ETHIOPIA TO SHIP SUGAR IN 2016Full Story On Page 22

CMA CGM SENEGAL REEFER SEASON LAUNCHEDOFFERS SPECIALIST DAKAR OFF DOCK TERMINAL FACILITIESFull Story On Page 3

AFRICACOM-WATCH

Ghana: Targets 150,000 Tonnes Of Cashew By 2025

ISSUE 55 | DECEMBER 2015

Kenya: Coffee Output To Rise 25% In 2015-16

South Africa: President Obama Ultimatum Over Chicken Row

07 14 19

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AFRICACOM-WATCH

ISSUE 55 | DECEMBER 2015

Contents

03 | African Group News

05 | General

10 | Cocoa

07 | Cashew, Groundnut & Shea

14 | Coffee

Trade: Louis Dreyfus Commodities May Sell Minority StakeGhana: Tema Port To Get US$10 Million Terminal For Agricultural Products / USDA Delegation Looking To Expand Trade In Agricultural Products

Cote d’Ivoire: 1.3 Billion Francs CFA Dabakala Processing PlantGhana: Ghana Targets 150,000 Tonnes Of Cashew By 2025Mozambique: Cashew Nut Production Approaches 100,000 Tons / Industry Increases Cashew Nut ProcessingTanzania: 40% Drop In Cashew Harvest Due To Poor Rains / US$13.9 Million For 3-Processing Factories / 3rd International Cashew ConferenceZambia: Cashew Infrastructure Development Project [CIDP]

Regional: Barry Callebaut Cuts Forecasts / Mondelz To Create Enterprising Farmers With Barry Callebaut / Crop Outlook Improves After ‘Very Good’ RainsCote d’Ivoire: Cote d’Ivoire To Supply 50% Global Cocoa By 2020 / Arrivals At 441,000 TonnesGhana: Improved Ghana Production Leads To World Surplus / Cocobod In Talks For New Medium-Term PXF / Ghana Purchases Jump In Early Weeks Of 2015-16 Season / Barry Callebaut Buys Nyonkopa Cocoa Group / Barry Callebaut Launches Sustainable Horizons CocoaNigeria: Buyers Chase New Harvest For Blending With Old Stock

Angola: Coffee Production Expands In Kwanza Sul ProvinceEthiopia: US$1.3 Million New Industry Traceability SystemKenya: Output To Rise 25% In 2015-16

15 | Cotton, Textiles & Leather GoodsRegional: ICE Launched New World Cotton ContractBenin: Benin Launches Cotton Marketing YearCameroon: Sodecoton Work To Introduce GM CottonCote d’Ivoire: Forecasts 2015-16 Output Of 484,000 TonnesEthiopia: 9th CmIA And COMPACI Stakeholder Conference

09 | CassavaCote d’Ivoire: Cassava Processing Plant In SemanMozambique: Brazil’s Odebrecht Mulls Cassava Processing PlantNigeria: New Processing Plant For Edo

06 | BananaCote d’Ivoire: Compagnie Fruitière Invests CFA 7-BillionSouth Africa: Strikes And The Threat Of The Panama DiseaseZimbabwe: Banana Exports To Tumble

CMA CGM Senegal Launches Reefer Season / Ivorian Agency Attends Africa Agri Forum [AFF]

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THE AFRICAN COMMODITY REPORTBrought to you by CMA CGM Africa Marketing

Rachel Bennett Dominic Rawle

29 | Palm OilZambia: Edible Oils Ban Lifted

30 | SugarAngola: Biocom Takes State Loan To Increase Production CapacityBurkina Faso: Burkina Faso Takes Measures To Protect Local Sugar IndustryCameroon: SOSUCAM Seeks Production Of 124,000 TonnesEthiopia: Ethiopia To Ship Sugar In 2016Malawi: Philippines Looking To InvestSouth Africa: Illovo Sugar To Boost OutputSudan: Sudan Increases Sugar ImportsTanzania: Bagamoyo Sugar Factory Construction To Start Soon

31 | TeaKenya: Tea Production Drops 14% / Tea Traders Decry Taxation / Weak Shilling Lifts Tea Companies’ H1 Earnings

32 | TimberRegional: ATIBT Forum - Competitiveness Of African Wood In Domestic & EU Markets / EU Auditors’ Critique Of FLEGTCentral/West Africa: Buying Set To Continue Through European Holidays / Widening Price Gap Hints At New Demand Trend / Price Conscious Middle East Buyers Yet To Regain Confidence / Okoume Millers Look For Alternative To Chinese Market / Demand In EU And Middle East Underpinning Price Stability / Production Of Sapele For Chinese Market Scaled Back / Opportunities In IndiaCameroon: North American Sapelli TradeGhana: Tropenbos Promotes Plantation Development / Air Dry Sawnwood Tops Exports / Ambitious Strategy For 500,000 Hectares Of Plantations / Report Calls For System To Assess Cost Of Environment DegradationNigeria: Weaker Import Demand

17 | Foodstuffs & BeveragesGambia: Rice Importation Ban Extended To September 2016Ghana: Chicken Imports To Hit US$198 Million In 2016Kenya: Tax Reduction Boosts Demand For SorghumMali: SCI International To Install A Mango Packaging Manufacturing UnitNigeria: NAFDAC’s Export Promotion Effort / Buhari Launches N20 Billion Loan For Rice Farmers & Thai Rice CitySenegal: Excelo Biscuits Prospecting Senegalese MarketSouth Africa: President Obama Ultimatum Over Chicken Row / Labour Strikes Hit Fruit IndustryZimbabwe: US$30 Million Pepsi Deal

37 | TobaccoMalawi: Contract System Blamed For Low PricesZambia: Tobacco Board Purchases 800 TonnesZimbabwe: Tobacco Yields Rebound

CMA CGM Senegal Launches Reefer Season On 11th November, Philippe Barreau, General Manager CMA CGM Senegal, gathered more than 100 clients in Dakar for a cocktail to launch the new reefer season. Among guests were major exporting reefer customers [fish, fruit & vegetables] as well as local institutions such as representatives from the Ministry of Maritime and the French Embassy.

With a strong commercial presence, CMA CGM offers expertise on both the reefer business and the African market. Our local teams identify customer needs and apply appropriate service solutions offering tailored solutions and advice on areas such as stuffing methods and transport. CMA CGM offers a group owned and operated dedicated multi-activity logistic platform. Split into 2-areas each platform provides:

Dakar port is served by our weekly EURAF 1 with connections via Tangier Med to all ports worldwide. This service calls at the DP World Terminal Dakar and is operated by six 3,500 TEU vessels. The EURAF1 service offers efficient transit times to Northern Europe for example Dakar to Dunkerque in just 9 days and to Tilbury in 10 days.

Dakar Off Dock Terminal [TCD 1 & 2] - Area: TC1 12,000m2 / TCD2 15,000m² - Organization of multimodal land transportation to end customer in Senegal and Mali - Bonded storage facilities - Reefer cargo containerized under bonded storage [64 plugs] – no disruption to power supply - Stuffing facilities for export cargo base commodities/ores - CMA CGM administrative building on site - Customs Office located in the port precinct - Bascule bridge for containers weighing

http://www.cma-cgm.com/products-services/line-services/flyer/EURAF1

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COMMODITY NEWSCORPORATE

Ivorian Agency Attends Africa Agri Forum [AFF]Our local agency office in Abidjan, Cote d’Ivoire, attended the 2015 Africa Agri Forum [AFF] held on 26-27th November at the CRRAE Centre. The 2-day agricultural event covered areas of technology and financing, and included innovation sessions on sustainable agriculture models, irrigation as well as roundtable sessions on government policies, PPPs [public-private partnerships] and insurance.

CMA CGM is a specialist in tailored transport solutions for all types of agricultural and soft commodities including reefer services. We can also handle the transportation of sizeable farm machinery and equipment from tractor units to spare parts. For more information contact your nearest local CMA CGM agent.

For further details please view http://www.i-conferences.org/africa-agri-forum/4

TradeLouis Dreyfus Commodities May Sell Minority StakeThe billionaire who controls Louis Dreyfus Commodities BV is considering selling a minority stake in the trading house to external investors as she weighs options for financing the buyout of remaining family shareholders. Margarita Louis-Dreyfus’s family trust, which owns 81% of the firm’s holding company, announced the firm is open to “a potential minority partnership with external investors.” The trust was “fully prepared to further increase its stake” in the holding company as other family shareholders sell down, it said.

The potential sale would add to an acceleration in mergers and acquisitions in the agriculture commodities trading industry, including Mitsubishi Corp.’s purchase of a 20% stake in Olam International Ltd. for about US$1 billion in August. Meanwhile Glencore Plc is trying to sell a minority stake in its grain-trading business.

[Bloomberg 18/11/15]

GhanaTema Port To Get US$10 Million Terminal For Agricultural ProductsA US$10 million terminal is to be constructed at Tema Harbour to facilitate the import and export of agricultural products. The project, to be funded by Super Maritime, a private local company, will be undertaken in partnership with the Ghana Ports and Harbours Authority [GPHA]. Work is expected to begin in January 2016 and completed within 8-months.

Tema Port has seen US$1.5 billion invested in it to enable the port to accommodate more cargo. The project, will have capacity for 3.5 million TEU, in line with the GPHA’s master plan for the Tema Port. The multi-purpose facility, he explained, would include a new 1.4-km quay for 4-container berths. It will also have a 16m draft and a 3.85-km breakwater within a dredged port access channel.

[Ghanaweb 18/11/15]

USDA Delegation Looking To Expand Trade In Agricultural Products A delegation from the United States Department of Agriculture [USDA] is in Ghana to explore opportunities to expand the export of food and agricultural products to the US market and vice versa. The delegation, led by the Agriculture Deputy Secretary, Ms Krysta Harden, included representatives from 26 US agribusinesses and commodity trade associations who met with potential producers of agricultural products. Delegates represented a variety of agriculture produce, including grains and feeds, peanuts, soybeans, meat and poultry products and agricultural machinery.

Top sub-Saharan Africa markets for US agriculture and related produce last year included Nigeria US$847 million; Angola US$298 million; South Africa US$259 million; Ghana US$129 million; Ethiopia US$83 million and Kenya US$69 million.

[Ghanaweb 18/11/15]

5

COMMODITY NEWSGENERAL

Cote d’IvoireCompagnie Fruitière Invests CFA 7-Billion Compagnie Fruitière is to launch an organic banana project in Côte d’Ivoire. It will cultivate 400 ha of plantations across the region and invest CFAF 7-billion which is partly funded by the European Union [EU]. The transaction strengthen its position on the Ivorian market, the largest producer of bananas in the continent, and reflects the confidence in the future of a sector under threat from the T4 strain of Panama disease.

[Ecofin 17/11/15]

South AfricaStrikes And The Threat Of The Panama DiseaseThe situation for South Africa’s banana sector is changing rapidly. Large growers in the north of the country are affected by strikes, but the consequences of this are still unclear. Additionally, some plantations are threatened by the Panama disease. In Mozambique, several companies have been affected by it and there are fears that the disease could spread to South Africa.

[FreshPlaza 20/11/15]

ZimbabweBanana Exports To TumbleZimbabwe’s banana market could face an oversupply after leading producers stopped exports to South Africa, the country’s biggest market, due to the depreciation of the rand. South Africa has become a risky export market for Zimbabwe, which is a high-cost producer. Zimbabwe also operates under a multi-currency regime, dominated by the United States dollar, which deprives the central bank of control over the exchange rate and money supply.Increasingly, local banana producers are finding the going tough in the export market, especially in South Africa and Zambia. This has forced leading banana producers to temporarily stop exports to South Africa.

This comes after some banana producers pleaded with government to engage South Africa to revoke its ban on Zimbabwean bananas it issued in 2012. The ban that lasted for 2-years implemented over the discovery, by the South African government, of a fruit-disease associated with local bananas.

[Gazette 12/11/15]

6

COMMODITY NEWSBANANA

Cote d’Ivoire1.3 Billion Francs CFA Dabakala Processing Plant Dabakala-Katiola is set for a 1.3 billion CFA francs cashew processing plant led by investor Sankara Abrahim. The project will cover 5-ha as part of the nation’s aim to transform its production of cashew nuts within 5-years. At present Cote d’Ivoire exports 90% of its harvest as raw nuts and is the #1 cashew exporter in the world.

[Ecofin 18/11/15]

GhanaGhana Targets 150,000 Tonnes Of Cashew By 2025

The Ministry of Food and Agriculture [MoFA] is hopeful efforts put in place by public and private sector institutions will raise output of cashew nuts from the current 50,000 tonnes to 150,000 tonnes in the next 10 years. The increased production is needed to feed local industries, majority of which have closed down due to a combination of factors that range from low output to lack of finance to meet rising costs. As well as supporting companies in the value-chain.

To this end the industry is working on increasing supply of cashew seedlings, improved and high-yielding varieties and financial support to players. Furthermore a 1-day workshop was organised by the Cashew Industry Association of Ghana with support from the Africa Cashew Alliance and the Business Sector Advocacy Challenge [BUSAC] Fund as a platform for stakeholders to validate recommendations into concrete conclusions.

[Graphic 07/11/15]

MozambiqueCashew Nut Production Approaches 100,000 TonsSales of cashew nuts in Mozambique in the 2015/2016 campaign could reach 100,000 tons, according to the National Institute of Cashew Promotion [Incaju], Its Director, Filomena, took part in the official launch of the sales year. He recalled the previous campaign sales totalled 80,000 tons and that the new goal was achievable. Mozambique has 14 cashew processing plants, mostly operating in Nampula province. Nampula has an estimated 14 million cashew trees and is the province with the highest cashew production.

[Macauhub/MZ 04/11/15]

Industry Increases Cashew Nut ProcessingMozambican cashew processing companies will process 41,500 tons of nuts by the end of the year, a 66% increase compared to the 25,000 tons processed in 2014 according to the Cashew Industry Association [Aicaju]. A new cashew processing factory will be inaugurated shortly in Nampula district and another is due to start operating in 2016 in the Liupo district. There are currently 14 cashew processing factories operating in Mozambique, mostly in Nampula province, the country’s largest producer, with over 14 million cashew trees. Aicaju also noted this year would also see the launch of processing cashew bark to extract oil, which is seen as an important step in the integrated development of the cashew industry in Mozambique.

The opening ceremony of the 2015/2016 cashew sales campaign took place in Muecate district, Nampula province this month. The goal for 2015/2016 is to sell 100,000 tons, against 80,000 ton the previous year.

[Macauhub/MZ 13/11/15]

7

COMMODITY NEWSCASHEW, GROUNDNUT & SHEA

Tanzania40% Drop In Cashew Harvest Due To Poor RainsAccording to the state-run Cashew Nut Board of Tanzania output could decline by 40% this year as poor rains in major growing areas hurt harvests. Tanzania will produce 120,000 MT of nuts this year compared with 200,000 tons achieved a year earlier. Tanzania is Africa’s largest cashew nut grower after Cote d’Ivoire, Nigeria and Guinea-Bissau, and the world’s eighth biggest producer, according to the United Nations’ Food and Agricultural Organization. Authorities want to establish more local processing from 40 small-scale factories to transform the country’s raw nuts.

[MedAfrica 17/11/15]

US$13.9 Million For 3-Processing FactoriesAbout Sh30 billion [[US$13.9 million] has been allocated for the construction of 3-cashew nut factories to boost processing capacity in Tanzania. The factories are to be built in Mtwara, Mkuranga and Tunduru. Currently 80% of cashew nuts are exported in raw form deny the opportunity to make revenue from processing. Each factory will have capacity to process 10,000 tonnes per annum and assure farmers with high returns before exporting. The Cashew Industry Development Trust Fund [CIDTF] will fund the construction.

[Citizen 16/11/15]

3rd International Cashew ConferenceThe Naliendele Agricultural Research Institute [NARI] of the Ministry of Agriculture Food Security and Cooperatives, in collaboration with the Cashewnut Board of Tanzania [CBT] and Cashewnut Industry Development Trust Fund [CIDTF] organised a 2-day International Cashew Conference [ICC] 16-17th November in Dar Es Salaam. The 3rd ICC brought together 140 participants from 22 countries to share knowledge and propose strategies to stimulate increased production and productivity in cashew. For more information please view http://icc-tz.org/

[ICC 17/11/15]

ZambiaCashew Infrastructure Development Project [CIDP]The Cashew Infrastructure Development Project [CIDP] aims at reviving the Zambian cashew subsector and is one of the Government priority projects. The development goal is to contribute to country’s economic growth and food security. The project will be implemented by the Ministry of Agriculture and Livestock [MAL], over a period of 5 years starting December 2015. It will benefit 60,000 farmers in Mongu, Limulunga, Senanga, Kalabo, Nalolo, Sikongo, Shangombo, Sioma, Lukulu, and Mitete Districts of the Western Province.

[AfDB 11/11/15]

8

Cote d’IvoireCassava Processing Plant In SemanSeman is to see a 100 million CFA francs cassava processing plant for the production of high quality flour. The plant’s construction will begin in January 2016. The local district will contribute 30 million CFA francs.

[Ecofin 16/11/15]

MozambiqueBrazil’s Odebrecht Mulls Cassava Processing Plant Brazil’s Odebrecht says it plans to invest US$20 million to build a cassava processing plant in Mozambique’s southern Province of Gaza in 2016. Cassava starch will be naturally-modified for cereal food products and more than 1,000 farmers will in involved in the cultivation of 5,000ha each. Odebrecht hopes to expand to the central province of Zambezia with plans to initiate similar projects in the districts of Mocuba and Lugela where initiatives such as poultry production line, comprising a feed mill and a slaughterhouse will be launched.

[APA 18/11/15]

NigeriaNew Processing Plant For Edo Roots Biochemical Products Limited plans to establish a US$120 million cassava farm and processing plant in Edo. US$80 million will be invested in a maltose syrup factory while US$40 million will advance primary agriculture. The project will take off in 2016 after due diligence by the company.

[News 24 12/11/15]9

COMMODITY NEWSCASSAVA

RegionalBarry Callebaut Cuts ForecastsBarry Callebaut AG, the world’s biggest maker of bulk chocolate, lowered its mid-term production forecast and said this financial year will be challenging due to high cocoa prices. Volume will rise 4-6% annually on average over the 3-years through August 2018. The company had been forecasting annual growth of 6-8% in past years. Stock fell as much as 6.3% whilst cocoa futures gained 17% in the past year. El Nino may cut supply further and there are headwinds from the strength of the franc, which reduces the value of its sales from abroad.

[Bloomberg 04/11/15]

Mondelz To Create Enterprising Farmers With Barry Callebaut Mondelz International has scaled up its cocoa sustainability program through a partnership with its major supplier Barry Callebaut and has set a long-term goal of professionalizing the cocoa sector. Earlier this month, Mondelz teamed with Barry Callebaut and NGO Solidaridad to eventually double numbers of farmers reached in Côte D’Ivoire through the Cadbury and Milka owner’s Cocoa Life sustainability program. Mondelz already works with Ecom, Olam and Cargill under Cocoa Life, but has now added its largest industrial chocolate partner Barry Callebaut. At the end of 2014, Cocoa Life reached 40,000 farmers, but the latest extension with Barry Callebaut and Solidaridad will add another 26,000 farmers alone by 2018.

[Fruitnet 03/11/15]

Crop Outlook Improves After ‘Very Good’ RainsThe return of rainfall to West Africa is helping reduce crop stress, with the outlook for production now appearing more manageable. Ivory Coast and Ghana, the world’s biggest growers, received “very good” rainfall last month. Dry weather in Q3 was hurting crops in the region, with precipitation in Ghana 50% below normal in the 90 days to Nov. 2, the driest since 1999. Farmers in Ivory Coast will gather 1.1 million to 1.15 million MT during 2015-16’s main crop, while the smaller of 2-annual harvests will amount to 400,000 to 450,000 MT. Final production will probably be at the upper end of these figures due to the improvement in weather conditions.

Cocoa futures traded in New York rose 12% this year as an El Nino weather patterned threatened crops from Ecuador to Indonesia and output in Ghana fell short of a government forecast last season. Dry weather had also been threatening crops in West Africa, raising concerns global supplies will fall short of demand. The beans are this year’s best performer in the Standard & Poor’s GSCI index of 24 commodities.

The return of rains is adding to large deliveries of beans to ports in the world’s leading producers to ease supply concerns. Arrivals in Ivory Coast are reportedly 28% higher than a year earlier. In Ghana, purchases through Oct. 22 were the highest in 5-years.

[Bloomberg 06/11/15]

10

COMMODITY NEWSCOCOA

Cote d’IvoireCote d’Ivoire To Supply 50% Global Cocoa By 2020President Ouattara wants Cote d’Ivoire to produce half of the world’s cocoa by 2020 while continuing to improve the quality in a statement made following his landslide re-election on October 25th. Cote d’Ivoire is the world’s largest producer of cocoa and had a record crop of about 1.8 million tons in the 2014-2015 season. Ouattara wants production to rise by 45%.

[Bloomberg 28/10/15]

Arrivals At 441,000 Tonnes Cocoa arrivals at ports in top grower Ivory Coast reached around 441,000 MT by Nov. 22 from the start of the season on Oct. 1, up from 408,000 MT in the same period of the previous season. Exporters estimated around 54,000 MT of beans were delivered to Abidjan and San Pedro between Nov. 16 and 22, down from 66,000 MT during the same period last year.

[Reuters 23/11/15]

GhanaImproved Ghana Production Leads To World Surplus Global cocoa market is likely to record a marginal surplus in the 2015/2016 crop season following improved production in Ghana. The government notes production this season would be enhanced by an improved supply of inputs to farmers and expectations for favourable weather. The market is projected to register a small surplus in the 2015/16 season. It attributed the projected surplus to weak growth in global demand for cocoa next year as grinding margins remain poor.

Prices rose in Q2 2015 as a result of weather-related supply shortfalls in Ghana but demand remains strong. Prices are expected to peak in 2015 before lowering at the beginning of 2016 to the end of the forecast period in 2019. This development is likely to further worsen Ghana’s revenue situation as the value of exports for January to September 2015 projected at US$7,750.8 million shrunk by US$2,312.1 million, a 23% drop. The phenomenon has largely been blamed on falling prices of oil, gold and cocoa.

Earnings from cocoa beans and products exports amounted to US$1,921.7 million in September, 2015, almost equal to US$1,921.7 in the same period in 2014. The earnings from cocoa beans were US$1,340.4 million, after the price rose by 22.2% to US$2,990.9 per ton while exports declined by 21% to 448,148.4 tonnes.

[Africa Report 17/11/15]

11

COMMODITY NEWSCOCOA

Cocobod In Talks For New Medium-Term PXFThe Ghana Cocoa Board [Cocobod] has issued a request for proposals [RFP] for a new medium-term trade finance loan. Reportedly the facility will be for US$300 million, and have a 3-year tenor with a 1-year grace period and 2-years of repayment. Denominated in local currency the Ghanaian cedi; the loan will be structured as a pre-export financing [PXF]: secured against the company’s cocoa receivables backed by fixed-price offtake contracts. Responses from the RFP are due back by 19 November. The PXF will refinance a US$200 million 2012 facility maturing in March this year, led by Bank of Tokyo-Mitsubishi UFJ, Barclays Bank, Standard Bank and Sumitomo Mitsui Banking Corporation. This will be the facility’s second refinancing, with the company’s first medium-term deal dating back to 2007.

[Trade & Export Finance 30/10/15]

Ghana Purchases Jump In Early Weeks Of 2015-16 SeasonData from industry regulator Cocobod showed cocoa purchases stood at 192,128 MT on Oct. 22 at the end of the third week of the 2015/16 season, up 118% on the same period last season. Purchases fluctuate throughout the main crop season, which runs from October to around July, and a strong start does not necessarily point to a strong season.

Cocobod forecast a rebound in production to 850,000-900,000 MT in the season that started on Oct. 2 after disappointing output in 2014/15. Some analysts and buyers said Cocobod’s forecast was optimistic and they expected the crop to be hampered in part by the El Nino weather phenomenon. Last season’s output stood at 735,000 tonnes on Sept. 24 at the end of a season in which Cocobod’s initial forecast of more than 1 million tonnes production was thwarted by adverse weather and the uneven distribution of pesticides and fertilisers.

[Reuters 04/11/15]

Barry Callebaut Buys Nyonkopa Cocoa Group Chocolate and cocoa group Barry Callebaut has acquired Nyonkopa Cocoa Buying Company Ltd in Ghana. Nyonkopa is a top 10-private licensed buying company and authorized by the Ghana Cocoa Board [COCOBOD] to buy cocoa from farmers and to sell it to the Cocoa Marketing Company of the COCOBOD.

[Yahoo 09/11/15]

Nyonkopa Cocoa - Founded in 2012 & operational in the 2013/14 crop season - Strong buying network with 100 employees and 600 purchasing clerks - Buying from over 10,000 farmers spread across 34 districts

Barry Callebaut Launches Sustainable Horizons CocoaBarry Callebaut has launched the Horizons range of sustainable cocoa and chocolate products, further promoting the company’s efforts to drive change to improve the livelihood of cocoa farmers. With the creation of the Cocoa Horizons Foundation, it focuses on farm productivity and community development to address on the ground challenges. It offers transparency on the use of funds and the breakdown of premiums. Horizons cocoa is the successor to Barry Callebaut’s previous Quality Partner Programme.

[New Food 16/11/15]

12

NigeriaBuyers Chase New Harvest For Blending With Old Stock

Cocoa farm-gate prices in Nigeria have jumped since the start of the main crop season as buyers chase newly harvested beans to blend with old stock of high-mold cocoa to make them fit for export. The main crop harvest, which began early in October, is still trickling in after damaging weather in August and September, leading to a rush for what is available.

Prices have risen 6% to N665,000/MT [US$3,374] from N630,000 in the southwest, which accounts for about 70% of the country’s output since the start of October. In the southeastern cocoa belt around the town of Ikom, prices have risen more than 3% to N630,000/MT. The new beans are needed to blend existing holdings of high-mold cocoa to make them fit for export.

Nigeria is the world’s largest cocoa producer after Ivory Coast, Ghana and Indonesia with a government-estimated output of 350,000 MT in the 2013-14 season. The International Cocoa Organization estimates Nigeria’s output at 240,000 MT for the same period. Mold in beans for export are acceptable when less than 5%, according to the ICCO. Farm-gate prices are expected to fall as more harvest reaches the market in the coming weeks. Weekly cocoa deliveries in the town are now about 500 MT per week, compared with about 2,500 MT at the peak of the main crop.

[Bloomberg 04/11/15]

Daily Spot Price [ICCO]These are the average of the quotations of the nearest three 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 (£ sterling/tonne)

New York futures (US$/tonne)

2 Nov 15 2394.21 3346.62 2205.67 3291.00

3 Nov 15 2399.29 3347.39 2211.33 3289.00

4 Nov 15 2358.46 3286.03 2176.33 3228.33

5 Nov 15 2387.47 3318.56 2212.67 3267.67

6 Nov 15 2370.91 3289.36 2221.67 3231.00

9 Nov 15 2357.68 3257.49 2195.33 3193.33

10 Nov 15 2408.70 3323.31 2232.33 3272.00

11 Nov 15 2435.02 3359.98 2243.67 3305.67

12 Nov 15 2444.12 3373.22 2258.67 3310.00

13 Nov 15 2468.05 3415.97 2289.67 3348.33

16 Nov 15 2476.12 3420.17 2287.00 3364.67

17 Nov 15 2477.49 3413.84 2281.00 3356.33

18 Nov 15 2462.52 3393.38 2265.67 3340.00

19 Nov 15 2484.08 3430.19 2273.00 3376.67

20 Nov 15 2474.67 3414.63 2280.33 3361.67

23 Nov 15 2438.86 3354.80 2247.00 3310.00

24 Nov 15 2458.63 3384.84 2278.33 3335.67

25 Nov 15 2442.07 3354.34 2252.67 3304.67

13

COMMODITY NEWSCOCOA

AngolaCoffee Production Expands In Kwanza Sul ProvinceCoffee production in Angola’s Kwanza Sul province has been increasing in recent years due to the efforts of producers who focusing on crop revival. The National Coffee Institute of Angola [INCA] noted this year forecasts point to a harvest of over 3,000 tons of commercial coffee from a crop area of 18,000 ha. Within a decade and a half INCA intends to produce 80,000 tons per year over 120,000 ha. One of the drivers of the recovery process is the Gravidade farm, which is implementing a coffee seedlings multiplication programme, initially providing 160,000 seedlings to rural families.

[Macauhub 11/11/15]

Ethiopia US$1.3 Million New Industry Traceability System Industry partners have invested US$1.3 million in a new food traceability system in Ethiopia. The initiative is expected to increase the nation’s coffee exports by allowing buyers to track the commodity’s ‘footprint’ to better ensure its quality and sustainability.

Meanwhile the Ethiopian Commodity Exchange [ECX] has launched the new US$4.5 million system, which covers over 5-million smallholder farmers who produce multiple commodities traded by ECX. Nestlé is backing the system, which is being piloted with coffee, through the Sustainable Coffee Program.

[Fin Channel 13/11/15]

KenyaOutput To Rise 25% In 2015-16Kenya expects its coffee harvest to jump by 25% to 50,000 MT in the 2015/16 crop year which runs until next September buoyed by initiatives to boost production and to crop cycles including increasing acreage in new growing areas in the west of the country. Earnings from exports are expected to increase to US$196 million based on current exchange rates, up from US$182.53 million the previous year.

Kenya accounts for just 1% of the world’s annual crop, but roasters seek out its quality Arabica beans to blend them with coffee from other regions. Coffee is one of Kenya’s main foreign exchange earners. Coffee output normally follows a cyclic pattern, with a year of poor harvest followed by a high output year. The crop is now in a recovery period.

[Reuters 17/11/15]

14

COMMODITY NEWSCOFFEE

RegionalICE Launched New World Cotton Contract A new global cotton futures contract began trading on the ICE Futures US exchange on November 2nd. The new contract, which trades under the symbol WCT, runs alongside the US “Cotton No. 2” contract – a physically settled contract for US origin cotton that has long provided the only hedging option for cotton traders.

The new WCT contract allows delivery of multiple points of origins in multiple locations reflecting the global nature of today’s cotton market and will enhance the ability of cotton market participants to hedge in a global market. In addition to US delivery points, this new world contract also allows delivery in Australia, Malaysia and Taiwan for cotton from the US, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali. The first physical delivery month for the contract will be May 2016 to allow time for logistical operations to get set up at various delivery points.

While cotton has had a long-standing spot at the center of the global textiles industry, the last decade has seen a pronounced shift in the commodity’s production and exportation. In 2003/2004, the US accounted for 19% of the world’s cotton production and 41% of global cotton exports. Just 10-years later in 2013/2014, the US accounted for only 11% of world cotton production and 27% of the product’s exports - a 42% and 34% drop respectively.

[Fibre2Fashion 31/10/15]15

COMMODITY NEWSCOTTON

BeninBenin Launches Cotton Marketing Year In Benin the cotton marketing year for the 2015-2016 season has been launched with an increase of 10 CFA francs of the purchase price of a kilogram of white gold which now stands at 260 CFA francs. The harvest is estimated at 324,000 tonnes down 69,000 tonnes from last year as less acreage was planted this season. Cotton is Benin’s main export crop accounting for 40% of its foreign exchange.

[Ecofin 17/11/15]

CameroonSodecoton Work To Introduce GM Cotton The Société de Développement du Coton [Sodecoton], the Cotton Development Company is to start research to introduce Genetically Modified [GM] cotton in Cameroon. Sodecoton, currently in the second phase of research over the next 3-years, wants to experiment with a strain that is more robust against herbicides and more resistant to diseases GM enabling significantly higher yields. The Government of Cameroon, via legislation governing the area, has put restrictions in place to prevent breaches. Sodecoton has set the target of producing 240,000 tons of cotton in 2014, as against 210,000 tons produced in 2013.

[Fibre2Fashion 08/11/15]

Cote d’IvoireForecasts 2015-16 Output Of 484,000 TonnesCote d’Ivoire is forecasting raw cotton production of 484,000 tonnes in the 2015/16 season due to open on Nov. 15, up from 450,000 tonnes during the previous season. For this season 440,000 ha of cotton has been planted. The state’s farmer price would remain unchanged from last season at 250 CFA francs/kg [US$0.41]. The government has set a target of 600,000 tonnes before 2020. Output has been rising steadily over the past 5-years.

[Reuters 04/11/15]

Ethiopia9th CmIA And COMPACI Stakeholder Conference In Ethiopia, cotton is both farmed and manufactured into textiles for international trade. Rather than merely exporting the country invests in the development of the entire textile value chain. This development is pursued by the international textile industry with great interest and was also at the top of the agenda at this year’s Cotton made in Africa [CmiA] and the COMPACI Stakeholder Conference in Addis Ababa, Ethiopia. Tadesse Haile, State Minister for Industry, opened the meeting. In his speech, he made reference to the impressive collaboration of Cotton made in Africa and COMPACI with thousands of African smallholder farmers who are creating an indispensable foundation for the development and growing of the industry as well as the significance of developing textile value chains. The conference included visits to AYKA ADDIS Textile & Investment Group PLC, a vertically integrated textile production plant, and Kanoria Africa Textiles PLC, a manufacturer of Jeans fabrics. Both companies are dedicated to protecting the environment and maintaining social standards.

[CmiA 10/11/15]

16

GambiaRice Importation Ban Extended To September 2016The Minister of Trade has said the banning of rice importation, which was to take effect by the end of December 2015, has been extended to September 2016. Around US$50 million is spent annually on rice importation from Thailand, India and Brazil, for about 175,500 MT of rice, while local production stands at 24,895 MT.

[Point 19/11/15]

GhanaChicken Imports To Hit US$198 Million In 2016Demand for imported chicken is expected to rise exponentially to over US$198 million by the close of 2016 fueled by the low cost of imported poultry relative to local chicken prices. The situation has created difficulties for local producers as the industry collapses amidst a recent bird flu scare causing a fall in demand. To prevent a total collapse, Ghana and the United States government have agreed to help farmers to cut production costs and has invested US$56 million in poultry feed.

[Business Day 23/11/15]

KenyaTax Reduction Boosts Demand For SorghumDemand for sorghum has tripled this year after the government cut excise duty. In 2013 the government introduced a 50% excise tax which saw demand drop sharply. In May this year, President Kenyatta reversed the charge through the Alcoholic Drinks Control (Amendment) Bill 2015, favouring beer brewed using locally sourced raw materials. The law offers a 90% tax cut for drinks manufactured using at least 75% sorghum, millet or cassava.

East African Breweries Ltd (EABL) Group is targeting 22,000 tonnes of sorghum this year. The value of the crop has also grown from Sh12 million in 2009 to Sh710 million this year. In 2009, EABL and development partners launched a project to support sorghum farming in the country, which has seen US$3.6 million invested in the past 4-years.

[Daily Nation 20/11/15]

17

COMMODITY NEWSFOODSTUFFS & BEVERAGES

MaliSCI International To Install A Mango Packaging Manufacturing Unit In Mali, the International SCI Group will strengthen its involvement in the mango sector through the establishment of a production plant packaging. The facility will cover 11,000m2 to be based in Kamale. Its construction will be completed next year requiring more than 5-billion CFA francs investment funded by 4-banks that will provide 4-billion CFA francs. For SCI International the factory gives it independence from importing cardboard packaging. The group has seen its mango exports rise from 20 tonnes to 1,600 tonnes in the space of 10-years and now wants to cut costs.

[Ecofin 11/11/15]

NigeriaNAFDAC’s Export Promotion EffortThe European Union [EU] under the auspices of the European Food Safety Authority recently placed a 1-year blanket-ban on the exportation of key value added agricultural products from July 2015 to July 2016. This included beans, sesame seeds, melon seeds, dried fish, meat, peanut chips and palm oil exported from Nigeria due to contaminants such as mycotoxins, pesticide residues as well as abnormal level of dichlorvos pesticides.

Consequently, NAFDAC has commenced intense efforts towards correcting this and has adopted immediate implementation of cutting-edge technologies involving deployment of mobile testing laboratories across 36 states including farms, exportable agricultural processing centers, produce market centers, sea and air ports as well as land border stations.

Training will also be given to farmers, produce marketers and other stakeholders in the export business to comply with global standards on issues such as food storage, product packaging, labelling and the reduction of chemical content and pesticide residue. packaging practices and other relevant quality control measures. To this end NAFDAC is seeking N2billion [US$10 million] from the Government.

[Tide 09/11/15]

Buhari Launches N20 Billion Loan For Rice Farmers & Thai Rice CityPresident Muhammadu Buhari noted Nigeria can no longer sustain the importation of rice and other food items that can be locally produced. Nigeria aims to be self-sufficient within 3-years. To this end Buhari launched a N20-billion ‘Anchor Borrowers’ Programme’ [ABP] which the Central Bank of Nigeria [CBN] has set aside for rice farmers across the country. The programme will create an Ecosystem to link small hold farmers to local processors and has set aside N20 billion from the N220 billion Micro, Small and Medium Enterprises Development Fund [MSMEDF].

Nigeria also hopes to reach a deal with China’s state Import and Export Bank within weeks to set up 40 rice mills as well as boost production of tomatoes, soy beans, nuts and plant 2-million cocoa trees to reduce an annual food import bill of US$20 billion

Furthermore the Cross River State Government and the Thai-Africa Corporation signed a Memorandum of Understanding [MoU] for the development of the first Rice City in Africa to incorporate a nursery, plantation, mill and packaging & distribution center.

[Vanguard 14/11/15 & Leadership 10/11/15]

18

SenegalExcelo Biscuits Prospecting Senegalese MarketExcelo which is currently the #2 market leader in the biscuit sector in Morocco [behind Mondelez] is currently prospecting in the Senegalese market via its subsidiary Anwar Invest Group.

[Ecofin 14/11/15]

South AfricaPresident Obama Ultimatum Over Chicken Row

US President Barack Obama has given South Africa 60 days to remove barriers to US farm produce or face sanctions in a long-running row over chicken exports. South Africa banned US poultry imports last December after an outbreak of bird flu. The latest escalation would threaten South African exports to the US of oranges, nuts and wine. South Africa exports $250m of farm products to the US each year.

In a letter to Congress, Mr Obama said he was taking the step as South Africa continued to impose barriers to US trade. In contrast, Africa’s second-largest economy has been able to export its meat to the United States duty-free. The Unites States also says South Africa has used unwarranted sanitary restrictions to keep out US pork and beef. South Africa says it is taking the warning seriously and is working to find a solution. Trade Minister Rob Davies noted the country is pretty close to resolving the outstanding sanitary matters. South Africa could still avoid the suspension, which could cost it up to $7m in lost trade, if it meets benchmarks to eliminate barriers to US poultry, pork, and beef.

Eliminating barriers to US trade and investment is one of the criteria for membership of the African Growth and Opportunity Act [AGOA], which was renewed earlier this year and provides duty-free access to goods from sub-Saharan African countries, ranging from crude oil to clothing.

[Reuters/Bloomberg/BBC 06/11/15]

Labour Strikes Hit Fruit IndustryMore than 1,500 workers, all members of FAWU employed by the Du Toit Agri Pty Ltd Group, the leading packing and exporter of fruit and vegetables, in Ceres, Prince Alfred Hamlet and Humansdorp in the Eastern Cape went on a strike this month over wage increases and better working conditions. Previously a strike involving 2,000 banana workers at organic producer Umbhaba Banana Estates Farms, took place. During September and October there was also a strike at Ceres Fruit Growers which has now been resolved.

[Fresh Plaza 11/15/14]

ZimbabweUS$30 Million Pepsi DealThe Zimbabwe Government and an Indian firm which makes Pepsi products held a ground-breaking ceremony this month for a US$30 million bottling plant in Harare. The Joint Venture [JV] has resulted in the formation of Varun Beverages [Zimbabwe] Pvt Ltd, which is spearheading the establishment of the state-of-the-art plant which will manufacture Pepsi, Mirinda, 7UP, Mountain Dew and Aquaclear water.

[Herald 14/11/15]

19

COMMODITY NEWSFOODSTUFFS & BEVERAGES

ZambiaEdible Oils Ban LiftedThe Government has lifted the ban on the importation of edible oils to mitigate the rising price of cooking oil on the domestic market. Importation of edible oils was suspended this year with a view to promoting the local industry, but some oil processors took advantage of the ban and increased prices.

[Times Of Zambia 11/11/15].20

COMMODITY NEWSPALM OIL

AngolaBiocom Takes State Loan To Increase Production CapacityAngolan bioenergy company, Companhia de Bioenergia de Angola [Biocom] will sign a contract with a syndicate of Angolan banks for a loan of US$210 million that has a State guarantee. The funds will increase production capacity and the sale of sugar, ethanol and electricity from biomass. The company’s shareholders are Brazilian group Odebrecht [40%], Angolan group Cochan, founded by entrepreneur Leopoldino Fragoso do Nascimento, [40%] and Angolan state oil company Sonangol [20%]. Biocom is in the Capanda Agro.Industrial Hub, in Cascuso district, in an area of 42,500 ha. Biocom’s sugar production is intended for the domestic market and power production will be sold to Angolan electricity company Empresa Nacional de Electricidade and anhydrous ethanol will be provided to Sonangol.

[Macauhub/AO 10/11/15]

Burkina FasoBurkina Faso Takes Measures To Protect Local Sugar IndustryThe Burkina Faso government has taken measures aimed at protecting the local sugar industry which has been affected by massive imports that has resulted in the loss of between 8-15 billion CFA Francs [US$13-25 million]. Some of the measures include cancellation of some Special Import Licences as well as reduction of prices of this mass consumption product.

Sugar production in Burkina Faso is carried out by SN/SOSUCO sugar factory in the country’s western region. The factory produces 30,000T of sugar every year out of the national consumption of 120,000T annually. The company has witnessed a reduction in sales for the last 10-years. The government has equally reinforced border control measures to monitor sugar importation, besides setting up a permanent committee to ensure respect for the protocol agreement signed between SN/SOSUCO sugar factory and sugar importers. A public hotline to report fraudulent importation of sugar has also been established.

[Xinhua 02/11/15]

CameroonSOSUCAM Seeks Production Of 124,000 TonnesSugar Corporation of Cameroon [SOSUCAM], a subsidiary of the French group Vilgrain and leader of the Cameroonian sugar market expects a production of 124,000 MT during the 2015-2016 campaign. The season started on October 26 and will end in June 2016. The production is down from the 150,000 MT forecast last year. During the opening of the 2013-2014 season, Sosucam announced that it would invest 110 billion CFA aiming to reach a production level of 170,000 MT from 2017.

[Ecofin 18/11/5]

21

COMMODITY NEWSSUGAR

EthiopiaEthiopia To Ship Sugar In 2016Ethiopia may begin exporting surplus raw sugar in 2016 after finishing delayed Indian and Chinese-backed projects. Unrefined sugar production in the fiscal year that ends July 7 should be more than 900,000 MT, primarily from the expanded Fincha, Wonji and Metahara factories and the almost complete Tendaho and Kessem operations, which are supported by state banks in the Asian nations. Tendaho and expansions at Fincha and Wonji were funded with a US$600-million loan from the Export-Import Bank of India agreed in 2007

The military-run Metals and Engineering Corp. may finish a factory at Kuraz in southern Ethiopia and 2-plants in Beles valley in Amhara region this year, though only trial cultivation will occur. The China Development Bank and Export-Import Bank of China have committed more than US$1 billion for Chinese contractors to build 2-other processors at Kuraz, the Welkait project in Tigray region, and Kessem in the arid Afar region.

Ethiopia wants to add 10 new plants to become one of the world’s 10 biggest sugar exporters by 2023. It failed to become self-sufficient as it forecast in 2013 and missed a target to export US$661 million of the unrefined sweetener last year, according to a 5-year growth plan that ended in July. The corporation received 64 billion Ethiopian birr [$3 billion] for the industry since 2010 and needs another 172 billion birr to finish all projects by mid-2020. The Finance Ministry said some of the $1 billion raised from a debut Eurobond in December will be allocated to sugar development.

Last year, the government, which is currently the only sugar producer, imported about 200,000 tons of the sweetener after financing delays slowed projects. Domestic demand in the 12 months to July 7 may be as much as 650,000 tons. Ethiopia won’t be able to meet the standards of refined sugar produced in developed markets, so will initially export the raw variety.

[Bloomberg 13/11/15]22

MalawiPhilippines Looking To InvestThe Government of Philippines is to bring investors to Malawi to explore sugar and tobacco industries, among other areas. New Philippine envoy to Malawi, Ambassador Bayani Mangibin will interact with the Malawi Confederation of Chambers of Commerce.

[Maravi Post 22/11/15]

South AfricaIllovo Sugar To Boost Output Illovo Sugar, part-owned by Associated British Foods, will lift production by as much as 300 000 MT should South Africa’s worst drought since 1992 end. Parts of the country’s KwaZulu-Natal province, where Illovo grows sugar, has finally experienced heavy rains.

[Moneyweb 03/11/15]

SudanSudan Increases Sugar ImportsThe risk of pirate attacks off the Horn of Africa and booming domestic demand have helped to turn Sudan into one of the world’s biggest white sugar importers this year estimated at around 1.5 million tonnes annually, according to the International Sugar Organization [ISO]. Sudan’s imports had increased by at least 200,000 tonnes this year, above an annual average of around 950,000 tonnes. Part of the reason is that Port Sudan on the Red Sea has attractions for shippers seeking to avoid pirates off the Horn of Africa.

[Reuters 05/11/15]

TanzaniaBagamoyo Sugar Factory Construction To Start SoonBagamoyo EcoEnergy is set to start construction of its sugar factory in Q3 2016 after years of delay due to outstanding issues including land disputes that had to be resolved with the government. Once the project is fully operational around 2022 it will produce about 150 000 tonnes of sugar per year for the domestic market which represents approximately 50% of current imports.

[Daily News 11/11/15]

23

COMMODITY NEWSSUGAR

KenyaTea Production Drops 14% Kenya’s tea output dropped 14% in 9-months to September due to drought that hit the country at the start of the year. Output in the period fell to 271.4 million kg from 315.7 million kg in the same period last year. Kenya’s exports also dropped to 328 million kg in the period to September, from 376.8 million kg during the same period last year. The differences in export and production figures usually arise from unsold tea held over from the previous year. Kenya experienced drought conditions early this year which affected the output of tea while processing factories received fewer deliveries. Tea production is expected to improve over Q4 of the year due to more rain in most key growing areas.

[Reuters 09/11/15]

Tea Traders Decry TaxationKenyan tea risks losing its global market share due to high taxes which are making it uncompetitive, tea traders have warned. The East African Tea Trade Association said the sector has been overburdened by taxes and high production costs which if unchecked, will significantly hurt export earnings. The association has asked the government to scrap taxes on the green leaf, Kenya’s top agricultural export earner, arguing they could price the country out of business.

The sector is paying more than 35 different taxes and levies, EATT claimed, making the commodity the most expensive at the Mombasa weekly auction compared to teas from Uganda, Rwanda, Tanzania, DR Congo and Malawi. EATT noted the most punitive levy is the ad valorem tax charged at a percentage of the value of tea exported which was introduced in 2012. Traders want the levy revised downwards. Traders are also calling for a waiver of the standard 16% Value Added Tax on locally consumed tea, to encourage its uptake from a dismal 5% of production.

Kenya exports about 95% of its tea, shipped largely in raw form. It is estimated the full-year production may stand at 350 million kilogrammes and is set to rise to 390 million kilogrammes in 2016 and 406 million in 2017. Consumption of tea in the world is projected grow by 5.2%, according to a forecast by the Global Economics. Global production fell by 22% y-o-y in H1 2015.

[Star 02/11/15]

Weak Shilling Lifts Tea Companies’ H1 EarningsKenya’s tea companies have doubled their profits over H1 of the current financial year buoyed by weak shilling against the US dollar. According to financial results released by tea companies, Williamson and Kapchorua, the country’s tea industry has been one of the biggest beneficiaries of a 13% depreciation of the shilling against the greenback this year.

Williamson Tea posted a Sh543.8 million in profit before tax, up from Sh240.4 million reported in a similar period last year. Profit from the company’s operations grew by 93%, up from Sh107 million recorded last year to Sh207 million posted this year. Kapchorua Tea, a sister company of Williamson, also reported strong earnings for the 6-months ending September 30th. The company saw pre-tax earnings jump by 110% to settle at Sh143.4 million, up from 68.2 million recorded last year. The 2-companies, however, issued mixed future earnings projection even in the face of anticipated El Nino rains in some of the tea growing areas of the country.

[Star 18/11/15]

24

COMMODITY NEWSTEA

RegionalATIBT Forum - Competitiveness Of African Wood In Domestic & EU Markets Unlike the ATIBT Forum in 2014 which was wide ranging and covered tropical timber trade trends globally, this year’s meeting focused more on linkages between African producers and European buyers. Around 150 participants attended the meeting in Milan on 14-15th October drawn mainly from African governments and trade associations, European-owned tropical timber operators in Africa, and European importing companies, trade associations and other policy makers.

Consideration was given to the emerging role of Africa’s domestic tropical timber market, and how this will impact on future development of the industry. Discussion also focused on the role and impact of trade policy instruments such as the EU Timber Regulation [EUTR], Voluntary Partnership Agreements [VPAs], and private sector forest certification.

An informative session on recent developments in Africa’s timber markets was introduced by SIAG, the forestry operators association in Gabon which highlighted that while the level of commercial timber consumption in Africa is low compared to other parts of the world, this is likely to change in the future. He noted that at current rates of growth, Africa will be home to more than one quarter of the world’s population before 2050. This combined with rising living standards is already driving a rapid increase in regional demand for building materials and furniture products.

[ITTO 16-31/10/15]25

COMMODITY NEWSTIMBER

EU Auditors’ Critique Of FLEGTAccording to an assessment by the European Court of Auditors [the Court] published in October, the EU FLEGT action plan to tackle the problem of illegal logging is not sufficiently well managed, designed and targeted. The special report “EU support to timber-producing countries under FLEGT” criticises both the implementation of the EU Timber Regulation [EUTR] and the FLEGT Voluntary Partnership Agreement [VPA] process.

While the Court acknowledges the European Commission [EC] “conceived the FLEGT action plan in an innovative way and identified possible measures to be taken” by addressing both supply and demand side issues of illegal logging and related trade, it also identifies shortcomings in implementation. According to the Court, the EC “did not devise an appropriate work plan with clear objectives, milestones and a dedicated budget”.

The Court finds it particularly problematic that, although it has been 12 years since the action plan was presented and despite FLEGT-related financial support to timber producing countries of around €300 million between 2003and 2013, there is still no FLEGT licensing system in operation – and several target dates for the introduction have not been met. As a result, the court highlights a “danger of ‘FLEGT fatigue’ setting in, as countries become frustrated with the lack of progress and are able to find other less stringent markets for their products”.

Following the adoption of the Action Plan, the EC and member states drew up a list of priority countries to target or participation in the FLEGT licensing scheme. However, it was also agreed that the EU “should remain open to trade negotiations with all countries that expressed an interest”. As a result, practically all interested countries – currently 26 – have become involved in the process to some extent and, according to the Court, “the limited financial and technical support has been spread over a large number of countries, some of which were not the key ones for tackling illegal logging or were most unlikely to develop the level of governance necessary to arrive at a licensing system in the short to medium term. This diluted the support”.

In this context, the Court particularly criticised high levels of funding for Liberia and the Central African Republic [CAR] on the grounds that they are minor timber suppliers to the EU market and are not expected to develop a functioning FLEGT-licensing system in the foreseeable future. This is contrasted with Ivory Coast, which delivers timber worth about €166 million per year to the EU [roughly seven times as much as Liberia and CAR combined] which has not so far received any financial assistance in connection with VPA. Moreover, the Court observes that the EC had early identified important producing, processing and trading countries like China, Russia, India, South Korea and Japan, as crucial for the implementation of FLEGT objectives. However, these countries are currently not pursuing a VPA and, according to the Court, bilateral policy dialogue with them has produced limited results.

The Court also found that “projects aimed at strengthening the capacity of public authorities were not effective” and the main projects examined were problematic. In Cameroon and Indonesia, for example, the financially most significant projects did not bring the desired results – which were to establish a timber tracking system and to improve forest law enforcement and governance, respectively. The main problems identified affecting the achievement of project objectives were “insufficient assessment of project risks and constraints, improper design, weak project management and monitoring, and coordination problems between project partners”.

To conclude the EC recommends various actions to strengthen implementation and better target resources. The Court encourages the EC to draw up a work plan for all components of the FLEGT action plan for the period 2016-2020. The plan should set out “clear and specific objectives, priorities, deadlines and a budget for EU support in timber-producing countries”. Moreover, the EC should urgently insist on the implementation of the EUTR in all Member States. And it should also consider making more use of reputable private certification schemes.

[ITTO 1-15/11/15]For more information on FLEGT please view http://www.euflegt.efi.int/news

26

Central/West AfricaBuying Set To Continue Through European HolidaysDemand from Europe remains stable which is allowing exporters to maintain price levels. With the onset of winter in Europe building projects wind down and this, coupled with the traditionally slow market over the Christmas and New Year holiday period, usually heralds a weaker market and a downward pressure on prices. Analysts suggest however, that this year, as European importers are carrying low stocks than in the past, it is possible they will continue buying to maintain their share of the market. In many respects short-term buying favours Central and West African producers as their delivery times tend to be shorter than for their main competitors.

[ITTO 1-15/11/15]

Widening Price Gap Hints At New Demand TrendSome producers report that they sense a trend to higher quality amongst buyers in Europe. It appears this is in response to designers and consumers being willing to pay a higher price for products that perform well are of good quality and appearance. This trend was first noticed in the panel market but since has been observed in the sawnwood market.

At the same time price competition has intensified for lower quality products which has resulted in a widening of the price range between top and bottom grades. To some extent this mirrors the American grade patterns where the top quality products earn substantially higher prices compared to falling grades. This has not been a feature of the Central and West African trade but may become so say analysts.

[ITTO 1-15/11/15]

Price Conscious Middle East Buyers Yet To Regain ConfidenceMiddle East buyers remain reluctant to place long term orders because of the recent low priced offers for sawn meranti, buyers are not inclined to look beyond immediate needs to fill gaps in stock levels. It is difficult to anticipate when confidence will rebuild in the very price conscious Middle East market. Despite the current cautious attitude on the part of buyers, demand is firm for decorative and higher quality timber and board products for the luxury sector of the construction industry.

[ITTO 1-15/11/15]

Okoume Millers Look For Alternative To Chinese MarketOverall there are no major price changes to report as producers carefully juggle production and demand. Okoume is really out of favour at present as buyers for the Chinese market are on the side-lines. Okoume prices are weak and variable and exporters are looking for alternative markets.

[ITTO 1-15/11/15]

27

COMMODITY NEWSTIMBER

Demand In EU And Middle East Underpinning Price Stability In the 2-weeks to the end of October FOB prices remain largely unchanged with just one or two minor adjustments reflecting the slow demand in China. While demand from European buyers is, at best, moderate it is sufficient to provide a firm base for the current price levels. Middle East importers and distributers report continued firm business although some importers are still inclined to limit the size of new contracts until they are more certain about how long current FOB prices can be maintained.

[ITTO 16-31/10/15]

Production Of Sapele For Chinese Market Scaled Back On the supply side, producers in Gabon continue to limit output and have indicated they will temporarily close sawmills if necessary to avoid building up stocks. Mills in Cameroon and the Central African Republic have limited production of sapele for China but there is ongoing demand from Europe and prices are stable.

[ITTO 16-31/10/15]

Opportunities In India India has become a major tropical log importer but shippers in Central and West Africa have not captured much of the market for logs in India except for plantation teak and some small quantities of gmelina. The Indian government has ambitious plans to expand house building and this will result in increased demand for wood products and create opportunities for Central and West African producers. Meanwhile timber exporters in Africa would seem to have an opportunity beyond teak exports in the Indian market. Trade development between Africa and India was a feature of the Third India Africa Summit in New Delhi in late October. This summit was heralded as India’s most extensive interaction with African countries.

[ITTO 16-31/10/15]

CameroonNorth American Sapelli Trade Cameroon shipped less sapelli sawnwood to the US [1,774 cu.m.] in July, but imports of acajou d’Afrique grew to1,412 cu.m. Year-to-date imports from Cameroon were twice as high as in July 2014.Among the smaller suppliersGuatemala exported significantly more sawnwood to the US in July [1,542 cu.m.].

However Cameroon benefited from Canada’s higher sapelli imports. Imports from Cameroon grew to US$411,428 in July. Sawnwood imports from Ghana also increased, while most other countries exported less to Canada.

[ITTO 1-15/11/15]

28

GhanaTropenbos Promotes Plantation DevelopmentTropenbos International Ghana [TBI], an NGO that provides forum for discussing forest issues, has launched a project to support the formation of a strong national tree growers’ association to strengthen private sector plantation development. The goal is to create a common platform for plantation developers and build their capacity to address the marketing, financial and logistical constraints affecting their operations.

[Ghanaweb 14/11/15]

Air Dry Sawnwood Tops ExportsThe Timber Industry Development Division [TIDD] of the Ghana Forestry Commission has released its August 2015 timber export report. The report shows that Ghana earned €.93 million from the export of 237,004 cu/m of wood products during the period January to August this year. This represents an increase of around 43% in volume and a 13% increase in value compared to the same period in 2014. The top species exported during the period reported were; teak, wawa, ceiba, gmelima and papao/apa. The leading companies amongst the total 103 exporters were Logs and Lumber Ltd, Samartex Timber and Plywood Company Ltd, John Bitar and Company Ltd, Regent Industries Ghana Ltd and Ayum Forest Products Ltd. Ghana’s major export markets in the year to August included India, China, Germany, Nigeria and Burkina Faso. Wood product exports to regional African markets were valued at Euro18.49 million and included air and kiln-dried sawnwood, sliced and rotary veneers and plywood with over 70% of plywood going to Nigeria.

[ITTO 1-15/11/15]

Ambitious Strategy For 500,000 Hectares Of Plantations Ghana plans to create about 500,000 ha of new forest plantations by 2040. Under a new multi-sectoral approach the ‘Ghana Forest Plantation Strategy’, plans are set out for government and private sector reforestation of degraded forests with commercial plantations of exotic and indigenous tree species. This was made known at a Consultative Workshop on the draft Ghana Forest Plantation Strategy [GFPS], for 2015 - 2040. The strategy targets the maintenance and rehabilitation of existing forest plantations as well as enrichment planting of under-stocked forest reserves with high value indigenous timber species.

The draft GFPS also identifies challenges faced in past efforts on plantations and outlines the strategic direction, actions and resources to overcome such challenges in order to create productive and sustainable forest plantations. The strategy will provide the opportunity for the building of a strong research base to ensure that the country develops fast growing tree species that could be used for the development of forest plantations. In a nationwide project under the National Forest Plantation Development Programme 2002 – 2012 the Forestry Commission championed forest plantations to slow the rate of deforestation but progress was poor due to an absence of a national strategy addressing funding, logistics, monitoring and sustainability. Despite growing contributions to GDP from other sectors of the economy in 2014 the forest sector remains the fourth highest contributor.

[ITTO 16-31/10/15]

Report Calls For System To Assess Cost Of Environment Degradation A report from the National Development Planning Commission says Ghana lost 2.51 million ha or 33.7% of its forest cover between 1990 and 2010. According to the report, Ghana now has a total forest area of 9.2 million ha comprising 1.8 million ha of closed forest and 7.4 million ha of open forest. The report identified some specific challenges to addressing deforestation and degradation it also makes recommendations which included the passage of resource regulations 2012-2014, [part of efforts to enable implementation of Legality Assurance System] and building capacity for monitoring and assessment of environment degradation costs.

[ITTO 16-31/10/15]

29

COMMODITY NEWSTIMBER

Nigeria

Weaker Import Demand Nigeria’s wood product imports dropped sharply from N4.4 billion in Q1 2015 to N3 billion in Q2, the lowest level of wood product imports since the Q1 2013. This decline reflects weak domestic demand but factors such as a devalued local currency and tight foreign exchange liquidity have also had an impact.

[ITTO 1-15/11/15]30

MalawiContract System Blamed For Low PricesMalawi’s US$165-million-a-year tobacco industry has fallen on hard times, with a growing number of farmers complaining that they can no longer make a decent living. Since 2010, the industry has been hit by unstable and falling prices – which growers blame on a buyers’ cartel – sales volumes that have not recovered from a crash in 2012, and a high rate of rejection at auction.

Tobacco is Malawi’s economic backbone, contributing 11% of gross domestic product [GDP] and 60% of its foreign exchange earnings. There are 350,000 growers in the industry, which provides 80% of rural jobs. The price of tobacco plummeted by 50% in 2011 to 92c/kg. It more than doubled to US$2.03 the following year, but since then has drifted down to US$1.75 – a 14% drop.

Production this year, at 190-million kilograms, was slightly down on last year, but almost 20% down on 2011. Central to growers’ grievances are hefty deductions from their earnings and growing debts, which they blame on the Integrated Production System [IPS] they believe buyers are forcing on them. Based on seasonal contracts, the system involves buyers in production from the outset and ties growers into loans for inputs.

[M&G 20/11/15]

ZambiaTobacco Board Purchases 800 Tonnes The Tobacco Board of Zambia [TBZ] will purchase 800 tonnes of tobacco from farmers stranded with the crop after private merchants withdrew from the market. Hundreds of farmers were caught out particularly in Eastern and Southern provinces after merchants decided to buy from a few growers they had sponsored. The board projected to buy more than 400 tonnes from farmers in Chipata, while more than 300 tonnes would be bought from Southern Province. TBZ will resell the crop at an appropriate time. There have also been concerns of lower prices of the crop despite being produced at high cost by the small scale farmers. Recently, Zambia’s top tobacco merchant, Zambia Leaf [Zamleaf] indicated its intentions to close down after operating for 8-years.

[Times 05/11/15]

ZimbabweTobacco Yields ReboundAccording to the Tobacco Industry marketing board (TIMB).Zimbabwe’s tobacco yields have been growing since 2008. Since then yields have improved as more farmers gained experience and got access to technical and financial assistance. In 2012, yields grew marginally to 1,893kg per hectare before retreating slightly to 1852kg per hectare in 2013. In 2014, they beat the 2,000kg/ha mark to close the season at 2,014kg/ha. Despite the growth, yields remain lower than peak levels of 2,792 and 2,666kg/ha recorded in 2000 and 1995 respectively. The average price of flue cured tobacco closed the 2014 marketing season at US$3,17/kg down from US$3,67 per kg in 2013 and US$3,65/kg in 2012.

[Independent 13/11/15]

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COMMODITY NEWSTOBACCO

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