Wednesday, January 11, 2012

General Equilibrium: Fuel Subsidies and Cocoa

What other effects does the removal of a fuel subsidy have? Well, it increases the price of cocoa, for one. Removing the fuel subsidy led to strikes, and strikes led to this:

The ongoing labour strike in Nigeria has contributed to drive the price of Cocoa to highs not seen in 11 years. Government processing offices that usually grade Cocoa before export are closed as a result of the strike. Also virtually all export terminals have been closed as a result of the strike. Cocoa beans are first certified/graded before being bagged and shipped for exports.
The price of Cocoa had fallen over 30% in 2011, however the strike has seen prices rebound and gain 15% in just two days.

No comments:

Post a Comment