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Naira Depreciation Pushes Up Prices of Cocoa Chemicals in Nigeria -- Traders

07/29/2021 | 11:48am EDT

IBADAN, Nigeria--Prices of cocoa inputs have risen in southwestern Nigeria due to the further depreciation of the naira, the country's currency, and farmers saying they are unable to buy enough chemicals to treat their farms, chemical traders said Thursday.

On Tuesday, the Central Bank of Nigeria announced a ban on foreign-exchange allocation to Bureau de Change operators in the country and the following day the naira depreciated at the parallel market where the BDCs operate to NGN525 to the U.S. dollar from NGN505 the previous day, currency traders said.

The CBN's official rate currently stands at NGN410.16 to the dollar, up from NGN379 previously.

Nigeria is facing a scarcity of foreign exchange trade due to the drop in the price of oil, its major foreign-currency earner. The scarcity has been exacerbated by the 2020 coronavirus crisis and economic downturn from which world economies are just recovering.

Isaac Ashaolu, a cocoa chemical dealer, said the cost of the inputs including imported agro-chemicals, such as insecticides, herbicides and fungicides, has risen because of the naira's depreciation.

"The low exchange rate of the naira is driving up the prices of cocoa inputs," said Mr. Ashaolu. "We are seeing the increase in prices of agro-chemicals because they are all imported with the dollar."

He said a liter of herbicide, used to treat cocoa farms during the dry season against insect attacks, sold for NGN1,500 earlier in the year but is now selling for NGN2,500 to NGN2,600, adding that the price may still rise if the naira depreciation continues.

Mr. Ashaolu also said fungicides used to spray cocoa pods against the black pod disease during the rainy season, is now selling at NGN420 for a 50gram sachet from NGN300 to NGN320, while herbicide previously selling for NGN1,500 a liter, now costs NGN2,500 to NGN2,600 a liter.

"We are now buying fungicides at higher prices as the rainy season is on. Many farmers cannot afford to buy sufficient quantities to treat their farms because of high prices of the chemical," said Bashiru Akinwale, a cocoa farmer in Ibadan, capital of Oyo state in southwest Nigeria.

The rainy season began in May in the southwest region and is expected to end in October, a cocoa trader said.

--By Obafemi Oredein; Dow Jones Newswires

(END) Dow Jones Newswires

07-29-21 1348ET

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