EXPERT DISCOVERS HIGH EXPLOITATION IN COCOA SECTOR

The News LIB, 07/28/2015 By N. Dweh Nimley

Dr. Gideon Onumah, an Agricultural Economist and Rural Finance Specialist of the Natural Resources Institute of the University of Greenwich, U.K., says there are manipulation of scales to cheat on the weight of cocoa per tones by Cocoa buyers in the country.

He said such issue appears common, thus making transparent price discovery difficult for farmers despite the LPMC role.

Dr. Onumah made the disclosure when he presented the results of a one-month research study he conducted into the applicability and benefits of the use of Warehouse Receipts Systems in Liberian agricultural sector.

Dr. Onumah was contracted by GROW to conduct a Market Systems Assessment of Warehouse Receipts Systems in Liberia from June 26 – July 25, 2015.

According to him, Cocoa agents or buyers offer farmers a nominal price of L$170/kg of cocoa (13% more than the L$150 offered by the cooperative), while scale manipulation involving loss of 12.5 of weight implies agent actually pays less (L$148.75/kg than the coop’s L$150/kg).

Anecdotes, he added, from other farmers indicate “weight lost” could be as high as 25%.
He said Cooperatives (Coops) who are dependent on exporters for trade finance creates liquidity constraints by weakening their capacity to aggregate referencing the Lofa case (Lofa case only 30% of potential).

He pointed out that financing challenges also compels farmers to enter into informal contracts with agents with prices set at 33-53% of market price depending on how acute farmers’ need is.

Dr. Onumah indicated that due to non-maintenance, large portions of farms and very low yields are not access to; while affordability and skills to apply yield-enhancing inputs are limited.

Outreach of replanting programmes, he said, appear limited, because farmers started nurseries but their uncertainty remains about quality of planting materials, inadequate physical infrastructure; lack of modern fermentation, drying and facilities (weather during harvest) as well as poor rural road network which increases cost of evacuation of beans to the port.

He believes that centralised warehouses are important at county level. The warehouses, he said, can be run by independent collateral management companies due to scale economies.

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