolonged drought in Texas will hurt the U.S. cotton harvest. President Ibrahim Boubacar Keita officially launched the April 2014 to end-March 2015 season on 02/05/14. Keita announced a 40 billion CFA franc [US$84.6 million] subsidy to cut the price of a 50 kg bag of fertiliser to 11,000 CFA from 12,500 CFA. Government spending on agriculture will rise from 10-15% of the budget with immediate effect. [Reuters 06/05/14]
17
Senegal Senegal’s SODEFITEX Plans Diversification The Textile Fibres Development Corporation of Senegal [SODEFITEX] has announced that it is to diversify its activities and has developed a strategic plan ‘SODEFIX 2020’ to expand into other agricultural crops. SODEFITEX decision was based on cotton price volatility. The plan also seeks to enhance the quality of cotton fibre through investing in research. [Fibre2fashion 22/05/14]
Tanzania Gatsby Trust To Review Cotton Program The Tanzania Gatsby Trust [TGT] has organized a cotton sector workshop to review the Cotton and Textile Development programme [CTDP] - an opportunity to review the sector and identify successes to be modeled by all in the sector. CTDP is funded by the Gatsby Charitable Foundation [GCF] and the UK’s Department for International Development [DFID]. The CTDP works under the auspices of the Tanzania Cotton Board [TCB] and with a wide range of public and private sector partners to improve the incomes and livelihoods from cotton of 360,000 small scale cotton farmers in the Lake Zone regions The aim is to sustainably transform the country’s cotton industry. The transformation includes major policy work on cotton pricing, licensing and regulation; the development of private markets for key agricultural-inputs; and the facilitation of sector-wide use of improved cotton seed. Gatsby has committed £10 million over 6-years whilst DFID have contributed nearly £6 million over 4-years. Significant co-funding agreements are also in place with NORAD and DEG. The quality of Tanzanian cotton has steadily fallen over the years. The sector needs to invest in its framers, providing them with high quality inputs, including improved seeds and a range of reliable pesticides, mechanised land preparation and planting and training. In the effort to address challenges in the sector, a committee commissioned by the government has recommended, among other interventions, contract farming. In implementing this model, there have been a number of challenges, including lack of proper understanding among stakeholders and lack of trust. Contract farming, which was approved by stakeholders in 2010 and rolled out countrywide in 2011 after 3-years of planning and piloting, saw a production of 351,151 tons of cotton in the first season, the 2nd highest to be produced in the country. Very little finance was made available during the following season when farmers had to buy inputs on cash, resulting into reduced production at 246,767 tons. In 2012/13, cotton ranked 4th after tobacco, coffee and cashew nuts, contributing US$81.4 million to the economy. [Daily News 15/05/14 / Business Week 25/05/14]
18
COMMODITY NEWS
FISH
19
Group Focus CMA CGM At ‘Seafood Expo Global’ The 22nd Seafood Expo Global was held from May 6-8th in Brussels, Belgium where CMA CGM hosted a stand to present our expertise in this field. Seafood Expo Global is the largest global exhibition dedicated to the products of the sea with more than 25,000 visitors from 140 countries and 1,700 exhibitors representing all sectors of the profession - fresh produce, canned, frozen, storage, treatment, equipment and services. For more information on our reefer service for fish and seafood contact your local CMA CGM / DELMAS agent.
Namibia Over 100 Exhibitors At Crayfish Festival Over 100 companies showcased their products and services at the 7th Crayfish Festival in Lüderitz/. The 4-day event was held under the theme ‘Celebrating Crayfish in diversity’ and promoted trade, investment opportunities and exports. [Namibian 06/05/14]
Senegal EU / Senegal Agree New Sustainable Fisheries Partnership The European Union and Senegal have agreed a new fisheries partnership following a successful 3rd round of talks in Dakar, Senegal, on the 24 and 25 April. The 5-year protocol fixes the fishing opportunities for EU vessels, the EU’s financial contribution, and the terms of support for the Senegalese fisheries sector. The new instrument allows 38 vessels targeting mainly tuna to once again operate in the Senegalese Exclusive Economic Zone [EEZ], subject to a compensation of €8,690,000 for the period of the agreement. [Fish Site 29/04/14]
20
COMMODITY NEWS
FOODSTUFFS Group Focus Malian Mangoes Shipped To France - Transit Times Key To Success CMA CGM / DELMAS has unloaded in Dunkirk an inaugural batch of 30 x 40’ reefers containing mangoes from Mali and Ivory Coast. While the ship was in operation at Dunkirk on the morning of May 2, the customer has requested a delivery the same day at Maasdjik in the Netherlands. Demonstrating our expertise, CMA CGM Logistics handled all operations to ensure same day delivery to the customer following phytosanitary controls and completing customs formalities. For more information on our reefer service and tailored equipment options view our website or contact your local CMA CGM / DELMAS agent: http://www.delmas.com/products-services/our-services/reefer
General East Africa: EAC Probes Rice Import Duty Decision A decision by Rwanda and Uganda to impose 75% import duty on Tanzanian rice exports in contravention of East African Community [EAC] Customs Union Protocol is under scrutiny. Under EAC Customs Union, rice originating from Tanzania is supposed to attract no import duty in both Rwanda and Uganda. The EAC noted the countries are negotiating a settlement. Local rice producers are struggling to dispose of their commodity at a profit because the domestic market is still saturated with the product due to a bumper harvest and imports. Such arbitrary tariff hikes affect regional trade as defined by EA Customs Union Protocol. Early last year, the government endorsed a 60,000 MT of rice imports from Asian to offset an artificial deficit created by traders seeking to import the cheap commodity from Asia. After almost half of the rice imports entered the domestic market, local farmers denounced the move after prices plummeted by close to 50%. [KPL which works with over 20,000 smallholder farmers still has 1,000 tonnes of rice from the 2012 season and another 5,000 tonnes from last season which is struggling to sell in the domestic market.] The Agriculture Minister suspended rice imports in March 2013 following complaints from local producers and donors. The government had approved the imports to help lower prices as local rice farmers were accused of hoarding the commodity which forced prices to peak at over 2,000/- /kg and was feared to fuel inflation. [Daily News 23/03/14]
Syngenta Establishes Africa’s First Seed Care Facility South Africa has become home to Africa’s first Seed Care Institute as agribusiness Syngenta opened its 11th research and development [R&D] facility, in Brits. The Africa Middle East [AME] Seed Care Institute, established at the company’s formulation, fill and packing plant, in the North West, aims to develop, test and protect seed technologies to develop diverse agro ecosystems, crop preferences and farming systems, while enhancing productivity. Meanwhile Syngenta’s ‘Good Growth Plan’ seeks to increase the average productivity of major crops by 20% without using more land, water or inputs. [Engineering News 06/05/14]
21
Guinea Guinea Will Invest US$21 Million In Crop Year 2014-2015 The Guinean Agriculture Minister, Jacqueline Sultan, announced US$ 21 million investment for the 2014-2015 crop year for the acquisition of inputs and farm equipment to improve domestic rice production. Guinea currently imports 500,000 tonnes of rice p.a. A dependency that the country aims to reduce. [Ecofin 21/05/14]
Kenya Kenchic To Invest In Poultry Processing Plant Kenyan company Kenchic, which specialises in the production of poultry will invest 350 million shillings in a poultry processing unit in Thika (Kiambu County). The unit will have a daily slaughter capacity of 30,000 chickens. Construction should last 2- years Sales of chickens and eggs in the Kenya generated 7 billion shilling in 2013, 9% more than the previous year. Kenchic services clients such as Steers, Galitos and KFC. [Ecofin 28/05/14]
Madagascar Castel Beer Takes Control Of NBM Brewer The Castel Group has officially taken control the Nouvelle Brasserie de Madagascar [NBM]). The group which holds the Antananarivo refrigeration company [Star], will continue to operate its competitor brands as well as promote ‘Skol’, one of the leading products of NMB. [Ecofin 24/05/14]
Rwanda Government Moves to Promote Rwanda’s Fruit & Vegetable Exports Plans aimed at widening Rwanda’s exports base and promoting agribusiness have gained pace after the government unveiled an initiative to attract investors into the horticulture sector. The government seeks a consultant to develop promotion materials for horticulture products, including pineapples, passion fruits and tree tomato with a view of attracting more private sector investments into agribusiness and improving access to agriculture development information. Other targeted crops are macadamia, chillies, French beans, fruits, vegetables, peas, tomatoes, nuts and eggplants. The consultancy will be funded by the World Bank. Currently, Rwanda’s fruit and vegetable exports are largely dominated by informal cross-border trade that accounts for 19% of Rwanda’s total exports. The country targets earnings of US$225m by 2017, up from US$20m presently. Rwanda’s main foreign exchange earners are coffee, tourism, minerals and tea. [New Times 07/05/14]
22
COMMODITY NEWS
FOODSTUFFS
Senegal Onion Sector Booming In Senegal According to the Minister of Trade, Alioune Sarr, in 10 years Senegalese onion production has sprung from 40,000 tons to 260,000. Production reaches 15,000 to 18,000 tons/month.. This places Senegal amongst the world’s main onion producing countries. The onion sector is present in over 14% of rural households. The Minister was present at the inauguration of a stocking and drying space in Darou Khoudoss. [Fresh Plaza 01/05/14]
23
South Africa EU Citrus Ban Under Debate EU’s threat to ban imports of South African citrus infected by the black spot fungus is under debate. According to the South African government the fungus does not affect consumers, and scientists from both sides are still investigating whether it could infect European orchards. There is no evidence so far that it could. But last year, the EU intercepted more than 5-shipments of citrus with the black spot and had stopped all citrus imports from South Africa. Because that had happened near the end of the season, it had had little commercial impact. But it could have a major impact in the coming season, as South Africa is the largest exporter of citrus to the EU. [Business Report 05/05/14]
Debate on Imported Frozen Chickens / Frozen Potato Chips Imports of frozen chickens and frozen potato chips from the EU are to be debated. South Africa has launched an anti-dumping inquiry into these imports. In 2008, South Africa exported €22 billion [R320bn] of goods to the EU and imported €20bn, earning a €2bn surplus. But in 2012, South Africa exported only €20bn to the EU, while imports from the EU increased to €25bn, creating a €5bn deficit for South Africa. European companies invested in South Africa had been making frozen chips with South African potatoes. But now South Africa was importing those chips. Meanwhile, frozen chicken imports had rocketed about a hundredfold, from about R3 million to R300m a year. [Business Report 05/05/14]
Export Tax On Raw Materials Another difficult dossier was export taxes that South Africa was proposing to impose on raw materials. The EU has complained that these taxes are an unwarranted protective measure for local buyers of raw materials. The issue is being thrashed out as part of the protracted negotiations for a SADC-EU EPA. The EU’s interest was not in helping other countries develop resources, but about ensuring the EU was not deprived of access to raw materials. The proposed taxes were designed as an incentive to companies to invest in the beneficiation of raw materials in South Africa so they could export processed materials. The SADC EPA negotiations are the most difficult dossier of all between the EU and South Africa – as well as the other SADC members in the proposed EPA – Botswana, Namibia, Swaziland, Lesotho, Mozambique and Angola. [Business Report 05/05/14]
Kerry Foods Opens R&D Centre In Durban The opening of a regional development and application centre in Durban, South Africa, signals a clear intent by Irish diary group Kerry Foods to ramp up its focus on the fast growing sub-Saharan African region. The creation of the centre follows 2-acquisitions by Kerry in South Africa; in February 2012 Kerry bought FlavourCraft, a Durban-based company that specialises in flavours for meats, soups, sauces, dressings and savoury snacks in South Africa, Nigeria, Ghana and other key markets in West Africa. Then last March, Cape Town-based Orley Foods, a manufacturer of sweet ingredients such as chocolate products, syrups and ice cream coatings, became part of the Kerry Group. [Food Navigator 27/05/14]
24
COMMODITY NEWS
PALM OIL
Sierra Leone Private Equity Firm Transforms Palm Oil Business With a capital injection from global investors, a long-abandoned palm oil plantation and mill in Daru, Sierra Leone, is expected to produce over 5,000 tons of palm oil in 2014. Goldtree mill buys in fruit from over 5,000 outgrowers where it is working on significantly improving fruit yields and technical skills on the farms. Phatisa is the fund manager of the African Agriculture Fund [AAF], which in turn manages the Goldtree investment on behalf of multinational investment partners. The Goldtree palm oil plantation and mill was the first agri investment of AAF, made in 2011. Phatisa’s AAF is a private equity fund focused on businesses in agriculture and the food value chain. To date, it has committed investments in excess of US$100m in 12 businesses across the continent, reaching from Sierra Leone in West Africa to Madagascar in far East Africa, and a further 8-countries in between. With an investment injection of US$20m and ongoing support from Phatisa agri specialists, Goldtree has been completely transformed. It now has a mechanised, safe and hygienic processing mill supported by stores, a quality control laboratory, holding tanks and a fleet of vehicles. Annual crude palm oil output should rise to 18,000 tons, supplying domestic and regional markets. [Howwemadeitinafrica.com 06/05/14]
25
26
COMMODITY NEWS
SUGAR Ghana Omnicane To Invest US$250 Million In Ghanaian Sugar Production Mauritian sugar company Omnicane will invest US$250 million in a 100,000 T production unit in Northern Ghana. The agreement forms the basis for strengthening investment partnership in the agricultural sectors in both nations and correct imbalances in the Ghana’s import bill, which rose to US$17 billion in 2013 from US$ 11 billion in 2010. [Africa Report 27/05/14]
Malawi Illovo’s Operations Decline 12% Illovo’s Malawian subsidiary saw profit from operations decline 12% to 29-billion Malawian kwacha [R762m], with headline earnings per share at 2,637 tambala from 2,930 tambala in 2013. During the 2013-14 season, overall sugar cane production amounted to 2.4-million tons. The group’s factories at Nchalo and Dwangwa were affected by unseasonal inclement weather and experienced plant operational breakdowns during the crushing period. Despite these challenges, overall sugar production totaled 289,000 tons for the season. Sugar sales for the year were just over 290,000 tons, with the domestic market accounting for 58% of this. The balance was exported to Europe, North America and the region. Illovo Sugar continues to focus on its operations in the rest of the continent to offset flagging production prospects in South Africa. Its Zambian and Malawian units account for more than 70% of its operating profit. [Business Day 13/05/14]
Nigeria Dangote Sugar To Produce 2-Million Tonnes Per Annum The Dangote Sugar Refinery [DSR] aims at producing 1.5-2 million tonnes of sugar per annum from locally grown sugar cane within the next 5-10 years. It disclosed this at the company’s 8th Annual General Meeting [AGM] following the Government’s National Sugar Master Plan, which has prompted the company to begin its own development plan. The plan has been structured to include an increased focus on backward integration project. Dangote has acquired some 200,000 ha of land to meet the development plan to be used for the development of sugar cane plantations and construction of modern sugar processing factories. [Nigerian Tribune 28/05/14]
South Africa Sugar Workers Plan First Strike for 17 Years About 5,500 sugar workers in South Africa went on strike demanding an 11% increase in pay, in the first industry-wide stoppage since 1997. Employers including Illovo Sugar Ltd. and Tongaat Hulett Ltd. Africa’s two biggest producers, have offered raises of 8.5%, meaning the two sides are relatively close. [Bloomberg 26/05/14]
27
Tanzania Tongaat Hulett And Illovo Sugar See Revenue Increases Fortunately for Tongaat Hulett and Illovo Sugar consumption of sugar continues to increase. Recently implemented tariff protection in South Africa and in Zimbabwe will also help future earnings. The government of Tanzania, where Illovo has significant investment, is also considering tariff protection mechanisms. Tongaat Hulett’s total sugar production in the year to March grew by 170 000 tons to 1.42m tons and it predicts production will grow to 1.8m tons in 4-years. Illovo saw production increase by 84 000 tons to 1.83m tons. But sugar is sold on global market at prices far below Southern Africa’s, knocking export income just as exports tripled and both companies’ earnings were affected. Tongaat notched up a 9% revenue increase to R15.7bn, translating into an 11% increase in operating profit to R2.3bn and a 3% hike in HEPS of 978.9c. Illovo increased revenue 20% to R13.2bn, generated almost-flat operating profit of R1.8bn that nudged diluted HEPS up 4.3% to 194c. In the case of Tongaat, operating profits in Zimbabwe and Mozambique fell dramatically as the local operations were forced to export surplus production. In South Africa, earnings benefited from a 30% increase in volume while costs were limited to 10%. Illovo saw its operating margin reduced from 17.2% to 14.3% as a result of cheap sugar imports. Almost 70% of Illovo’s operating profit was generated from cane production, up from 55% last year. Cane growing generated 21%, while downstream production and power co-generation generated 9% of profits, up from 5%. Its Zambian unit declined 4% to 303.2-million kwacha [R482m] for the full year ended March 31. Both companies are increasing their efforts to improve downstream production. In the case of Tongaat the starch business is already generating substantial profits. In addition both ethanol and co-generation can be highly profitable. Growth in Illovo’s revenues was underpinned by improved downstream furfural and ethanol sales. llovo completed the construction of its alcohol distillery in Tanzania and the revenue will provide diversity to the 2014/15 earnings. Tongaat’s results were boosted by the sale of land, generating operating profit of R1.08 billion. [Citizen 28/05/14]
28
COMMODITY NEWS
SUGAR Government To Introduce Bulk Sugar Procurement System The government is contemplating replacing the current sugar importation system by introducing a bulk procurement system in case there is shortage arising from closure or dysfunction of factories. Stakeholders have agreed on the matter and the process is underway to replace the current system. According to the Sugar Board of Tanzania [SBT] the current system of importation involves too many traders and has too many challenges. Asked if the board plans to set indicative price for sugar in order to make the product stable SBT noted that it may be difficult due to the nature of the market economy. On sugar smuggling, agencies are mandated to undertake checks on the borders and have been working hand in hand to ensure that the product does not enter the country illegally. Recently, revenue collecting authorities reported the capture of smuggled sugar in Mbeya and Morogoro regions. The main challenge are porous borders especially along the coastal line and at the borders with Malawi and Zambia. Last year Tanzania imported 50,000 MT of sugar to plug a deficit that had pushed up the price of the commodity. Currently, the retail cost of sugar in the country stands at between 2,000/- and 2,400/- up from 1,800/- last year. During the rainy season most sugar mills in Tanzania close down business causing sugar shortage. Tanzania’s annual sugar consumption stands at 480,000 MT but the country’s main producers - Tanganyika Plantation Company [TPC], Kilombero Sugar Company Limited in Morogoro Region, Mtibwa Sugar Estates also in Morogoro and Kagera Sugar Limited in Kagera Region - only manage to produce an average of 400,000 MT. [The Guardian 26/05/14]
US$550m Tanzania Ethanol Venture Agro EcoEnergy [Tanzania] Limited, a subsidiary of a Swedish based firm, has invested US$550 million in sugarcane farming as part of a power and ethanol project. Agro EcoEnergy has already set up a special purpose project company, Bagamoyo EcoEnergy to develop a modern sugar cane plantation and factory producing sugar, ethanol and power for the Tanzanian market. The project will produce 130,000 MT of sugar pa. with over 1,500 sugarcane outgrowers in Bagamoyo in the Coast Region earning around US$18 million annually when the project takes off. The Southern Agriculture Growth Corridor of Tanzania [SAGCOT] is advising the project. Launched at World Economic Forum Africa in 2010, SAGCOT is a public-private partnership that aims to boost agricultural productivity in Tanzania and the wider region, and thereby achieve the country’s agricultural strategy. [Daily News 09/05/14]
29
COMMODITY NEWS
TEA General Black Tea Production Falls Global black tea production so far this calendar has dropped by 6.89% over the same period a year ago. The output fell to 247.95 million kg from 266.30 mkg. This fall of 18.35 mkg is due to the fall of production in Sri Lanka, Kenya and Uganda. Adverse weather was said to be the cause for lower production in different countries. Weather has since improved and this month, most tea plantations have received showers. [Business Line 16/05/14]
Country
Output 2014 Q1/2 Million kg
Output 2013 Q1/2 Million kg
Sri Lanka
73.39
80.29
Kenya
112.08
117.26
Uganda
4.03
14.56
South India
30.96
31.44
North India
4.97
4.34
30
COMMODITY NEWS
TEA Kenya Top Tea Prices Creep Up At Auction The highest price for top-grade Kenyan tea edged up to US$3.08 per kg at the latest auction from US$3.06 per kg at the previous sale noted Tea Brokers East Africa. Kenya is the world’s leading exporter of black tea. The crop is a top foreign exchange earner for Kenya. The bulk of the tea offered at the Mombasa auction is from Kenya, but it also sells tea from Uganda, Tanzania, Rwanda, Burundi and other regional producers. [Reuters 28/05/14]
Auction
27th May
20th May
13th May
6th May
Best Broken Pekoe Ones [BP1s] TEABP1BEST-KE
$2.18-3.08 / kg
$2.10-3.06 / kg
US$2.10-2.90 / kg
US$2.15-3.04 / kg
Best Brighter Pekoe Fanning Ones [PF1s] TEAPF1-BEST-KE
$2.21-2.72 / kg
$2.34-2.76 / kg
US$2.22-2.62 / kg
US$2.18-2.72 / kg
12.98% of 168,216 packages / 10.88 million kgs - on offer
15.69% of 168,780 packages / 10.92 million kgs on offer
13.38 % of 164,212 packages / 10.55 million kgs on offer
13.8% of 138,901 packages on offer
Not Sold
Tea Gets Major Boost In EU Market Kenyan tea is set for a major boost in the European market if an initiative by a Dutch imports agency is implemented. This follows efforts by the Centre for Promotion of Imports [CBI] from developing countries, an arm of the Ministry of Foreign Affairs of The Netherlands, to improve skills of Kenyan agricultural agencies and stakeholders in the tea sector. The CBI event has for the first time brought together Kenyan tea growers and exporters for a 3-day training workshop in The Hague, aimed at marketing branded Kenyan tea in the European Union. Kenyan participants attending included the Tea Research Foundation of Kenya, Tea Board of Kenya, Ministry of Agriculture and Kenya Tea Packers. Purple cloned tea offers a good opportunity to develop a wide range of products for the EU market requirements. [Standard Digital 23/05/14]
Tea Firms Look for Markets Tea companies in Nandi are looking for a direct market abroad following the decline of prices. The companies have traditionally been selling their Black Tea through the Mombasa Auction under the control of leading brokerage firms and dominated by Kenya Tea Development Agency [KTDA]. Tea companies have been trading accusations over the poor tea prices, with a number of multi-national firms blaming KTDA for flooded the market with their products after hoarding a huge stock for speculation purposes. The crop production has increased by 30% nationally due to good rains leading to oversupply. Meanwhile the market for black tea had seriously fallen due to political instabilities in some of their key markets - Egypt, Pakistan, Afghanistan, Yemen and Syria. [The Star 06/05/14]
KTDA Urges State to Supply Cheap Fertiliser The Kenya Tea Development Authority [KTDA] has urged the government to supply tea farmers with subsidized fertiliser noting the current price of Sh2,300 / 50kg bag was too expensive. The authority has procured 60,000 MT of fertiliser, which is normally given as credit to farmers and later deducted from the tea bonus in November. [The Star 29/04/14]
31
Kericho To Invest Sh300 Million In New Tea Factory Kericho county is looking to set up tea factory on its 450-acre Kabianga tea farm at an estimated Sh300 million. The county is conducting feasibility studies, Presently, the tea is processed at the nearby Momul Factory owned by the Kenya Tea Development Agency. The plans come at a time the Ministry of Agriculture is formulating a ‘national tea policy’ to address concerns and challenges in the industry. The policy will seek solutions to sustain production of high quality tea and reduce the cost of production, processing and marketing. The policy will also look into tea trade and value addition. The tea sector is faced with challenges that include declining prices, high production cost, climate change, narrow market outlets and limited diversification and value addition. Kenya earned Sh114.5 billion from tea exports, more than 5-fold the Sh22 billion recorded from domestic sales in 2013. [The Star 12/05/14]
32
COMMODITY NEWS
TIMBER General EU Tropical Log Imports Down 54% To End February 2014 EU imports of tropical hardwood logs in the first 2-months of 2014 were 18,454 m3, 54% less than the same period the previous year. Imports declined from all the main African supplying countries. Longer term monthly data shows that after a brief spike in early summer 2013, EU imports of tropical hardwood logs resumed their long term decline between August 2013 and February 2014. EU imports of logs from Equatorial Guinea only resumed in the second half of last year and were therefore up sharply in January to February 2014 compared to the same period in 2013. [ITTO 01/05/14]
EU Imports Of Sawn Tropical Hardwood Fall Sharply EU imports of tropical sawn hardwood in the first 2-months of 2014 were 147,326 m3, 8% down on the same period in 2013. Imports fell from all 3-of the main supply countries including Cameroon, Malaysia and Brazil. However, imports increased from some smaller suppliers, including Gabon, Ivory Coast, and the Republic of Congo. EU imports of tropical sawn hardwood were low but stable for most of 2013, but trended down sharply between November 2013 and February 2014. The low level of EU imports from Cameroon in early 2014 is partly due to short-term operational problems at the port of Douala and volumes are likely to rise in the spring as these problems are overcome. However, European buyers are also struggling to obtain sufficient volumes of preferred species such as sapele and sipo as more is now being sold into the Asian and U.S. markets. [ITTO 15/05/14]
33
French Market For Logs Comes To Life The flow of log exports is at a fairly normal to high pace and, as always, okoume is the top species for Asian destinations. Buyers for the Chinese market have resumed purchases of okan logs. Producers report a modest improvement in interest in logs from buyers in France but across the EU the volumes being imported are much lower than in the past as there are now fewer sawmills in the EU processing tropical logs. As expected, log prices for the limited number of premium species have moved higher. At present there are two main drivers of log prices one is the firming demand for sawnwood in major markets the other the limited availability of the prime species. Demand for sapele and sipo sawnwood is particularly strong at present and demand outstrips the ability of mills to secure logs. [ITTO 15/05/14]
Producers Anticipate Firmer Prices For ‘Redwoods’ Recent price rises for the most frequently demanded timbers have been consolidated as demand is now as firmer, a term that has not been used by producers in the region for several years. Producers are convinced from current developments that demand will remain firm stretching into the third quarter of the year. Producers anticipate firmer prices for the premium red timbers. Exporters in Cameroon are particularly well placed and order book positions are said to be extending into the last quarter of the year. The biggest problem faced by producers is finding sufficient logs to meet shipping schedules. Cameroon log exports, limited to only secondary species, are reported very strong and this level of demand is supporting overall market prices. [ITTO 01/05/14]
Sapele Millers Fall Behind On Shipments Demand for sapele sawnwood substantially higher than supply. Some producers say they are falling behind with deliveries and are still contracted to supply orders taken at previous lower prices. The current higher demand is spread over several markets including some European countries and the USA. Demand in Asian and Middle East markets has been consistent over the past months and producers report good prospects in China, Vietnam and India. [ITTO 01/05/14]
German Tropical Timber Importers Concerned About Availability The German trade journal EUWID reports rising concern in Germany about lack of availability of tropical hardwoods. There has been “satisfactory to good” demand for wood products in Germany since the start of 2014. However in the case of imported products the main concern this year has been problems and restrictions on the procurement side. Supplies available to European buyers are severely restricted, especially in Africa, primarily attributable to the further increase in buying competition from Chinese companies. Also the FLEGT programme and EU Timber Regulation are now restricting procurement possibilities for European companies in Africa. The VPA process has contributed to further harvesting restrictions in supplier countries while EUTR has created uncertainty over the reliability of legality documentation issued by some African governments. [EUWID 30/04/14]
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COMMODITY NEWS
TIMBER Revival Of Tropical Hardwood Market Promotion In Europe The EU Sustainable Tropical Timber Coalition [STTC] was launched in November last year. Since then it has acquired new members to expand the network of private, public and civil society players committed to promoting European demand for certified and FLEGT licensed timber products. It has also constituted several working groups which are developing and coordinating a communications and technical program. STTC has a target to contribute to the achievement of sustainable management of up to 10 million hectares of tropical forest by 2015 by making the business case for certification more attractive for concession holders.
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The aim is to accelerate demand for certified or licensed timber from sustainably managed tropical forests to the tipping point of 30% and to put a halt to declining use of tropical timber in front-running countries in the EU, through creating momentum in legality and sustainability efforts.
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EU Sustainable Tropical Timber Coalition [STTC] Discussion has highlighted the need to focus on communication of technical qualities of tropical hardwood as well as the legality and sustainability issues. The need to build on existing communication tools has also been emphasised, for example the new technical procurement guide for African species now being developed by ATIBT and the database of lesser known wood species [LKWS] properties and applications now being developed by FSC in the Netherlands and Denmark. STTC now plans to set up meetings between relevant national government authorities in the EU to co-ordinate efforts in support of STTC goals. Efforts are also being made to facilitate business encounters in the most important EU countries for tropical timber in Europe identified as the UK, Netherlands, Denmark, Germany, Belgium, France, Italy, and Spain. Business encounters will focus first of all on a few big event notably BAU and Interzum in Germany, Carrefour du Bois in France and the Timber Expo in the UK. A large general European STTC meeting is also proposed, likely to be held in January 2015. [ITTO 01/05/14]
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Cameroon Port Delays Reported In Cameroon Reports suggest shipments of logs and sawnwood from Cameroon are being delayed because the contract with the port handling company is yet to be renewed. Log and sawnwood stocks have built up in Cameroon and there are reports of long delays in shipments. Exporters are concerned that some of the lighter density timbers may deteriorate when held for long periods sealed in containers. Analysts say it may take some considerable time to clear the back-log of cargo. Exporters now face stringent container inspections in Cameroon and Gabon as the authorities are determined to crack down on those attempting to ship banned species mixed with behind other timbers. The Middle East market continues to be strong and producers say prices are stable and order book positions extend to September. [ITTO 15/05/14]
Congo Sapele From Congo Now Coming Onto The Market New sawmills have now started production in Northern Congo Brazzaville and are milling mainly sapele for shipment out of Douala or Point Noire. Shipment from either port involves very long distance road haulage. While log prices are rising, sawnwood prices are currently unchanged having stabilised following the steep rises for the prime species during April. [ITTO 15/05/14]
Mills Under Construction In Congo Companies recently granted forest concessions in Congo Brazzaville are now establishing processing plants, a condition of the concession agreement. The concession agreement allows for limited log export during the mill construction phase and exporters of okoume logs are very busy. Overall, export market prospects are expected to remain good and prices firm with likelihood of some further increase over the coming months for the most popular redwoods. [ITTO 01/05/14]
Gabon Delayed Reimbursement Of VAT Hurting Timber Companies In Gabon Producers in Gabon report that, in spite of government assurances, repayments of the taxes sur la valeur ajoutee [value added tax] are more than 1-year overdue and this is putting a considerable financial burden on timber exporters. [ITTO 01/05/14]
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COMMODITY NEWS
TIMBER Ghana Ghana To Start Issuing Timber Validity License The issuance of TVL formed part of the EU Voluntary Partnership Agreement [VPA] designed to stop the export of illegal timber to the EU markets of which Ghana is a signatory. Ghana has initiated several processes towards full compliance with the agreement since signing the agreement in 2009. The issuance of the license would pave the way for Ghanaian companies to export legally harvested timber to the EU markets. The Forest Commission [FC] has put in place an automated Legality Assurance System [LAS] to help track timber as it moves through the various stages of production to ensure that it is legal. Data would help to manage and regulate the forest and forest industry. [Ghanaweb 24/05/14]
On Track To Trade FLEGT Licensed Timber A meeting in support of the Forest Law Enforcement Governance and Trade Voluntary Partnership Agreement [FLEGT-VPA] between Ghana and the European Union was convened by the EU Delegation to Ghana and the Forestry Commission of Ghana. The event ensured the effective collaboration and coordination between the organisations managing these projects. Ghana became the first country to agree a VPA with the EU which will result in systems to verify the legality of timber for exports and to strengthen forest governance. The EU is Ghana largest market for wood products. By agreeing the VPA Ghana has committed to dealing with the challenges of illegal logging and its associated economic, social and environmental costs. Over the past 5-years, the Forestry Commission has been working to put in place the systems and reforms necessary to implement the VPA. After considerable progress with the development of the system to license legal timber Ghana is on track to soon be shipping FLEGT licensed wood products. [ITTO 15/05/14]
Signing EPA Will Ensure Competiveness Of Exporters Ghanas Minister of Trade and Industry has said that signing the ECOWAS-EU Economic Partnership Agreement is essential as not signing would seriously undermine export opportunities for the main commodities such as cocoa, gold, oil and timber as well as for nontraditional products. The EU is Ghanas largest export market, accounting for more than half of all exports and failure to seize the opportunity for improved market access would result in exporters losing competitiveness in the EU market. [ITTO 15/05/14]
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Bold Initiative To Strengthen Ghana Forestry Commission To improve oversight of the sector the Forestry Commission [FC] an 11-member committee has been tasked with recommending ways in which the FC can better ensure the it its functions in a credible, transparent and independent manner. Inaugurating the committee, known as the Timber Validation Committee [TVC] the Minister for Lands and Natural Resources, Alhaji Inusah Fuseini, lamented the inadequate and weak laws that have been the root cause of illegal forestry operations. The Minister tasked the TVC with recommending additional measures to improve the verification and validation of licenses and for addressing complaints in ways that eliminate the risk of any outside interference or influence. The committee is also responsible to come up with ways to inform consumers of their rights, obligations and understanding of the functioning of the Legality Assurance System [LAS]. [ITTO 01/05/14]
State Loses US$16 Million Of Stumpage Values A study shows that the state from 2003-13 lost US$16 million of stumpage value of timber due to the inability of the Forestry Commission to review and publish new fees within the period. The stumpage fees, which is the price a firm pays for the right to harvest timber from a given land base, has not been reviewed since July 2003 until March this year. On March 1, the Forestry Commission [FC] reviewed the stumpage fees, which subsequently would be reviewed quarterly to reflect prevailing economic conditions at both the local and international markets. The study by Forest Watch Ghana [FWG] noted the FC did not comply with legislative instrument [LI] 1649’s requirement that stumpage fees be determined partly in relation to the free-on-board price of air-dried lumber. Failure to reform timber pricing had resulted in continued over-harvesting and closure of more than two-thirds of the industry towards the end of 2000s. The study called for the repositioning of the Timber Industry Development Division of the FC, to place it one step ahead of the timber industry. It urged the FC to begin to implement quarterly reviews of stumpage fees indexed to both the free-on-board value of the air-dried lumber and quarterly average inflation. [Ghanaweb 10/05/14]
Oda Timber Firms Reeling From High Production Cost More than 10 wood processing companies at Akyem Oda and its environs in the Birim Central Municipality are on the verge of collapse due to the high cost of production. Birim Wood Complex has retrenched more than half of its work force whilst East Forest Products Limited [EPL] and K.G Wood Company Limited have laid off hundreds of employees. Factors include high electricity tariffs, 400% increase in stamp fees charged this year by the Forestry Commission, high fuel prices coupled with high cost of tyres and vehicle spare parts, and high taxes. [Ghanaweb 26/05/14]
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COMMODITY NEWS
TOBACCO
Kenya BAT Kenya Want Uniform Taxation On Tobacco British American Tobacco [BAT] Kenya has called for the simplification of the taxation on cigarettes. In addition to 16% VAT, BAT carries an excise duty of 35% of the retail price. [Ecofin 29/05/14]
Malawi Tobacco Sales Breach US$80m Level Malawi tobacco sales have hit over US$80 million in the first 8-weeks of trading on the country’s auction floors. Auction Holdings Limited [AHL] said in its latest market report that more than 54.3 million kg of the golden leaf were sold during the past 2-months, consisting of 52.1 million kg of burley and just over 2-million kg of flue-cured tobacco. According to the Tobacco Control Commission sales are progressing well at the market, with the crop continuing to attract good prices. Malawi’s tobacco production for the 2013/14 season is estimated at 194 million kg for all types of tobacco against last year’s 169 million kg. [APA 22/05/14]
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