So how does this work? Kogi cashew association tell traders that farm gate prices are N470k per tonne i.e. $1000/tonne. At this time the naira traded at N470/$ levels at the black market.
Given the set farm gate price, upcoming local traders reached out to buyers across the globe and settle trade arrangements. At this point profit margins were adequate but not crazy.
However, over the last week, the central bank has stepped in and black market rate have started sliding at very close to N430/$.
Guess what our Kogi Cashew farmers decide to do. Rather than doing the noble thing, which is to respect agreements (the N470k/tonne), they go gaga and violate both verbal and written agreements.
At the moment, prices have been raised to over N600k/tonne. This beats all logic wallahi! One would have thought that prices in naira terms would actually drop. At this price any trade would be done at a loss! Unfortunately, local traders can’t express such indiscretion internationally.
There are several questions, but one nagging question that comes to mind is, why are the farmers pegging sales to the black market? Perhaps, the National Economic Team and the Central Bank should look into this.
The unethical decision by the Kogi Cashew Producers Association does very little to help business confidence. In the short term this is likely to hurt trade and the FG’s efforts at raising non-oil export revenues.
Several steps need to be taken in the agricultural commodity export business in the country such as product standardisation, product pricing – perhaps the re-introduction of commodity boards could be useful not for setting prices by the govt but to help the market in price discovery.
In the immediate, the Kogi Cashew farmers should get their act together or risk having cashew produce wasting away during this harvest season. There’s a 3-4 month window after which lessons would be learnt the hard way!
Credit: Safiya Stephanie Musa
