LOCAL Cocoa farmers are facing tough times as the year draws to an end following the decline in the price of Cocoa on the World Market.

Authorities said cocoa exporters, traders and farmers are likely to experience a price drop for some time.

Even though experts predicted a good run this season beginning on October 2016 to 2017, there are other factors that have contributed to the current decline.

According to the Commodities Export Marketing Authority (CEMA) Chief Produce Inspector Mr Patterson Siliota, this is still early in the season and anything could have happened that could turn around the situation as the season proceeds.

He said the good Cocoa Season 2016/2017 (surplus of cocoa tones), Brexit (weakening of pound sterling) and speculators withdrawing from their investments are all contributors to the current decline on all fronts from International Terminal Cocoa Market prices, contracted prices offered to local exporters and domestic prices paid to cocoa farmers by cocoa exporters.

“For International cocoa marketing, Solomon Islands is a very small cocoa bean producing country so we are price takes only,” said Mr Siliota.

“The world market prices are influenced by big producing countries especially in West Africa like Ivory Coast, Ghana, Nigeria and in Latin America like Brazil, Ecuador, Venezuela and in Asia like Indonesia.

“Whatever affects the production in those countries especially West African countries can really have impact on the price in the world scale,” he said.

“Some of the potential threats to the production of cocoa beans include excessive rainfall, which can lead to disease crop in West African countries.

“The Harmattan desert wind which blows from the Sahara desert can cause drought resulting in poor harvest with small bean sizes, other natural disasters and political instability in these producing countries,” he added.

In relation to “demand”, industry reports indicate that both cocoa butter and powder prices have continued to decrease. Most market analysts expect butter prices to continue to decline in the coming months amid a sustained decline in cocoa bean terminal prices.

Meanwhile, Cocoa farmers from East Guadalcanal selling cocoa pods to cocoa buyers in Honiara have confirmed that the cocoa buying price per kilo by buyers has dropped from $17.00 per kilo to $11.00 and $10.00 per kilo in which they are questioning why there is such a downfall on prices.

Hopkins Iro one of the cocoa farmers from East Guadalcanal Island Sun managed to also ask said such experience recently from the drop of cocoa prices is affecting their benefits (income) from their produces.

The graph below illustrates the declining trend of Average International Cocoa price, Contracted Prices and Domestic prices for 2016 up to November. All are in Solomon Bokolo Dollars.

• We see the decline in International Cocoa Terminal price is most obvious beginning in July 2016. This may be due to the aftermath of the Brexit vote taken on 23^rd June 2016.
• The average International Terminal price continues to decline at a steady pace but dropped further in November 2016. Indications in December revealed that the International Terminal price have further dropped to around SBD$17,000/MT.
• The average Contracted Prices (FOB) has almost steady, slowly fluctuating between SBD$20,000/MT and SBD$21,900/MT from January to September 2016, then dropped to SBD$18,009/MT in November 2016.
• The average Domestic prices have remained almost steady between SBD$16,430/MT and SBD$17,760 up to August 2016, but then slightly declined to SBD$15,820/MT in September, then to SBD$14,070/MT in November 2016. Indicative average prices for December 2016 is now in the range of SBD$11, 000/MT – SBD$12,000/MT.
• From the graph and calculations made, for the value (Price) of one metric ton of cocoa exported (fob), 70% of the price was paid to cocoa producers, 20% of the fob price was retained by the exporter whilst the other 10% was for the transport sector and regulatory services including ports handling charges.