Tangible evidence of an upturn in the global economy--projected by the International Monetary Fund to expand at 4.1% this year--and a weakening US dollar over recent months, have underpinned commodity markets. MOIN SIDDIQI presents a comprehensive view of Africa's main cash crops.
World commodity prices have increased significantly from the lows of 2001/02. The prices of agricultural raw materials (such as cotton, rubber, and timber) maize, rice, groundnuts, coconut oil, sugar and beverages (coffee, tea, cocoa), have all risen--though less strongly than oil or precious and industrial metals.
In 2003, the IMF estimated that non-oil commodity prices rose by 5%. That's a marked improvement over the 4% decline in prices recorded in 2001, the year when the industrialised world went into near-recession following the 9/11 terrorist attacks on the US, and their ramifications upon global trade.
For developing regions like Africa, where primary commodities and oil and natural gas account for about two-thirds of merchandise exports, buoyant global economic activity and higher commodity prices are vital for sustainable development and poverty reduction.
The World Bank says: "Multilateral trade negotiations could lead to higher agricultural prices if reforms reduce production subsidies and tariffs in major consuming and producing countries; however, little progress on reforms has thus far been achieved."
Last year, cocoa prices averaged $1,763/t-similar to 2002 levels. Total production during the 2002/03 season rose to record highs: 3,102,000t, compared to consumption of 2,996,000t according to the International Cocoa Organisation (ICCO).
A cocoa surplus, the first in three years, was pegged at 75,000t. According to ICCO figures, the end of season stocks, at 1,191,000t, were equivalent to a stock/consumption ratio of 39.8%, or 4.5 months of annual offtake.
Africa, led by Cote d'Ivoire, accounted for almost 70% of the global crop, while Asian and South American contributions were 17% and 13% respectively.
Bumper harvests in major growing regions reflect improved husbandry standards, higher farmgate prices and better use of fertilisers and pesticides.
Forecasts for 2003/04 global crop range between 3,068,000t and 3,300,000t. The Ivorian harvest is expected to be 1,340,000t; with Ghana's 500,000t; Nigeria's 165,000t; and Cameroon's 135,000t contributing to an overall West African output forecast to reach 2,140,000t.
Apart from Africa, the world's two other dominant suppliers are Indonesia, which produces 480,000t, and Brazil's 175,000t.
However, the Ivorian political climate still poses downside risks. Problems of labour shortages, lower beans prices compared to Ghana, and inadequate investment in infrastructure over the past two years can all affect the crop's potential.
ED & F Man Cocoa, the UK trading house, comments: "The greatest risk would appear to be that a much lower farmer price in Cote d'Ivoire acts as a disincentive to the complete harvesting...