COM-WATCH The African Commodity Report

Issue 8: January 2012

This month’s top stories...

Antwerp To Develop World's Largest Cocoa Port

Cocobod Mandates Banks For 3-Year Finance Facility

Burundi Coffee Farmers to Withhold Crop, Seek Control

Sugar Investor Seeks 20,000 Hectares In Rwanda

Contents >> CASHEW

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MOZAMBIQUE

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NIGERIA

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TANZANIA

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CAMEROON

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Study In Mozambique To Determine Real Production Of Cashew Government Plans To Increase Cashew Production To 200,000 Tons Per Year

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October Robusta Coffee Exports Down 44% On Year

Tanzania Mtwara Farmers Get Tech to Produce Cashew Juice

November Cocoa Beans Improved For Export Cameroon Cocoa Exports At 64,937 Tonnes Cameroon Crusher Aug-Oct 2011-2012 Season Cocoa Intake Down On Year

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ETHIOPIA

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KENYA

COCOA

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GHANA

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NIGERIA

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UGANDA

Main Cocoa Peak Harvest Under Way Amid Low Prices Output In Nigeria's Cross River State Drops 50%

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Cocoa Demand To Rise 1-Million Tons Cocoa Caps Longest Slump in 50 Years Olam Warns of Global Deficit Daily Spot Price [ICCO]

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New Ethiopian Coffee Directive Retracted Price Drops On Increased Supply

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Kenyan Coffee Prices Climb 21%

UGANDA Coffee Development Authority’s Robusta Prices Coffee Exports May Fall by 9.6% in December on Rains Uganda’s Coffee Exports Decline 15% In November

GENERAL World Coffee Production to Decline This Season Higher Robusta Crop May Cap Coffee Prices

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PALM OIL Cussons Invest US$612 Million In Nigerian Palm Oil Refinery Palm Oil Trade Fair In Africa European Industry Proposes Zero-Duty On Sustainable Palm Oil Ghana Benso Oil Palm Makes Profit

RUBBER GMG Unit Signs S$535 Million Cameroon Rubber Deal

SHEA NUTS Steering Committee On Sheanut Inaugurated In Ghana Government To Establish Sheanut Factories In Ghana

SUGAR Sugar Investor Seeks 20,000 Hectares In Rwanda Sudan Opens Processing Plant Ethiopia to Construct Sugar Factories Cargill Replaces Head Of Sugar

TEA

Tanzania Arabica Coffee Poor Take Up Tanzania Coffee Prices Rise, Eyes On Euro Zone Tanzania’s Top Coffee Grade Falls 5.8% on Increased Supply

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BURUNDI

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KENYA

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RWANDA

Burundi Tea Export Earnings Jump In Nov Burundi Oct Tea Export Earnings Up 29% Mombasa Tea Auction Faces Crash Week 51: Kenya Top Grade Tea Prices Hold Steady Week 50: Kenya Tea Prices Slide New Plants Planned to Boost Tea Exports

UGANDA Kisoro Gets Sh530 Million For Tea Growing

COTTON

Cocoa Exports Projected To Rise Next Year

GENERAL

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TANZANIA

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Antwerp To Develop World's Largest Cocoa Port Low Export Demand Pummels Ivorian Cocoa Price Ivorian Cocoa Buyers Seek End To Grinders Tax Break Ivory Coast Cocoa Arrivals Running 14% Up On Last Year Strong Harmattan Worries Ivorian Cocoa Farmers Ivory Coast Starts Cocoa Forward Sales In January Dry Weather Darkens Cocoa Outlook In West

Cocobod Mandates Banks For 3-Year Finance Facility COCOBOD Releases US$200 Million For Roads Construction Ghanaian Cocoa Purchases Up 16% Year-On-Year Olam, Rainforest Alliance Launch US$1 Million Ghana Cocoa Project

Cameroon Coffee Production Falls 39% Cameroon Blames Coffee Export Drop On Arab Turmoil Cameroon Exports 36 Tons Arabica Coffee In Opening 2011-2012 Season Cameroon Exported 29,027 Tons Robusta Coffee In Dec-Oct Cameroon Introduces Chemical Use & New Species To Fight Coffee Disease

COTE D’IVOIRE

Nigeria Targets 3900% Increase in Cashew Output Nigeria Makes N23b Yearly From Cashew

COTE D’IVOIRE

CAMEROON

China To Support C4 Countries On Cotton Production US Pledges US$16 Million in Aid to Africa’s C-4 Association of African Cotton Producers Hold AGM Cotton Forecast Cut as Global Outlook Sours Cameroon Raises Cotton Price To Curb Smuggling Malawi’s 2012 Cotton Output to Rise More Than Threefold

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FISH

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Unsuccessful EU Negotiations To Renew Agreement With Mauritania

FOODSTUFFS Maputo Port Citrus Operations & Logistics Cost Assessment 2011 South Africa’s Transnet Looks To Bolster Grain Facility FG Plans Two Rice Mills In Niger Feronia Completes Largest Single Rice Planting In Congo

COFFEE

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TIMBER Price Levels Unchanged As New Export Markets Absorb Increased Output Producers Track Demand Trends To Avoid Overproduction Chinese Preference For ‘In Fashion’ Species Amid Slowing Demand Market Prospects For 2012 Hinge On Resolution Of EU Debt Crisis Ghana Export Permits Drop By A Third In July-September Period Ghana Regional, Middle East And Asian Markets Sustain Price Levels National Forest Forum Calls For Abridged Version Of Forestry Laws Agreement Reached Regarding CAR Wood Imports Fallsway In US$1.5m Plant Expansion Exporters See Slight Cooling In Business For The Chinese Market Demand For Padouk, Sipo & Sapele Remains Strong And Sustained A Steady Flow Of Orders For Some EU Markets Keeping Prices Stable Brisk Demand In India And Vietnam Offsets Weaker Chinese Market Demand From South Africa And Middle-East Countries Helps Maintain Market Stability Global Green Carbon Announces First REDD+ Project in Cameroon Ghana Third Quarter Exports Continue Downward Trend

ANGOLA

This report is brought to you by the Delmas Marketing Department.

BURUNDI

This document aims to give our customers a thorough insight into the latest commodity news affecting West Africa. By using our local agency network within West Africa we will provide you with up-to the minute strategic information.

15 Robusta Coffee Production In Angola Rises By 42.8% In 2011 Burundi Coffee Farmers to Withhold Crop, Seek Station Control

Scan with your smart phone for service details and schedules! Com-Watch Issue 8: January 2012

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Disclaimer of Liability Delmas make every effort to provide and maintain usable, and timely information in this report. No responsibility is accepted for the accuracy, completeness, or relevance to the user's purpose, of the information. Accordingly Delmas denies any liability for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any published information. Conclusions drawn from, or actions undertaken on the basis of, such data and information are the sole responsibility of the reader.

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MOZAMBIQUE

NIGERIA

Study In Mozambique To Determine Real Production Of Cashew Mozambique’s National Cashew Institute [INCAJU] plans to launch a study to assess the impact of the informal sector on the sale of cashew nuts. The 4-months study aims to determine more clearly the average annual cashew nut production in Mozambique. According to the Institute cashew nut production refers to the nuts sold, but there is a very important sector, which is informal and involves purchasing, domestic processing and domestic sale, both on an internal level and an external level.

Nigeria Targets 3900% Increase in Cashew Output As one of its strategies to increase the volume of non-oil exports and diversify the nation’s economy, Nigeria is currently targeting an increase of cashew output of up to 3,900% in the next few years. To achieve this, the Bank of Industry [BOI] is partnering the African Cashew Alliance [ACA] to increase the production of cashew nuts in the country from 10,000 tonnes to 400,000 tonnes per annum. The 2-bodies formed a strategic partnership with the Raw Materials Research and Our aim is to see that Nigeria Development Council [RMRDC].

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An initial study carried out demonstrated that Mozambique’s real production could be double what is announced, a figure based on the amount of cashews sold on the official market. It is estimated that over 1,400 becomes a major player in the Currently Cote d'Ivoire has the highest production families use cashews as their main source of income and in the current campaign 105,000 tons are expected cashew industry: we are volume in Africa, with 350,000 tonnes per annum. to be sold, as compared to 113,000 tons last year. [Macauhub 01/12/11] already a major player but we The ACA believes Nigeria has the potential to want to be number one. surpass this. Government Plans To Increase Cashew Production To 200,000 Tons Per Year The newly launched Cashew Master Plan II for the cashew sub-sector plans to boost cashew production 80% The African cashew industry has the potential to over the next 9-years to 200,000 tons per year by 2020. Over the same period, the plan also aims to increase Prof. Peter Onwualu, Material Research and realise more than US$300m in raw nut sales by the amount of nuts processed by the national cashew industry from the current 30,000 to 100,000 tonnes a Development Council smallholder farmers and US$300m in added value year. Spraying will continue to cover around 5,000 cashew trees per year, planting will increase, new from cashew processing. The main measures to be production technology will be introduced and other types of investments will also be made. taken include promoting cashew sector development as a priority in donor platform and in government investment. Average cashew production currently stands at around 105,000 tons per year, most of which is exported unprocessed to countries such as India, due to a lack of capacity in Mozambique to process the cashew nuts. Mozambique plans to focus on medium-sized companies and aims to achieve a domestic processing capacity The move was initiated not only to boost the foreign exchange earning capacity of the commodity, but due to the fact that cashew cultivation and processing for export has potential to create jobs. Nigeria is currently the of around 100,000 tons by 2020, as compared to 38,000 tons at the moment. [Macauhub 12/12/11] 7th largest producer of cashew in the world after India, Brazil, Vietnam, Cote d'Ivoire, Guinea Bissau and Tanzania with production exported in raw form to India and Vietnam for processing and export, with added value and benefits to those economies. [This Day 05/12/11]

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CASE STUDY: FG To Commission Cashew Processing Plant In Ogun The Government has concluded plans to establish a cashew processing plant in Abeokuta, Ogun state capital before the end of the year. The Raw Material Research and Development Council [RMRDC] disclosed that the cashew plant project was collaboration between the RMRDC and the University of Agriculture and also revealed that more processing plants are being considered. The project would consolidate upon the Council’s cluster development programme which led to the establishment of a cashew processing plant in Kogi state. The RMRDC also wants to look into the supply side. Many plantations in Nigeria are aging so the council is discussing proposals with relevant stakeholders how to replant. At present Nigeria exports 80% of its cashew to India, Vietnam and Brazil missing out on value added processing. [Nigeria Compass 02/12/11] Nigeria Makes N23b Yearly From Cashew Nigeria earns N23 billion yearly from cashew production according to the National Cashew Association. Revenue comes from 100,000 tonnes produced annually. The association’s agenda is to increase its national production to 200,000 tonnes annually, adding that the development would make Nigeria an important participant in the world cashew market. In spite of the multi-faceted benefits of cashew, processing is largely non-existent and that 95% of cashew exported as raw nuts overseas. [The Nation 13/12/11]

Com-Watch Issue 8: January 2012

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TANZANIA

CAMEROON

Tanzania Mtwara Farmers Get Tech to Produce Cashew Juice The United Nations Industrial Development Organisation [UNIDO] is providing cashew nut farmers in Mtwara Region with modern technology to produce juice and wine from the crop. The technology also enables the farmers to get higher grade nuts by using factories set up by the UN agency. [Tanzania Daily 05/12/11]

November Cocoa Beans Improved For Export Reduced rainfall in November boosted the size of cocoa beans produced in the South-West Region, the main cocoa-producing area, and helped to ease post-harvest handling of the crop. The area, which accounted at least 40% of the country's total 240,000 metric tons of cocoa beans output in the 2010-2011 season, had suffered severe rainfall for about 5-months, rendering post-harvest cocoa handling very difficult, especially in drying the crop. Quality controllers recorded good sizes of beans ranging between 78-83 beans/100g for cocoa beans, which came from the South-West Region in November. Apart from the fact that there was very little trace of smoke recorded for the cocoa beans, the sizes of the beans were bigger than those of October. Farmers were able to dry their crop after rainfall began reducing in intensity. South-western cocoa beans controlled at the wharf in October measured between 80-82/100g, slightly bigger than the 80-83/100g beans measured in September. But the harvest suffered from smoke contamination, as fire-powered mud-brick ovens were used to dry the crop in the heart of intense and prolonged rainfall. The controllers noted the cocoa was well-dried, mould-free, and had no dampness, making it fine for export. [Dow Jones 06/12/11] Cameroon Cocoa Exports At 64,937 Tonnes Cameroon exported 27,524 tonnes of cocoa beans in the month of October, bringing the total for the season so far to 64,937 tonnes, according to statistics from the National Cocoa and Coffee Board [NCCB]. That is down on the 69,702 tonnes exported by the same point last season. The country has exported 64,937 tons of cocoa since the season started compared with 71,702 tons the previous year. The data, confirmed by the Cocoa and Coffee Interprofessional Board [CCIB] also showed a decline in the month compared to the 33,930 tonnes exported in the same month last season. CCIB attributed the drop to persistent heavy rainfall during the month in the leading South-West and Centre growing regions which slowed down the drying process. The Cameroon Marketing Commodities [CAMACO], the second main exporter based in Kumba in the South-West, noted that the rains further deteriorated the poor state of earth roads, hampering produce evacuation from remote areas. Cameroon's cocoa season runs from August 1 to July 31, with the main harvest period from October to January/February. The Centre and South-West regions account for 40% each of the country's cocoa production and the remainder comes from the South and East regions, although cultivation is extending rapidly to the Littoral region as well as the deep valleys with warm temperatures of the high plateau West, North-West and Adamawa regions. [Business Recorder 04/12/11 & Bloomberg 01/12/11] Cameroon Crusher Aug-Oct 2011-2012 Season Cocoa Intake Down On Year The Cameroon branch of the Switzerland-based Barry Callebaut AG [Sic Cacao SA], bought 8415 tons of cocoa beans in between August and October, 3-months into the ongoing 2011-2012 cocoa season of the crop. The Cocoa and Coffee Interprofessional Board [CCIB] noted the company bought and crushed 11,287 tons in between August and October of the last season. In October, Sic Cacao bought 3,241 tons of cocoa beans to grind into powder, down from 5,325 tons it bought and crushed in October of the last season. The cocoa season in Cameroon officially runs from August of each year to through July of the previous year. Sic Cacao's total cocoa beans intake for last season was 28,413 tons, up 37% on the 20,734 tons in the prior year. Sic Cacao is Cameroon's lone certified industrial crusher for chocolate and other by-products, with an annual grinding capacity of 30,000 tons. The Swiss company Barry Callebaut owns 70% of Sic Cacao, while the Cameroon government has the remaining 30%. Chocolate produced from Sic Cacao is marketed mainly in Cameroon and the surrounding ECOWAS region. Cameroon produced 240,000 tons of cocoa beans in the last season, a record high from 197,939 tons the country produced in the 2009-10 cocoa season. [Dow Jones 05/12/11]

Com-Watch Issue 8: January 2012

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COTE D’IVOIRE

Ivorian Cocoa Buyers Seek End To Grinders Tax Break Major buyers of Ivorian cocoa have urged the government to cut a 20-year old tax break given to local grinders, arguing the incentive handed grinders an unfair market advantage. Members of an international and local buyers association, which includes France-based commodities firm Sucden and leading cocoa trader Armajaro, said in a letter to Ivorian authorities the tax benefit distorted the market.

Antwerp To Develop World's Largest Cocoa Port The Port of Antwerp has outlined its planned collaboration with the world's largest cocoa port, San Pedro in the Ivory Coast.

The Ivorian government introduced the tax incentives during the 1991/1992 cocoa season to encourage investments in the country, create jobs in the cocoa sector and increase the country's grinding capacity. The tax benefits were supposed to last for five years and are in the form of a reduced DUS ["droit unique de sortie"] tax, the main cocoa export tax. Until the 2008/09 cocoa season, the tax was fixed at 220 CFA/kg [$0.44], while for grinders, the tax was reduced by about 70 CFA/kg.

Up to 2000-ha of vacant land is to be developed at the West African port under a master plan finalised last month by the Port of San Pedro and Port of Antwerp International [PAI], the international subsidiary of the Antwerp Port Authority. Logistics zones are to be developed in the hinterland of the port, which handles between 1.5 and 2 Mtpa, including the cities of Odienne, Touba and Man. Further space in San Pedro will be freed up to handle other commodities including rice, cashew nuts, fertilisers and cotton.

This subsidy cost the Ivorian government about 34 billion CFA [US$67.11 million] in 2010 and enables local grinders to buy more beans from cooperatives and producers. It is argued that this has as immediate consequence, a monopoly situation that could in the medium and long term, force buyers out of the procurement system at the farm level.

PAI and San Pedro first agreed to explore avenues of potential collaboration in October 2010. The new development is ultimately designed to boost traffic in Antwerp binding freight and customers to Antwerp. Corresponding deals are being sought in Mali, East Guinea and South East Liberia to help develop San Pedro on a regional scale. Port professional training will be provided by APEC, Antwerp Port Authority's training vehicle. A joint port day between Antwerp and San Pedro will be held in 2012. [World Cargo News 12/12/11] Low Export Demand Pummels Ivorian Cocoa Price Cocoa farmgate prices in Ivory Coast extended losses amid soft demand from local grinders and exporters, triggering a round of panic selling by growers. The fall in prices to around 550 CFA/kg from over 700 CFA/kg at the start of the season has already revived smuggling operations to Ghana, where prices are stabilized by the government. Prices in Daloa averaged around 550 CFA/kg last week from 600 CFA/kg the week before. In the western region of Soubre, at the heart of the cocoa belt, farmers said prices were in a range of 500-550 CFA/kg, down from 600-650 CFA/kg the previous week.

The association urged the government to cut the tax exemption, saying buyers will not be able to match prices paid by local grinders at farmgate level in the long run, thus pushing them out of the market. The tax exemptions have been in place for nearly 20 years instead of 5 years as was intended, local grinders such as Cargill and Barry Callebaut and ADM had recovered the capital invested in plants and therefore did not need the exemptions. Cargill, ADM, Barry Callebaut and Cemoi are the top four grinders, crushing between 415,000 and 450,000 tonnes of cocoa annually.

Barry Callebaut and Cemoi are planning to increase their grinding capacity in 2012. In 2010, Ivory Coast In Gagnoa, farmers said the average price was ranging around 500 CFA/kg from 550 to 600 CFA the previous became the world's top cocoa grinder with a capacity of 532,000 tonnes, turned mainly into cocoa butter and week. Around Abengourou in Ivory Coast's east, prices were about 530 CFA/kg, well below the 900 to 950 CFA powder. The cocoa grinders have however said the incentives does not give them any advantage and that removing them could hurt the local grinding industry and even push some to move plants to neighbouring being offered by illegal buyers across the border in Ghana. Ghana, the world's second-biggest producer after Ivory Coast. The slump in Ivorian farmgate prices comes amid a decline in demand from local grinding companies as well as from exporters at the ports of Abidjan and San Pedro. Grinder warehouses and factories are full of beans. And to add to that, the prices at the port are weak which discourage the growers. The price for a kilogram of cocoa at the port of San Pedro fell to a range of 650 to 675 CFA from more than 725 the previous week. Prices at the port of Abidjan were 675 CFA to 700 CFA/kg, down from 750 CFA the previous week. Many chocolate makers in Europe had already stockpiled cocoa prior to Ivory Coast's legislative elections on December 11 and were in no hurry to take on new supply. Cocoa futures prices have slumped to multi-year lows but got a brief jolt upward earlier this week after Olam forecast a global cocoa deficit, in part due to a decline in production from Ivory Coast. [Reuters 15/12/11]

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The Ivorian government is carrying out reforms in the sector, which it has said will guarantee farmers receive at least 60% of the market price for the cocoa they produce. The latest draft of the sector reform in November said the revision of the tax benefits would be decided after an impact analysis on employment and grinding capacity. [Reuters 28/12/11] Ivory Coast Cocoa Arrivals Running 14% Up On Last Year Cocoa arrivals at ports in Ivory Coast reached 578,368 tonnes by December 18 since the start of the season in October, up 14% from the 506,970 tonnes recorded in the same period a year ago, according to data from Bourse du Cafe et Cacao. The figures showed 60,140 tonnes of beans were declared at the ports of Abidjan and San Pedro from December 12 to 18, up from 36,727 tonnes in the same week of the 2010/11 season. [Public Ledger 23/12/11] www.delmas.com

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Strong Harmattan Worries Ivorian Cocoa Farmers Dry Harmattan wind mixed with parched weather across Ivory Coast's cocoa regions could hamper development of the main crop. Farmers said they were concerned by the particularly strong Harmattan wind, the dry West African trade wind which blows south from the Sahara desert to the Gulf of Guinea from December to March, because the scale could determine the size of the main crop. Ivorian farmers, who are currently harvesting the country's main cocoa crop for the 2011/2012 season, need a lot of rainfall interspersed with sunny spells for the development of pods on trees and drying of the beans after harvest. [Reuters 19/12/11]

GHANA Cocobod Mandates Banks For 3-Year Finance Facility Ghana Cocoa Board [Cocobod] has mandated 4-banks for a US$200 million 3-year pre-export financing. The Bank of Tokyo-Mitsubishi UFJ, Ltd., Barclays Bank, Standard Bank Group and Sumitomo Mitsui Banking Corporation, are acting as Initial Mandated Lead Arrangers [IMLAs] in a US$200 million Medium Term Trade Finance Facility. The IMLAs are expected to sign the Facility before year-end. The borrower is looking to diversify its financing options having raised a record US$2 billion for its annual 1-year trade finance facility in September. This represents the second time that Cocobod have approached the market for medium term financing, having last tapped the market in 2007. This new Facility will again be secured against cocoa receivables backed by fixed price offtake contracts. Loan proceeds will be used to develop infrastructure within Ghana, including building of warehouses and rehabilitation of cocoa farms. A limited syndication can be expected in the market and at this stage pricing for the facility remains undisclosed. [Business Live 05/12/11] COCOBOD Releases US$200 Million For Roads Construction The Ghana Cocoa Board [COCOBOD] has released US$200 million to the Ministry of Roads and Highways, under the Cocoa Roads Improvement Project [CRIP Tranche II], for the maintenance, rehabilitation and upgrading of roads in cocoa growing communities in Ghana. Under the CRIP Tranche II, it was estimated that routine maintenance would be carried out on 4,000 km, spot improvement on 2,000 km and upgrading of 750 km of feeder roads to bituminous surface. Under CRIP Tranche I [2008-2010] contracts were awarded in 3-phases to undertake works involving 685 km of roads at a total cost of GHC122 million. KfW, a German company, is also funding a poverty- focused rural transport programme, to rehabilitate 300km of feeder roads to provide access to markets in Ashanti and Brong Ahafo Regions. [GNA 22/12/11]

Ivory Coast Starts Cocoa Forward Sales In January Ivory Coast will from January 2012 start the forward selling of future cocoa crops a move by the government to reverse a decade of liberalisation. External sales from the 2012/2013 season onwards will be handled by a computer-driven auction system. Commercial operations will start in January 2012 according to regulator CGFCC to market players mid December. Around 70-80 % of the season starting in October 2012 will be auctioned at two daily sessions. The move is part of a return to a more tightly regulated sector in an effort to guarantee Ivorian cocoa farmers a minimum 60% of the export price of their produce. First details of the reform emerged in October. [Reuters 16/12/11] Dry Weather Darkens Cocoa Outlook In West Continued hot and dry weather in western Ivory Coast heightened worries among farmers that supply could drop off starting early next year. Lack of rain in recent weeks in Soubre, Gagnoa and Duekoue was impeding trees from producing new pods that would be harvested from January onward, leaving only larger pods for prompt harvest. However conditions were favourable for drying main crop beans and quality is likely be good, though there are concerns about supply in 2012 and worries about bushfires. The Harmattan winds that mark the start of the dry season have already begun and are expected to end early. [Reuters 05/12/11]

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Ghanaian Cocoa Purchases Up 16% Year-On-Year Cocoa purchases declared to Ghana's Cocobod reached 376,485 tonnes by Nov. 24 since the start of the season on Oct. 14, up 16.2% over the corresponding 6-week period last season. The figures compare with 323,936.2 tonnes of official purchases recorded during the first 6-weeks of the previous season, which ran from Oct. 1 to Nov. 11, according to Cocobod. [09/12/11] Olam, Rainforest Alliance Launch US$1 Million Ghana Cocoa Project Olam International Ltd. and certifying group Rainforest Alliance will invest US$1 million over 3-years to produce sustainable cocoa in Ghana. The two organizations will invest in farmer training, aiming to double yields of cocoa in 3-years. The money will also finance the planting of 100 ha of native trees. The project will train people, help improve yields and raise awareness of the environment. Deforestation in Ghana has swelled by an average 2.1% a year between 2000 and 2010. The project will start with training of 2,000 farmers in 13 communities and will expand. Growers will be able to certify their cocoa under the Rainforest Alliance scheme and benefit from the premium paid in the market for such certification. Olam sold 18,280 tons of Rainforest Alliance-certified beans in their last financial year ended June 30. Olam and Rainforest Alliance already have partnerships in Ivory Coast, Indonesia and Nigeria and there are plans for another in Togo. [Bloomberg 06/12/11] www.delmas.com

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NIGERIA

UGANDA

Main Cocoa Peak Harvest Under Way Amid Low Prices The peak harvest period for the 2011-12 September-to-February main crop cocoa is under way in southwest Nigeria though farmers are keeping back most of the cocoa from the market because of low prices. The peak harvest period, when the bulk of the main crop is harvested, began late last month and will end in January. Plenty of main cocoa is coming out of the bush now. However traders in Akure noted the majority of farmers in the region are not selling their good-quality cocoa and hoarding the beans in protest against the current low prices of the commodity.

Cocoa Exports Projected To Rise Next Year Uganda is projecting a 12% jump in its cocoa exports in the 2011/2012 [Oct-Sep] season compared with the last season, as newly planted trees start producing beans. According to the Tea/Cocoa Project within the Ministry of Agriculture, production is expected to reach 18,000 MT up from last year’s 16,478 MT an improvement that should push earnings to US$55 million from US$52.7 million realised this year. The rise in production and exports will mainly depend on an increase in planted area. More farmers have been planting cocoa trees and most of them are reaching maturation - a positive impact for future exports.

Farmers are piling up good-quality cocoa in their stores vowing not to sell the cocoa until prices go up. The Cocoa Farmers Association of Nigeria [CFAN] noted farmers are demanding N450,000 [US$2,866] for a ton for ungraded cocoa. CFAN said farmers were facing high production costs and rising costs of living and have rejected the NGN305,000-NGN310,000 which Licensed Buying Agents [LBAs] are offering.

Uganda cocoa exports have grown from 6,000 metric tonnes in 2004/05 valued at US$8.7 million to 16,478 MT in 2010/11 worth US$52.72million. Earnings from cocoa bean exports have been sharply increasing due to improved crop productivity and better global prices. Cocoa is one of Uganda’s major commodity exports and a significant source of foreign exchange, although its production is still low compared to other African countries that produce the crop.

We are supposed to see very active cocoa marketing from now until January/February, but this is not the case because of the low prices of cocoa according to CFAN. The southwest cocoa belt accounts for 70% of Nigeria's annual cocoa production of 240,000 tons. [Dow Jones 05/12/11]

Uganda is planning to expand the cocoa growing hectares and also provide farmers with the required resources and technological knowledge in order to boost production levels from the current 16,478 MT to 50,000 MT targeted by 2016. Experts say Uganda is at an advantage over the other countries simply because it is at a higher altitude of between 1,100-1,300m above sea level compared with West Africa with an altitude of between 0-300m above sea level where humidity is high, attracting high infestations of diseases and pests. [Daily Monitor 21/12/11]

GENERAL Cocoa Demand To Rise 1-Million Tons The world will require an additional 1 million MT of cocoa by 2020 to meet demand, according to Barry Callebaut AG, the world’s largest maker of bulk chocolate. Prices have fallen 16% in London and 20% in New York over the past month on speculation supplies will outpace demand for a second year. The surplus this season will be 32,000 tons, London-based broker Marex Spectron Group Ltd. estimates. Production exceeded consumption by 434,000 tons last season. [Bloomberg 06/12/11] Cocoa Caps Longest Slump in 50 Years Cocoa prices plunged, capping the longest slump in 50 years, on signs that supplies are rising in Ivory Coast. Deliveries to ports this season from farms in Ivory Coast climbed 5.8% through Dec. 4. Voters in Ivory Coast cast ballots on Dec. 11 in the first legislative election in more than a decade that’s likely to shore up support for President Ouattara, who’s pledged to overhaul the cocoa industry to increase output.

Output In Nigeria's Cross River State Drops 50% The 2011-12 main cocoa production for Nigeria's south-eastern Cross River state has fallen 50% because of weather problems. The state is the second-largest cocoa producer in Nigeria after Ondo state in the southwest and usually produces around 45- 50,000 mt of main cocoa a year when growing conditions are favourable. Excess rainfall, excessive humidity, and heavy flooding on cocoa farms contributed largely to the poor cocoa yield. [MENAFM 21/12/11]

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Market Factors > Increasing availability of cocoa from Western Africa is still the dominant force in the market. > Traders are also worried about the economic situation in Europe. > Global supplies will exceed demand for the second straight year. The surplus last season totalled 341,000 tons. > The Standard & Poor’s GSCI Index of 24 raw materials saw cocoa slump 32% in 2011, the second-biggest decline among the commodities tracked by the GSCI. [Cotton plunged 38% this year.]

Prices have dropped 45% since touching 32-year high in March, when a civil war disrupted supplies following a disputed November election. The commodity dropped as global output rose and slowing economies in the U.S. and Europe signaled supply may exceed demand for a second year. The slump may lower costs for companies including Hershey Co., Nestle SA and Barry Callebaut AG, the world’s top bulk-chocolate maker. [Bloomberg 09/12/11]

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Cocoa >>

Cocoa >> Olam Warns of Global Deficit

Leading cocoa trader Olam International warned of a tightening global market in 2012, with supplies moving into deficit after this year's record surplus drove prices too low. Gerry Manley, the head of Olam's cocoa division, expects world 2011/12 production to fall around 100,000 tonnes short of grindings. Other traders have generally seen the market as balanced. According to Manly the market was oversold due to the size of the 2010/11 surplus and the expectation of forward crop sales from Ivory Coast in the wake of their planned cocoa sector reforms. “Given the fundamental story, the outlook for next year, and given some uncertainty with the macro side of the picture, particularly in Europe, we think a price range of 1,600 to 1,700 pounds is a more realistic value.” Commodities broker Marex Spectron said a month ago that it expected a supply surplus of 32,000 tonnes, while the International Cocoa Organization said in late September it expected a balanced market. The ICCO hasn't provided a more recent forecast. Manley said the 2010/11 global surplus, which Olam estimates at 500,000 tonnes, has contributed to strong port arrival figures in Ivory Coast, which is currently shipping its 2011/12 main crop. Cocoa arrivals there reached 422,430 tonnes by Dec. 4, up from 400,043 tonnes in the same period a year ago, according to data from Bourse du Cafe et Cacao [BCC]. Olam expects Ivory Coast's main crop to fall to just over 1 million tonnes in 2011/12, down from 1.35 million tonnes the previous year, when ideal weather boosted West African output.

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 30-Dec-11 29-Dec-11 28-Dec-11 27-Dec-11 23-Dec-11 22-Dec-11 21-Dec-11 20-Dec-11 19-Dec-11 16-Dec-11 15-Dec-11 14-Dec-11 13-Dec-11 12-Dec-11 09-Dec-11 08-Dec-11 07-Dec-11 06-Dec-11 05-Dec-11 02-Dec-11 01-Dec-11

ICCO daily price (SDRs per tonne) 1397.29 1380.35 1397.14 1443.19 1446.27 1453.92 1461.80 1433.27 1366.47 1387.75 1416.51 1438.92 1478.52 1426.55 1347.65 1387.17 1402.52 1414.30 1437.21 1443.74 1477.76

ICCO daily price (US$ per tonne) 2145.22 2112.49 2155.19 2225.99 2229.79 2240.55 2255.76 2209.67 2101.68 2135.53 2176.74 2211.02 2288.19 2210.18 2098.67 2159.83 2180.27 2200.56 2237.80 2252.72 2305.90

London futures (£ sterling/tonne) 1397.00 1382.00 1406.67 1415.50 1424.33 1432.00 1451.67 1417.33 1361.00 1386.67 1414.33 1440.33 1490.33 1434.67 1353.67 1385.67 1400.00 1422.67 1437.00 1451.67 1476.67

NY futures (US$ per tonne) 2127.33 2101.67 2139.33 2239.33 2237.33 2239.67 2239.67 2202.00 2093.00 2123.67 2167.00 2201.33 2266.00 2187.67 2084.00 2157.33 2168.00 2188.67 2225.33 2246.00 2298.67

Grindings growth, an indicator of demand, was forecast at 3% in 2011/12, mainly driven by emerging market demand for cocoa powder. When a cocoa bean is processed it makes roughly equal parts butter and powder. In recent years powder demand has outpaced butter demand due to most of the cocoa products consumed in emerging markets being powder-based including chocolate-flavoured cakes and ice cream. The weaker demand for butter has led to cheaper prices for what was once the premium cocoa product. Part of Ivory Coast's cocoa sector reform plans include an intention to sell forward up to 80% of their crop. Olam noted that at current price levels it would be surprising if the 2012/13 crop was sold forward. "We don't see why they would like to commercialize the crop at levels that wouldn't give their farmers a good price in the future." Manley said. [Thomson Reuters 12/12/11]

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Coffee >>

ANGOLA

CAMEROON

Robusta Coffee Production In Angola Rises By 42.8% In 2011 Angola produced 50,000 sacks of Robusta coffee in the 2011 coffee harvest representing 3,000 tons of coffee, according to the International Coffee Organisation. Production in 2011 exceeded the 2010 harvest, which totalled 35,000 sacks and represented a rise of 42.8%. Since 2006 coffee production has always exceeded 30,000 sacks, with the exception of 2009, when production fell to just 13,000 sacks.

Cameroon Coffee Production Falls 39% Coffee production dropped in the 2010-11 season as some robusta-variety plants became dormant and illegal trade in arabica rose. Output of both types dropped 39% in the harvest period to 34,417 metric tons, according to data from the Cocoa and Coffee Board. Production of robusta declined to 31,840 tons in the season that started in October 2010 and ended last month, from 53,000 tons a year earlier.

The director of the National Coffee Institute noted Angola needed an investment of at least US$150 million in coffee production, which would make it possible to produce 60,000 tons of coffee per year for export. Figures show that in the period between October 2009 and October 2010, Angola was the 6th biggest exporter of Robusta coffee in Africa after the Cote d’Ivoire, Guinea Conakry, Togo, Madagascar and CAR. [Macauhub 28/12/11]

Coffee plants are in a resting period after previous years of increased production. Production may increase in the next crop as the plants are fresh and have produced enough flowers this year. Arabica output slipped to 2,577 tons from 3,423 tons a year earlier. The arabica season runs from October to September. A lot of arabica coffee is sold in neighbouring Nigeria. Production of both varieties of coffee is expected to rise to an annual 125,000 tons by 2015. Processing of robusta dropped to 193 tons in 2010-11 from 316 tons a year earlier, while arabica grindings declined 17% to 187 tons. [Bloomberg 09/12/11]

BURUNDI Burundi Coffee Farmers to Withhold Crop, Seek Station Control Burundi’s coffee growers threatened to stop selling produce unless they are granted a controlling stake in the East African nation’s washing stations. The country started selling its coffee-washing and purification plants to closely held companies in 2009, with Webcor Ltd., a Swiss company, buying 13 stations. Burundi in November said it plans to sell the remaining 133 stations. According to the National Federation of Coffee-Growing Associations of Burundi [CNAC] farmers should hold a controlling stake in the plants as they have paid a tax of 60 Burundian francs/kg [US$0.04] of coffee since the 1980s to pay for the construction of the stations. Coffee output in Burundi, which grows mainly the arabica variety and relies on the crop to generate more than half its foreign-currency earnings, may drop 13% to 21,000 metric tons this year amid declining plantings according to the Burundi Coffee Regulatory Agency. Production is falling because of a lack of motivation among farmers, who are replacing the beans with other crops. [Bloomberg 12/12/11]

Cameroon Blames Coffee Export Drop On Arab Turmoil Robusta coffee exports from Cameroon fell nearly 33% last season, the National Cocoa and Coffee Board [NCCB] said, blaming the effects of turmoil in North Africa where much of the exports are consumed. Uprisings toppled the governments Tunisia, Libya and Egypt, and protests raged in other North African countries this year. Some 30,194 tonnes were shipped from the state during the December-to-November 2010-11 season, compared to 44,966 tonnes the previous year. Total robust production in the country was 31,840 tonnes, down from 53,299 tonnes last season. Output in 2011-12 is expected to shoot up according to the NCCB. [Reuters 10/12/11] Cameroon Exports 36 Tons Arabica Coffee In Opening 2011-2012 Season Cameroon's first arabica coffee exports in the opening session of the 2011-2012 season was 36 metric tons, against no exports of the crop in the same period of the just ended season according to the Cocoa and Coffee Interprofessional Board, [CCIB]. The arabica coffee season in Cameroon runs from October through September. Statistics from the CCIB, which still need to be certified by the country's government, showed that a total of 2,409 metric tons of arabica coffee were exported in the previous 2010-2011 season, slightly down from the 2,986 tons exported during the 2009-2010 season. Arabica coffee output in Cameroon has been plummeting in the past few years as farmers have diverted land to food crop production. [Dow Jones 05/12/11] Cameroon Exported 29,027 Tons Robusta Coffee In Dec-Oct Cameroon exported 29,027 tons of robusta coffee between December and October, down from 42,752 tons of the crop it exported during the first 11 months period of the previous season, according to the Cocoa and Coffee Interprofessional Board [CCIB]. The figures showed that just 594 tons of the crop was exported in October of the current season alone, far below the 1,781 tons shipped out of the country in the same month of the last season. Officially, the robusta coffee season in Cameroon stretches between December through November. The country exported 44,966 tons of robusta in the 2009-2010 season, up from 29,350 tons the year before. [Dow Jones 05/12/11]

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Coffee >>

Cameroon Introduces Chemical Use & New Species To Fight Coffee Disease Arabica coffee production in Cameroon is expected to be helped in the 2011-2012 season, thanks to the provision of chemicals by the government to fight the coffee berry disease [CBD] according to the North-West Cooperative Association [NWCA] Ltd. In Cameroon, arabica coffee is grown only in the high plateau of West and North-West regions, with the latter accounting for 80% of total output.

ETHIOPIA New Ethiopian Coffee Directive Retracted The Ethiopian Ministry of Trade has retracted the directive that required all coffee exports to be shipped in container sized bags. The directive that established the new shipping system has been made null and void according to Kebede Tchaine speaking to the Board of the Ethiopian Coffee Exporters Association [ECEA]. Tchaine had remained resistant when coffee exporters opposed the directive that imposed the new shipping system.

Production fell sharply in the 2010-2011 season to 2,577 tons, down from 3,453 tons in the previous season mainly due to the outbreak of the CBD. Many farmers are replacing traditional varieties, mostly the Jamaica variety, with the Java variety which is more vigorous and resistant to the disease.

Associations representing major importers from Germany and Switzerland wrote letters of complaint against the new bulk container shipping to their Embassies in Ethiopia, the Ministry of Trade and the Ministry of Foreign Affairs. A meeting of the Ethiopian Coffee Exporters Association concluded that the shipping system was untenable and requested appropriate revisions from the authorities. [The Reporter 19/12/11]

The Kenya coffee hybrid “Ruiru 11” has also been planted over the last 2-years which is resistant to both the CBD and coffee leaf rust. These moves should raise regional output to 7-10,000 tons in 2011/12. Cameroon plans to raise output to 125,000 tons in the next decade, of which 80,000 - 90,000 tons will be robusta coffee now grown in 8 of the 10 regions. [Xinhua 16/12/11]

COTE D’IVOIRE October Robusta Coffee Exports Down 44% On Year Ivory Coast exported 4,691 metric tons of robusta coffee in October, the first month of the 2011-12 season, down by 3,736 tons, or 44%, on the 8,427 tons shipped in the preceding season. Ivory Coast produces about 2% of annual global coffee output and is Africa’s third largest coffee producer, after Ethiopia and Uganda. The coffee marketing season runs from October-September and peaks in January-May, during the seasonal lull in cocoa harvesting. Exports have been hit by the post-election crisis which saw some of the worst violence in the coffee growing areas in the West, as well as general move by farmers away from coffee. [Dow Jones 08/12/11] Shipments of green robusta coffee beans per port. All figures are in metric tons. Ports Abidjan San Pedro Beans total

Oct 11 3,151 154 3,305

Oct 10 7,313 126 7,439

Net weight of instant soluble coffee produced and shipped by Nestle SA’s Abidjan plant. Period Products

Oct 11 533

Oct 10 380

The bean equivalent is the amount of beans it takes to produce one ton of soluble coffee. The sum of bean exports and the bean equivalent gives the total exports.

Bean equivalent Beans total Total exports

Oct 11 1,386 3,305 4,691

Com-Watch Issue 8: January 2012

Price Drops On Increased Supply During Week 50 prices of unwashed arabica coffee fell by 6.9% on the Ethiopian Commodity Exchange. The fall occurred as the volume of washed and unwashed coffee traded on the exchange increased from 2,295 MT to 2,529 MT in 2010-11. Ethiopia is the 6th largest coffee producer and its exports have also increased which experts say is due to the introduction in 2008 of a commodity exchange market, which promoted transparent trading, and rising global commodity prices. Coffee exports from Ethiopia rose by 38% in the fiscal year to 7 July 2011 as shipments of the beans jumped. The total amount of coffee exported over the period reached US$2.8 billion. Coffee was Ethiopia's biggest source of revenue raising US$841.7 from 196,118 tonnes of beans shipped. Last year, the country exported 172,210 tons for US$528.2 million. The increase was driven by a 40% rise in global coffee prices in the period. [Bloomberg 13/12/11]

Oct 10 988 7,439 8,427

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KENYA

Tanzania Coffee Prices Rise, Eyes On Euro Zone Tanzania's coffee prices rose at auction during Week 50 buoyed by strong export demand according to the Tanzania Coffee Board [TCB], and traders expect further increases in the coming weeks despite euro zone fears. State-run TCB said 21,359 60-kg bags were offered at the sale with 20,615 bags sold. A total of 29,333 bags were up for sale in the previous auction, with 23,097 bags sold. Overall average prices at the Moshi exchange were up by US$3.41 per 50 kg for mild arabica and up by US$9.95 per 50 kg for robusta compared to the last auction.

Kenyan Coffee Prices Climb 21% Kenya’s coffee prices climbed 21% at the 07/12 auction as buyers replenished their stocks before the year-end holidays. The average price for all the coffee sold rose to US$340.95 for a 50-kg bag from US$280.70 2-weeks ago. The average price for the benchmark AA grade fell 3% to US$446.14 a bag from US$459.99 at the previous sale after supplies rose 89% to 2,623 bags. The top grade sold for as much as US$480 a bag compared to US$537 at the previous sale. The last auction this year will be held on Dec. 14 and sales will reopen on Jan. 10. Sales at the auction climbed 84% to 9,732 bags worth US$4.1 million from 5,299 bags valued at US$1.8 million at the previous auction. Supplies rose 56% to 16,610 bags from 10,616 bags at the previous auction. Kenya harvests the bulk of its crop from October through December, while a secondary crop is reaped from April to June. [Bloomberg 07/12/11] Auction in US$/50-kg bag Grade Low High AA 391 480 AB 260 445 C 242 342 E 355 361 MH 187 208 ML 90 174 PB 346 442 SB 85 85 T 111 264 TT 258 355 UG 262 322 UG1 198 267 UG2 120 255 UG3 76 163

Tanzania mainly produces arabica coffee and grows some robusta. Prices of its arabica normally track the New York market while those for robusta take their cue from London. There is a supply shortage in the world market so demand for coffee will remain stable. This should push prices further up in January and beyond. Market participants said they expect coffee prices to remain firm due to strong demand for the commodity on the world market. Europe is a key market, accounting for about half of the coffee exported from Tanzania. When the euro zone is in crisis, demand for coffee also suffers. TCB said coffee prices in New York were up by US$9.04/50 kg, while London prices rose by US$3/50 kg. TCB forecasts the 2011/12 [June/April] crop will fall to 45,000 tonnes from 56,247 tonnes in the previous season. [Reuters 13/12/11]

Average 446.14 385.61 287.75 358.82 198.14 134.52 385.44 85.00 201.68 332.54 275.18 251.17 191.96 115.55

TANZANIA Tanzania Arabica Coffee Poor Take Up Tanzania's arabica coffee prices fell at auction during Week 51, with just over half of the coffee on offer sold after growers rejected low bids from exporters. State-run Tanzania Coffee Board [TCB] said 23,615 60-kg bags were offered at the sale and 12,765 bags sold. That compares with figures at the previous action of 21,359 bags for sale and 20,615 sold. Overall average prices at the Moshi exchange were down by US$24.75/50 kg for mild arabica compared to the last auction. No robusta coffee was sold at the auction due to limited supply.

Tanzania’s Top Coffee Grade Falls 5.8% on Increased Supply Tanzania’s benchmark coffee grade fell 5.8% at a sale on Dec. 1 as supplies increased and global prices declined, the Tanzania Coffee Board said. The highest price paid for the arabica AA grade dropped to US$316 per 50-kg bag from US$321 a week earlier. The average price for the grade fell 0.9% to US$284.37 as supplies more than doubled to 8,385 bags. Total supplies at the auction rose 30% to 28,611 bags while sales climbed 21% to 22,290 bags. Arabica accounts for 75% of Tanzania’s output with robusta making up the rest. [Bloomberg 05/12/11]

The terminal market in New York was last week dropping daily. It was very significantly down on the previous week, so many of the producers were disappointed with the prices offered and they were not ready to sell. TCB The following are details of the Dec. 15 auction in U.S. dollars for a 50-kg bag: said coffee prices in New York were down last week by US$12.80/50 kg, while London prices fell by Grade Offer Sold High Low Average US$5.50/50 kg. Benchmark grade AA sold at US$242-316 per bag, compared with US$205-329 per bag Arabica AA 7,160 3,780 316 242 260.67 previously. The average price was US$260.67 per bag, down from US$289.70. Arabica A 4,601 2,184 265 253 261.42 Arabica AB 4,337 2,399 275.60 262.33 269 The average price for Grade A fell to $261.42 from $283.27 previously. The newly introduced grade AB got an Arabica B 2,941 1,608 267 230 255.42 average price of US$262.33, down from US$284.89. [Reuters 20/12/11] Arabica PB 2,499 1,544 282 229 255.31 Arabica C 2,077 1,250 243 201 223.64

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UGANDA

GENERAL

Coffee Development Authority’s Robusta Prices The Uganda Coffee Development Authority [UCDA] gave indicative prices for robusta exports, which make up 85% of the country’s bean shipments. Uganda is Africa’s second-largest coffee producer, after Ethiopia, and the continent’s biggest robusta grower. Nearby refers to deliveries to be made within 45 days and forward delivery is between 45 and 90 days. Prices are basis free on rail or truck from Kampala, in U.S. cents a pound.

World Coffee Production to Decline This Season Global coffee production will drop to 133.8 million bags in the year that started Oct. 1 according to the U.S. Department of Agriculture [USDA]. The forecast is down from output of 136.38 million bags a year earlier and a June estimate of 135.05 million. A bag weighs 60kg. The lowered projection means that demand would exceed production. The agency forecasts consumption at 133.86 million bags, little changed from 133.96 million estimated in June. Ending stocks would be 23.98 million bags, the lowest since the 2000-2001 season. [Bloomberg 16/12/11]

Grade Bugisu AA Bugisu A Bugisu PB Bugisu B Wugar Drugar

Nearby Price 212.85 211.85 211.85 209.85 210.85 194.85

Forward Price 212.85 211.85 211.85 209.85 210.85 194.85

Higher Robusta Crop May Cap Coffee Prices Record Robusta harvests in Vietnam and Brazil, along with a big jump in Indonesia’s coffee output will boost supplies of coffee at a time when demand is under threat from slowing economic growth. The effect on coffee prices has been visible in 2011, which saw a roller coaster ride. Currently, coffee prices are down to their December 2010 levels. The average ICO composite price of coffee in December, a price indicator maintained by the International Coffee Organization [ICO], is down 17% from its 2011 high levels. December alone has seen the daily price fall 8% to date. That adds credence to the belief that coffee prices are on a weak footing.

A week ago, UCDA quoted arabica prices as below: Grade Bugisu AA Bugisu A Bugisu PB Bugisu B Wugar Drugar

Nearby Price 205.30 204.30 204.30 202.30 203.30 187.30

Forward Price 204.30 204.30 204.30 202.30 203.30 187.30

The US Department of Agriculture [USDA] has released its revised world coffee consumption and production estimates. USDA has scaled down its estimates of global coffee production in crop year 2011-12, to 133.8 million bags [60kg], or down by about 1% from its earlier estimates reported in June. Compared with 2010-11, coffee production is expected to be down by 2%. USDA lowered its estimates after a shortfall in Columbia due to rains. Arabica production is down 7% while Robusta production is estimated to rise 6.6%. [Wall Street Journal/Mint 18/12/11]

Coffee prices have fallen off their 2011 highs. [Bloomberg 28/12/11]

Average monthly price, in cents per pound (till 15 Dec 2011) 350

Coffee Exports May Fall by 9.6% in December on Rains Coffee exports from Uganda may fall 9.6% in December as wet weather hinders the harvesting and drying of the beans. December shipments may decline to 215,000 60-kg bags from 237,747 bags a year earlier according to the Uganda Coffee Development Authority [UCDA]. The forecast is 5.4% less than the 227,177 bags shipped in November. On-going rains have delayed the harvesting and drying processes in most areas which has put pressure on the quality of the coffee.

253.0 300

Colombian mild Arabicas 250

192.1

Shipments from Uganda may rise to 3.3 million bags in the 12 months through September 2012 from 3.15 million bags a year earlier because of a bigger crop. Uganda plans to increase production to 4.5 million bags by 2015 through a replanting program. The nation consumes around 3% of its annual coffee crop and the rest is exported, according to the Eastern African Fine Coffee Association. [Bloomberg 19/12/11]

200

ICO composite price Uganda’s Coffee Exports Decline 15% In November Coffee exports from Uganda fell 15% in November according to the nation’s Coffee Development Authority [UCDA]. Shipments declined to 227,177 60-kg bags from 266,726 bags a year earlier. Exports for the first 2-months of the season dropped 2.7% to 442,462 bags using UCDA data.

150

100.6

142.3 100

Uganda ranks behind Ethiopia as Africa’s biggest producer of the crop. Robusta beans account for about 85% of the nation’s annual production. Exports in 2010-11 were worth US$448.89 million. Exports in 2010-11 were US$448.89 million from 3.15 million bags, compared with US$267.13 million from 2.67 million bags. [Bloomberg 06/12/11]

50

108.4

Robusta

82.7 Ja

Jul

2009

Ja

Jul

2010

Ja

Jul

De

2011

Source: International Coffee Organization

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Cotton, Textiles & Leather >>

Cotton, Textiles & Leather >>

China To Support C4 Countries On Cotton Production China and the group of 4-major African cotton producing countries [C4] announced a joint program in Geneva aimed at supporting C4's cotton production through technical and financial assistance over the next few years. The program, which came ahead of the 8th Ministerial Conference of the World Trade Organization [WTO], was jointly announced by the Chinese Commerce Minister Chen Deming and trade ministers or representatives from C4 countries: Benin, Burkina Faso, Chad and Mali. C4 countries accounts for 15% of the world's cotton exports.

Association of African Cotton Producers Hold AGM The Association of African Cotton Producers [AProCA] on 06/12/11 held its Annual General Meeting in Banjul, Gambia. The meeting is the 6th of its kind after 2006 in Bamako, Cotonou in 2007, Yamoussoukro in 2008, Lome in 2009 and Ouagadougou in 2010. Cotton is an important primary economic base for many African countries. Farmers continue to face tremendous challenges from the lack of finances, limited market outlets, limited extension services, effects of climate change, poor governance structures of farmers association, post harvest losses, unaffordable inputs, land issues, and inadequate water supply. [Foroyaa 09/12/11]

Cooperation between the two sides will include technology transfer, technical assistance in areas of research, provision of seeds, agricultural machinery, fertilizers and pesticides, funding of training projects, as well as exchanges of experience.

FACTBOX: AProCa > AProCa is an African organisation of cotton producers which brings together cotton producers in West, Central and East Africa. > Created in Cotonou in December 2004 during meetings of representatives of cotton producer’s of Benin, Burkina Faso, Cameroon, Mali, Senegal and Togo. > AProCA has 15 member countries which are Benin, Burkina Faso, CAR, Cameroon, and Cote d’lvoire, Gambia, Ghana, Guinea Bissau, Mali Uganda, Senegal, Chad, Togo and Zambia.

Despite China itself being a big cotton-growing country producing more than 7 million tons of cotton per year, China barely exports any cotton, but imports from international markets. The new program represents action in "aid for trade" and is a step forward in promoting development as stipulated by the Doha Development Agenda. However huge subsidies on cotton production, most of which come from developed countries, have undermined the competitiveness of African cottons. C4 countries have engaged in a battle in WTO to restore Cotton Forecast Cut as Global Outlook Sours competitiveness of African cotton. [Xinhua 14/12/11] Global cotton demand will be 2.6% less than forecast last month on diminished prospects for economic growth and increased market share for polyester, according to the U.S. Department of Agriculture. The world will use US Pledges US$16 Million in Aid to Africa’s C-4 111.34 million bales in the year ending July 31, compared with 114.27 million projected in November. Demand At a time when U.S. domestic cotton subsidies are at an all-time low, the federal government has decided to will drop for a second straight year, sending stockpiles to 57.67 million, up from 54.96 million projected a move forward with several initiatives to help the four leading African cotton-producing countries [Benin, Burkina month ago and the highest since 2009. Faso, Chad and Mali, otherwise known as the C-4] engage in global trade. Prices have plunged as much as 60% since reaching a record in March as the economy slowed and farmers As the 8th Ministerial Conference of the World Trade Organization geared up in Geneva, U.S. representatives boosted output to the highest ever. The USDA said its forecast reflects “continued weak mill demand owing to resolved cotton- trade issues with the world’s Least Developed Countries [LCD’s] by extending duty-free, an uncertain world economic outlook” and a shift by clothing makers to more polyester after cotton prices quota-free access for upland cotton and pledging to drum up legislative support for a new cotton assistance surged earlier this year. program when USAID’s West African Cotton Improvement Program [WACIP] expires in April. Global production will be 123.42 million bales, down from 123.89 million forecast in November, mostly The proposed new program, which will require Congressional action before it’s enacted, will provide up to because a drought reduced production in the U.S. Output still will be a record, up 7.1% from a year earlier. The US$16 million over 4-years [subject to the outcome of the budget process] to improve the capacity and government’s forecast of U.S. demand was reduced by 200,000 bales, or 5.3%, to 3.6 million bales, reflecting efficiency of the cotton sector in West Africa by “leveraging private-sector cotton initiatives, catalyzing a slowdown in recent months. [Bloomberg 09/12/11] increased commercial investment for cash crops, particularly cotton, and strengthening extension services to increase the adoption of improved techniques and technology and expand market linkages. The existing WACIP has been criticized for shutting out other African countries struggling to enter the global market. Detractors have also accused U.S. trade representatives of slapping a band-aid on a much larger problem: domestically subsidized cotton, which has long driven down global market prices and made it virtually impossible for other nations to compete. This year’s edition of the “Doha Round,” which originally began in 2001, covered issues such as the creation of a framework to facilitate membership of the LDCs to the WTO, longer protection of intellectual property rights for the LDCs, and establishing preferential rules for services offered by the LDCs. Once again, no agreement was reached. [USAID 21/12/11] Web References The Doha Round: http://www.wto.org/english/tratop_e/dda_e/dda_e.htm 8th WTO Ministerial Conference: http://www.wto.org/english/thewto_e/minist_e/min11_e/min11_e.htm USAID WACIP Cotton Program: www.wacip.org

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Cotton, Textiles & Leather >>

Fish >>

Cameroon Raises Cotton Price To Curb Smuggling Cameroon state firm SODECOTTON has increased farm gate raw cotton price by 27.5% for the current harvest in an effort to dissuade farmers from smuggling their produce to neighbouring Nigeria. SODECOTTON said it will pay farmers 255 CFA/kg of cotton this season from 200 CFA/kg in the previous season. About 16% of Cameroon's total output of 161,000 tonnes in the 2010/2011 season was smuggled into Nigeria where farmers were paid almost twice what they get in Cameroon. SODECOTTON estimated a loss of 24 billion CFA during the year. SODECOTTON pre-finances purchases by providing farmers with seedlings, fertilisers and other materials on the agreement that they sell their cotton to them. But the farmers did not respect the terms of the deal, preferring to illegally export to Nigeria. Official data from the firm shows that Cameroon's raw cotton production rose 47% to 161,800 tonnes during the 2010-11 season with plans to increase output to between 185,000-200,000 tonnes in 2011/12 following the introduction of new high-yield plants. SODECOTTON plans to raise its pre-financing fund from 33.8 billion CFA from 24 billion CFA during the 2011/12 season to boost production. [Reuters 29/12/11]

Malawi’s 2012 Cotton Output to Rise More Than Threefold Malawi’s cotton production for the 2012 season could rise more than threefold as a result of government subsidies this year, according to the Great Lakes Cotton Co one of the country’s biggest cotton buyers. Malawi is expected to produce 200,000 metric tons of lint in the season to July 2012, compared with 55,000 tons last year. The amount of land with cotton has doubled from last year to 400,000 ha. Malawi provided 1.6 billion kwacha [US$9.7 million] in subsidies for cotton farmers. President Bingu wa Mutharika told parliament in June that the government would promote the crop and wanted cotton to become the country’s main foreign exchange earner. Cotton is Malawi’s 4th-largest cash crop after tobacco, tea and sugar. The cotton price at the end of the selling season this year was 190 kwacha/kg, more than double the government-set price of 75 kwacha/kg. [Bloomberg 14/12/11]

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Unsuccessful EU Negotiations To Renew Agreement With Mauritania The European Union [EU] and the Mauritanian government failed to reach an agreement to renew a bilateral fishing pact. After 3-days of negotiations the 2-parties could not agree on the compensation to be paid to Mauritania. The current fisheries agreement expires in June 2012. The European offer is well below Mauritania’s expectations. The agreement allows 110 vessels, most of which are from Spain, to fish in Mauritanian waters. This setback takes place a day after the Government of Morocco ordered the exit of Community vessels from its fishery, following the decision of the EU Parliament to reject the extension of the bilateral fishing agreement. It had been agreed that European vessels should hire 60% of Mauritanian seamen and that such vessels would fish up to 20 miles out to sea [instead of 13 miles as it has been so far now] and 8 miles over the sea for those ships capturing crustaceans [instead of 6 miles]. [European Union 16/12/11]

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Foodstuffs >>

Foodstuffs >>

Maputo Port Citrus Operations & Logistics Cost Assessment 2011 The Citrus Growers Association of Southern Africa has undertaken a study of the logistics and costs involved in transporting fruits across the region. Their findings concluded that geographically Maputo port is well placed to offer the more efficient transport and better logistics costs compared to Durban port.

South Africa’s Transnet Looks To Bolster Grain Facility Transnet Port Terminals [TPT] is in talks with the agricultural sector and Department of Agriculture to raise an additional R250 million through public private partnership [PPP] needed to bolster a grain facility in East London. Transnet transports maize and wheat to various Southern African countries. [IOL 13/12/11]

However, due to shipping constraints from Maputo and competitive container sea freight rates offered from Durban, advantages are achieved by shipping citrus from the Durban port rather than Maputo. Direct container shipping from Maputo to key markets is not presently available [only transhipment from Durban or Far East ports] and is not thought to be offered in the short to medium term. Although it costs less to transport citrus to Maputo, by road and by rail, the difference in container sea freight rates ex Durban offers a better logistics cost and therefore citrus is transported on average an extra 450km to the Durban port. The most viable option to export citrus from Maputo is to utilize the break-bulk service to Europe, Med and Russia and to ship containers to Far East and Middle East transhipped via Durban or Far East ports. The fact that most citrus produced from the northern area is exported to Europe & UK from Durban by containers, this draws most of the production to Durban rather than to Maputo. Production Region

KM to Maputo KM to Durban KM Difference

Ave. Cost of Truck

FG Plans Two Rice Mills In Niger According to the Minister of Agriculture Two rice mills are to be built in Badeggi and Wushishi in Niger, under a public private partnership [PPP] arrangement. The old rice mill in Badeggi will also be rehabilitated - a move by the government toward boosting rice production. The ministry will construct an Agro-Industrial Estate in Minna in conjunction with the state government to process 6,200 tonnes of rice per annum.

Difference

Northern Limpopo -LP

665

1 150

-485

Maputo R 21272

Durban R 23015

MPT vs DBN -R 1742.40

Letsitele / Tzaneen -LP

440

900

-460

R 14540

R 18134

-R 3594.00

Hoedspruit -LP

350

830

-480

R 11974

R 17110

-R 5135.28

Marble Hall / Groblersdal -MP

475

700

-225

R 16366

R 12864

R 3502.32

Nelspruit -MP

200

700

-500

R 7698

R 13278

-R 5580.48

Malelane -MP

140

610

-470

R 5526

R 12385

-R 6859.20

North Swaziland -SZ

220

620

-400

R 7298

R 13703

-R 6404.88

South Swaziland -SZ

185

450

-265

R 6300

R 10043

-R 3742.80

Over the last decade citrus export production from the northern region has almost doubled which means the volume of export citrus routed through Durban has almost doubled over the same period. The result of this is the Durban port becomes severely congested and cold store infrastructure is oversubscribed during peak season. Over the same period the volume of citrus exported by containers vs. break-bulk conventional shipping has grown to represent 70% of the total export volume. In the near future if the break-bulk conventional shipping mode is not revitalized, almost all citrus will be shipped by containers and container shipping capacity and equipment may not be able to service the industries demands. Therefore the Maputo port could provide a means of reducing logistics costs, decrease the amount of citrus routed through Durban to increase efficiency, and rejuvenate and create a viable and sustainable break-bulk conventional shipping mode from South Africa.

A market will be constructed in Bida to warehouse fresh produce and market on favourable conditions to consumers. One-stop shops and agricultural input centres will be constructed in Bida, Wushishi, Salka and Mokwa towns in 2012. [Next 20/12/11]

Feronia Completes Largest Single Rice Planting In Congo Feronia announced its arable farming division has finished planting 1,200 ha of rice in DRC, the largest single rice planting in the country. The company holds a 10,000-ha concession in the Bas-Congo province of the DRC, located about 200km from Kinshasa. Feronia said it cleared 2,000 ha of land to plant 2-varieties of rice - NERICA-4 and NERICA-7 - on 1,200 ha. Feronia expects to harvest and process the rice in February 2012. After that, it will replant the land with edible beans, which will be harvested in May 2012. Feronia's focus is on its arable farming operations and oil palm operations in DRC. [Proactive Investors 29/11/11]

View the full report at: http://www.cga.co.za/site/files/5438/CGA%20-%20Maputo%20Port%20Citrus%20 Operations%20and%20Logistics%20Cost%20Assessment%202011.pdf

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Palm Oil >>

Rubber >>

Cussons Invest US$612 Million In Nigerian Palm Oil Refinery PZ Cussons’s US$56 million palm oil refinery in partnership with Singapore’s Wilmar International will be operational by Q3 of 2012. The joint venture company PZ Wilmar will invest N100 billion [US$612 million] in Nigeria over the next 5-7 years to develop oil palm plantations that will feed the refinery and reduce import bills. Nigeria currently imports around 300-400,000 tonnes of oil palm a year. [Business Day 27/12/11]

GMG Unit Signs S$535 Million Cameroon Rubber Deal A unit of Singapore-listed GMG Global has struck a US$410 million deal with Cameroon's government to develop 45,200 ha of palm oil and rubber plantations. Sud Cameroun Hevea, 80% owned by GMG, said the plantations in Cameroon's South region should become fully operational within 4-years, with production aimed at the export market. Rubber and palm oil are significant export crops from Cameroon with annual production estimated at 60,000 tonnes and 175,000 tonnes, respectively. [Today Online 14/12/11]

Palm Oil Trade Fair In Africa The Malaysia-Africa Palm Oil Trade Fair and Seminar 2011 [POTS] was held under the theme if "Seizing New Opportunities". Split over 2-countries POTS South Africa in Johannesburg attracted some 200 participants and POTS Nigeria in Lagos attracted over 250 participants. Palm oil exports are on the rise in both countries with the value of exports to Nigeria surged from US$55 million last year to well over US$410 million up to September this year, while exports to South Africa this year should exceed the 150,000 tonnes recorded last year. Nigeria, although a producer of palm oil, still imports substantial quantities to meet the need of its population of around 160 million. The Bakrie Group of Indonesia recently announced a plan to invest US$1 billion in mining as well as oil palm and rubber plantations in Nigeria. [Bernama 12/12/11] European Industry Proposes Zero-Duty On Sustainable Palm Oil Palm oil-based industries in the European Union [EU] are seeking to promote the removal of import duties on sustainable palm oil to encourage production in producing countries. A proposal has been issued to the governments of EU member states for approval. [Jakarta Post 05/12/11] Ghana Benso Oil Palm Makes Profit The Benso Oil Palm Plantation Limited [BOPP] under its new management, WILMAR, a Singaporarian Company made a profit of GH¢8.3 million after tax this year, as against a profit margin of GH¢1.9 million in 2010. The company produced 14,270 tonnes of palm oil between Jan to Nov this year, recording a 30% increase over the previous year’s 10,966 tonnes. Palm kernel followed with actual production of 2,572 tonnes this year as against 2,271 tonnes the previous year. [Ghana News Agency 12/12/11]

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Shea Nut >>

Sugar >>

Steering Committee On Sheanut Inaugurated In Ghana A 15-member steering committee on Sheanut has been inaugurated in Tamale in the Northern region of Ghana. The Committee chaired by the Deputy Chief Executive of the Ghana Cocoa Board, Dr Yaw Adu-Ampomah, is mandated to see to the sustenance and regulation of the shea industry in Ghana. Activities will be financed by the Ministry of Finance and the Ghana Cocoa Board, which is the regulatory body of the Shea sector. Ghana earns US$18 million per annum from shea exports and this could be improved if quality control measures are applied to the sector. [Ghana Broadcasting Corporation 10/12/11]

Sugar Investor Seeks 20,000 Hectares In Rwanda Algeria's biggest sugar producer Civital Group has tasked the Rwandan Government to provide 20,000 ha of land to grow sugarcane as a pre-condition to set up a sugar milling plant in Rwanda with the capacity to produce 200 MT annually. The plant is only a portion of about US$250m the group has earmarked to invest in Rwanda in agro-processing focusing mainly on sugar production, tea processing as well as grains and cereals processing for both internal and external markets. Rwanda has one sugar processing plant - Kabuye Sugar Works [KSW], which produces 30% of the local market demand and the remaining portion, is imported from Uganda, Tanzania and other countries. Due to drought that hit sugar plantations in East African countries such as Uganda and Tanzania reducing production beginning August this year, Rwanda has not been able to import enough sugar to satisfy the local demand. This has pushed prices up and the highest was Rf1300/kg. Meanwhile, the EAC countries, which tax 100% sugar imports from outside the bloc, late this year approved Rwanda and Uganda's request to import 50,000 tons of sugar and 40,000 tons each tax free to avert the sugar crisis and bring down the prices. Sugar price has now gone down in Rwanda to Rf1000/kg. However, importing sugar does not solve the issue of insufficient production locally. It also worsens the balance of trade, which continues to widen due to high imports and low exports. For Rwanda to be able to avert future sugar crisis, it is required to have sufficient sugar production but land remains a major factor hindering this objective. The current sugar miller in the country, KSW, the former state owned factory that was sold to Madhivani Group through privatisation in 1998, produces around 10,500 tons each year, which represents 30% of the total demand. Low production is a result of small and poor land for sugarcane production. When it acquired the factory in 1998, KSW signed a 50-year lease contract with the Government for 3,158 ha of land but only 2,160 ha are suitable for sugarcane production while the rest is prone to flooding. The company had promised to meet 80% of the local sugar demand but it never lived to the promise due to land issues. With repeated appeals to the government to get more land, KSW failed to attract government attention and so it couldn't get land to increase its sugarcane production to have sufficient raw material for sugar production. [EA Business Week 20/12/11] Sudan Opens Processing Plant White Nile Sugar Co. plans to open a processing plant in Sudan in December, helping to meet domestic demand for sweeteners. White Nile will start with initial capacity of 150,000 MT and grow to 450,000 MT in 2-years, covering 40% of domestic demand, the company. The company is 30% owned by Kenana Sugar Co., Sudan’s largest producer of white, or refined, sugar. Sudan is Africa’s third-biggest sugar producer after South Africa and Egypt. [Bloomberg 15/12/11] Ethiopia to Construct Sugar Factories In its bid to become a major sugar exporter, Ethiopia is constructing 10 sugar factories following the injection of a US$4.6 billion investment. The government run Ethiopian Sugar Corporation will construct the factories in Beles, central Amhara region, Wolkait northern Tigray area, Kesem north eastern Afar regional state and South Omo Zone of the Southern Nations Nationalities and Peoples' region. [Mena 21/12/11]

Government To Establish Sheanut Factories In Ghana Vice President John Dramani Mahama announced that the Government will establish 3-shea nut processing factories to make use of the abundant raw material. The construction of a facility in Buipe, Northern Region, will be completed by Feb. 7 2012, while another two will be located in vantage areas of the Upper East and Upper Cargill Replaces Head Of Sugar West Regions. The Government has signed an agreement with a Brazilian Company that would buy all the Cargill has replaced the head of its sugar business. Jonathan Drake has left the group. [FT 07/12/11] produce of the sheanut factories. [GNA 13/12/11]

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Tea >>

Tea >>

BURUNDI

KENYA

Burundi Tea Export Earnings Jump In Nov Burundi's tea export earnings jumped 60% year-on-year in November, driven up by high volumes and a stronger regional market. The country's state-run tea board [OTB] said US$1.41 million was collected from the export of 560,353 kg, up from US$878,877 earned in the same period in 2010 from the sale of 357,745 kg.

Mombasa Tea Auction Faces Crash Direct sale of tea to international buyers has plucked off 30% of the total export volume, sparking fears that it will undermine pricing at the East and Central Africa tea auction based in Mombasa. Traditionally, only 20% of tea exports are bought directly from farmers, as buyers seek top-ups for blending varieties from the auction.

Jan-Nov total revenues reached US$21.2 million, surpassing total earnings from tea in 2010 of US$18.8 million. Burundi sells 80% of its tea through a weekly auction held in the Kenyan port city of Mombasa. The average 2011 price per kg climbed to US$2.53 up from US$2.46 in 2010. [Reuters 28/12/11] Burundi Oct Tea Export Earnings Up 29% Burundi's tea export revenues rose 29% in October from the same month last year on high volumes. Burundi collected US$1.21 million from the export of 479,808 kg. It earned US$940,605 in October 2010 from 369,095 kg. Tea production in October this year was better due to good rains, and this has had a positive impact on earnings. The average price per kilogram fell slightly to US$2.54 from US$2.55 last October. Earnings in the January-October period have reached US$19.8 million, far ahead from the early projection of US$13.4 million for the year. The tea board estimates 2011 output at 9,000 tonnes, up from 8,016 tonnes in the previous crop, thanks to good rains and an increased use of fertilisers in tea farms. [Reuters 06/12/11]

The East Africa Tea Trade Association has noted increased direct transactions have reduced the number of buyers at the auction, leading to lower traded volumes. Often only half of the 70 registered exporters are active at the auction while about 18% of tea remained unsold on a weekly basis despite reduced offers following the withdrawal of Tanzania and Malawi producers mainly due to East African Community tariffs. Stringent requirements for buyers and brokers are pushing them to look for deals outside the auction. Besides being asked to deposit Sh10 million, set up warehouses and pay taxes, buyers’ licences have to be renewed annually. If the number of buyers continues to fall at the auction, the reduced competition will lead to a price crash. There are 11 tea auctions centres in the world but Mombasa, Colombo in Sri Lanka and Calcutta in India are the market movers, handling half of the tea sold through auction. Although direct tea sales are pegged on auction prices, farmers are attracted to individual contracts because the cost of storage, transport costs and brokers’ fee is borne by the buyer. A ceiling should be put on direct sales to protect the auction which handles trades valued at KSh12 billion every week. Dubai Tea Trade Centre [DTTC] has been increasing its activity in the African tea market, after various players like Unilever, James Finlay and Kenya Tea Trade Agency [KTDA] signed a trade pact with it. KTDA, the marketing agent for about 500,000 small scale farmers said it still supported the Mombasa auction but the interests of growers affiliated to it come first. [The Citizen 13/12/11] Week 51: Kenya Top Grade Tea Prices Hold Steady The average price for top grade Kenyan tea held steady at an average US$2.88 per kg during week 51, while the amount offered edged up. The Africa Tea Brokers [ATB] said 143,332 packages were offered for sale with 12.1% of it left unsold. Best BP1s TEABP1-BEST-KE fetched $3.46-2.30 per kg compared with $3.40-$2.35 per kg previously. Best Pekoe Fanning Ones TEAPF1-BEST-KE sold at $3.54-3.14 per kg compared with $3.56-$3.10 per kg in week 50. [Reuters 20/12/11] Week 50: Kenya Tea Prices Slide The average price for top grade Kenyan tea fell in week 50 to US$2.88 per kg from US$2.95 per kg previously, while the amount offered rose. Mombasa-based Africa Tea Brokers [ATB] said 142,561 packages were offered for sale with 13.4% of it left unsold. In week 49, 132,541 packages were offered, with 14.8% left unsold. Tea is a key export for Kenya and is seen fetching a record 106 billion shillings [US$1.2 billion] in 2011 up from 97 billion shillings last year. ATB noted buyers from Pakistan were the main buyers. Afghanistan and Egyptian packers showed strong interest, while Yemen, Middle Eastern countries and Iran showed more activity. [$1 = 89.0000 Kenyan shillings] [Reuters 14/12/11]

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Tea >>

Timber >>

RWANDA New Plants Planned to Boost Tea Exports A new strategy aimed at increasing Rwanda’s revenue from tea export has been unveiled by the National Agricultural Exports Development Board [NAEB]. NAEB, the agency that oversees promotion of exports in the country, has said that the new strategy will among other things seek to establish 5 new tea factories. The new plants will be operational by 2014. Rwanda's tea sector currently has 11 factories with an annual production over 23,000 tons of dry tea. Five of these are 90% owned by private sector and 10% by small scale growers following a massive privatization drive that begun with Sorwathe tea factory in 2003. Other factories privatized between 2003 and 2011 are Pfunda, Nyabihu, Rubaya, Nshili-Kivu, Kitabi, Gisakura, Mata and Gisovu. Mulindi, Rwanda's oldest tea factory constructed in 1960 and Shagahsa constructed in 1963 are the only ones in which the government has a controlling stake of 55% and 70% respectively. Land area under tea cultivation is about 15,000 hectares and production has grown from 5,414 tons in 1995 to 23,249 tons in 2010. He says the new goal is to increase tea production to at least 31,460 tons by 2014 and 41,873 tons by 2017. The NAEB is actually looking at having a total 31,588 hectares of tea plantations, 41,873 tons of harvest and export receipts of US$ 147million by 2017. But there are challenges. NAEB says Rwanda's tea exports have not yet properly penetrated the international market like Kenya's. And even if it had, price fluctuations are also to worry about. However approximately 97.3% of the Rwanda tea crop is exported in its raw form with 60% of it sold in auctions, 37.3% sold directly and 2.7% sold locally. Every week at the Mombasa auction, Rwanda tea especially Gisovu BP1 fetches the highest price. In fact, Kenya buys most of Rwanda's tea to boast their own local production for their huge international market. NAEB tea factories will be supported to acquire certification through trainings to enable then sell their products on the international market. The other challenge is limited value addition with 97.3% of tea exported in raw form to Kenya. This obviously robs the country of several millions of dollars that would have been earned from finished products. NAEB, with other stakeholders is now rooting to ensure good management of tea cooperatives by making a follow-up on harvesting tea leaves in time and efforts to reduce fertilizer prices by having tea fertilizers produced in Rwanda will also be supported. On the issue of limited land for expansion, land consolidation for new tea plantations is being fronted as a solution in addition to replacing old tea fields to give way for new ones. Rehabilitation of main roads and feeder roads for quick delivery from fields to factories and modernization of the tea processing machinery will also be considered. With the successful implementation of the activities to improve tea production, Rwanda will be hoping to double export receipts. [Rwanda Focus 05/12/11]

UGANDA Kisoro Gets Sh530 Million For Tea Growing Kisoro district has received sh530 from the Ugandan government for tea growing. The money will be used to kick start tea growing in the sub counties of Kirundo and Nyabwishenya near the Bwindi national park. [New Vision 26/12/11]

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Price Levels Unchanged As New Export Markets Absorb Increased Output The news from producers is that there has been little change in the market situation even as buyers in Europe and N. America prepare for the Christmas and New Year holidays. Export prices for logs and sawnwood remain stable. The doubts expressed by exporters in August and September this year that the prices being obtained for certain species were likely to fall back to the previously established levels did not materialise. The anticipated price correction did not occurred even as sawnwood production in the region expanded steadily throughout the year. Efforts at market diversification to a wider range of consumer countries have been successful for some exporters and this has helped balance production and demand levels thereby stabilising prices. [ITTO 1-15/12/11] Producers Track Demand Trends To Avoid Overproduction In recent weeks log harvesting in Cameroon has not picked up as expected as the rains lasted through into November, much longer than usual. This has resulted in log stocks dropping below normal levels for this time of year. Elsewhere, production and export volume have remained quite closely balanced but sawmillers are keeping a very close check on customer demand forecasts hoping to avoid running into an oversupply situation. [ITTO 1-15/12/11] Chinese Preference For ‘In Fashion’ Species Amid Slowing Demand Producers are seeing a slowdown in demand from China but this has not impacted the overall market, though certain species are said to be ‘out of favour’. The effect of any decline in demand is more likely to be felt by sawnwood producers than log exporters. This, say analysts, is because the availability logs for export continues to fall and demand for export logs is form in India. However, the recent weakening of the rupee is likely to soon have an impact on the market. [ITTO 1-15/12/11] Market Prospects For 2012 Hinge On Resolution Of EU Debt Crisis Producers are unanimous in their view that forecasting how business will develop in the first quarter of 2012 is virtually impossible. They are somewhat reassured that the Eurozone countries are determined to resolve the currency problem in ways that will ensure more stable economies for the biggest debtors. However the trade is aware that there will still be large spending cuts that will negatively impact demand for Central and W. African wood products. [ITTO 1-15/12/11] www.delmas.com

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Timber >>

Timber >>

Ghana Export Permits Drop By A Third In July-September Period A total of 1,235 export permits were processed, approved and issued by the Timber Industry Development Division [TIDD] during Q3, covering shipments of timber and wood products through the ports of Takoradi and Tema, as well as overland exports to neighbouring ECOWAS countries. The number of permits issued in the third quarter declined by almost 30% compared to the previous quarter. The number of permits issued in Kumasi fell drastically from the previous quarter figure of 622 to just 155.

Agreement Reached Regarding CAR Wood Imports Thanks to legislation passed by the European Commission on Nov. 28, all wood imports into Europe via the Central Africa Republic [CAR] will be required to have a license denoting their legal origin, which will be fully implemented by 2014. The agreement will look to make the timber industry, a large portion of the CAR market, more transparent, so as to benefit the economies of both Europe and Africa.

This, say local analysts, could be due to the TIDD exercise of eliminating chainsaw lumber exports which go mainly to neighbouring countries. The number of permits issued for Kumasi shipments to neighbouring countries dropped from 519 in the second quarter to 54 in Q3. The highest number of export permits issued was for sawnwood shipments which accounted for 45% of the total number of export permits issued during the quarter under review. Permits for plywood export were the second highest. [TIDD 05/12/11] Ghana Regional, Middle East And Asian Markets Sustain Price Levels During Q3 2011the TIDD processed and approved contracts for the exports of sliced veneer, mouldings and celtis sawnwood meant for the West African market. During Q3 exporters were able to meet the Mouldings produced from species such as wawa, koto, otie, utile, ofram and walnut were shipped to Nigeria. Contracts for exports of sliced veneer to the Ivory Coast and celtis sawnwood for Senegal were approved. Minimum Guiding Selling Price [GSP] for plywood destined for the West African market, especially Nigeria. Most export contract prices were well above the GSP. The TIDD data shows that prices for wawa sawnwood contracts for Far and Middle East countries improved from levels recorded recently. In contrast, exporters of mahogany sawnwood to the US market were, with a few exceptions, unable to satisfy the GSP. The gap between the contract price and the GSP in the second quarter was around 3-7%. However, in Q3 the difference between the price being offered by US buyers and the Ghana GSP widened to 7-11%. Ghana’s underutilised species such as celtis, yaya and denya continued to find markets in the Middle and Far East countries. Shorts of denya sawnwood continue to attract buyers for the Chinese market. [TIDD 05/12/11] National Forest Forum Calls For Abridged Version Of Forestry Laws Participants at the 4th National Forestry Forum-Ghana have called for an abridged version of laws on forestry to be made available to stakeholders with special reference to forest fringe communities. Although there are rules and regulations, they are shrouded in ambiguity, thereby creating room for corrupt practices and making enforcement difficult. The 3-day meeting focused on issues affecting the sustainable management of forest and wildlife resources in Ghana. [Ghana News Agency 11/12/11]

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The CAR will set up a national system to ensure business compliance with the legal framework set out for timber production; the framework blankets all wood exports to the EU. By doing this, the CAR will eliminate illegal deforestation and environmental degradation, so prominent in African nations, that contribute to climate change. [New Europe 06/12/11] Fallsway In US$1.5m Plant Expansion Fallsway Timbers Limited will invest US$1.5 million in expanding its plant capacity in Livingstone, Zambia, following the increasing demand for its products over the last year. The funds, additional to the US$1.5 million which has been spent already this year, will set up horizontal and vertical wood processing unit with saw-milling, kiln drying and furniture producing facilities. Fallsway produces about 600 cubic metres of finished and semi-finished timber products annually which are sold to the domestic market and to the export markets especially in South Africa and Botswana. [Times of Zambia 05/12/11] Exporters See Slight Cooling In Business For The Chinese Market Producers report, with a certain degree of surprise, that demand for Central and W. African hardwoods is holding up well and prices remain generally firm. There have been some slight changes in price but this reflects the normal ups and downs for individual species as buyers deal on a contract by contract basis. Reports suggest that some exporters have noticed a slight cooling in levels of new business from buyers for the Chinese market. It is said that stocks of some species are above current consumption levels in that market or, in the case of okan, there is still a moderate overstocking due declining demand from flooring manufacturers. The authorities in China have introduced measures to address the overheating in the housing market, especially speculative construction activities. However, the underlying demand for housing in China is undiminished. [ITTO 16-30/11/12] Demand For Padouk, Sipo & Sapele Remains Strong And Sustained Padouk sawnwood has been a strong market performer in recent months and producers report there are no signs of a slowdown. There is even some continued demand from European buyers say producers. Sipo and sapele sawnwood prices are stable and the market seems to have absorbed the recent higher than usual production of sapele. [ITTO 16-30/11/12]

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Timber >>

Timber >>

A Steady Flow Of Orders For Some EU Markets Keeping Prices Stable Some producers remain nervous about the stability of their markets in Europe due to the unsettled economic situation. Countries such as Greece, Spain and Portugal and even Italy are unlikely to be able to finance new infrastructure or housing project in the near future. The UK, Netherlands, Germany and even Belgium are still buying West and Central African timbers although exporters report business is slow, but prices are stable. [ITTO 16-30/11/12]

Ghana Third Quarter Exports Continue Downward Trend Data on contract approvals by the Timber Industry Development Division [TIDD], show that exports of timber and wood products continue to decline. This, say analysts at the TIDD, is mainly due to the dwindling raw material base. Contracts for a total volume of 76,014 cu.m of wood products were processed and approved by the TIDD in the third quarter of 2011.The contract volume approved for the period was 12% lower compared to volumes in contracts approved during the second quarter. The table below shows the breakdown of volumes in contracts approved by product during the quarter under review.

Brisk Demand In India And Vietnam Offsets Weaker Chinese Market It is difficult to determine how well business will hold up into the first quarter of 2012. The slight downturn in demand in the Chinese market is being factored into forecasts. In contrast, business is reported as very brisk in India and, on a smaller scale in Vietnam. [ITTO 16-30/11/12]

TIDD Third Quarter Contract Approvals By Product Product Category Volume [cu.m] Percent Primary 4,279 5.63 Secondary 65,164 85.73 Tertiary 6,571 8.64 Total 76,014 100.00

Demand From South Africa And Middle-East Countries Helps Maintain Market Stability There is good, steady demand for sawnwood for Middle East markets. This, and steady demand from S. Africa, is a great help in maintaining the market. [ITTO 16-30/11/12] Product Global Green Carbon Announces First REDD+ Project in Cameroon Global Green Carbon Corporation [GCG] and University of California [UCLA] Center for Tropical Research [CTR] consortium announced that it has received formal Letters of Approval from the Cameroon government to advance feasibility assessments for the first REDD+ [Reduced Emissions from Deforestation and Forest Degradation] project in Cameroon, located in and around the Dja Biosphere Reserve [DBR]. The Cameroon Ministry of Forestry and Wildlife, MINFOF, and Ministry of Environment and Nature Protection, MINEP, have awarded official approval to the GGC-CTR consortium to conduct REDD+ feasibility assessments within the Dja Biosphere Reserve. The DBR project aims to reduce deforestation and degradation and encourage an increase in carbon stocks within the 624,000 ha of reserve. [PR Web 06/12/11]

PRODUCT Lumber Rotary Veneer Sliced Veneer Curl Veneer Boules Plywood Mouldings Dowels Floorings Layons Teak Logs Gmelina Billets/Poles Blockboard 4 Profile Boards TOTAL

2nd Qtr 2011 Permits Issued 1,032 31 126 1 17 271 156 5 15 3 80

3rd Qtr 2011 Permits Issued 564 29 101 1 11 279 135 5 4 2 86

10 2 4 1755

16 -50 0 1235

% Change -45.3 -6.5 -19.8 0 -35.3 3 -13.5 0 -73.3 -33.3 7.5 60

-29.63

Sawnwood exports declined by 9% for the second consecutive quarter from a volume of 28,532 cu.m in the second quarter to 25,913 cu.m in the third quarter. Total contract approvals for export of plywood also fell [down 12%] from a volume of 30,373 cu.m in the second quarter to 26,734 cu.m in the third quarter. Around 87% of the approved plywood export contracts were for shipment within the West African market, with the remaining 13% for the European market, particularly Greece and Belgium. A total of 6,366 cu.m volume of veneer export contracts were processed and approved. The volume represented in these contracts was down 18% on the previous quarter. The breakdown of veneer exports by product is as follows: sliced veneer [4,778 cu.m, representing 74.5%]; rotary veneer [1,585 cu.m representing 25%] and very small quantity of high value curl veneer. Exports of teak poles/billets/logs also declined dropping from a volume of 13,324 cu.m in the second quarter to 4,279 cu.m in the third quarter, a drop of 68%. However, the volume of teak sawnwood in approved export contracts increased from 3,038 cu.m in the second quarter to 5,051 cu.m in the third quarter. Contracts processed and approved for the export of rosewood also increased. For the third quarter fifteen permits were issued for the export of 1100 cu.m of rosewood sawnwood to China at a value of €278 million. [ITTO 16-30/11/12]

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