Nigeria’s involvement in the cocoa market has had a substantial impact on the nation’s economic development and global chocolate consumption. However, the declining cocoa beans supply from Southwest, among other producers, is altering the country’s volume, prompting processors worldwide to look elsewhere to meet the demand. Agricultural Policy Research in Africa (APRA) Consortium, an international research programme that targets sub-Saharan Africa examines the challenges of the region’s cocoa sector and considers practices affecting Nigeria’s competitiveness in the global market place. DANIEL ESSIET reports.
In a market where customers are more demanding than ever, the global cocoa market size is expected to reach $29.5 billion by 2025; rising at a market growth of 3.51 per cent. This is according to “Global Cocoa Market (2019-2025), published by Researchandmarkets.com.
One of the primary drivers for the growth is expanding middle-class and innovative uses of cocoa in the food and related industries into confectionery, bakery products, cosmetics, functional foods, beverages and pharmaceuticals.
The scale is exploding in the chocolate market which globally consumption has boomed.
According to analysts, the global market for chocolate confectionery grows at an annual rate of five per cent. As a consequence, cocoa production and processing has enjoyed substantial growth worldwide.
To meet demand, analysts say cocoa bean processing has increased, by more than 25 per cent over the last four years.
Nigeria
In Nigeria’s export basket, there has been a noticeable shift away from oil to agricultural commodities. This had highlighted renewed optimism and commitment for agro export-led growth model and the necessity for trade.
Buoyed by this, Nigeria has agro-industries that are internationally successful and have created livelihoods for millions of people. Some of these companies and individual producers are in the cocoa industry.
For years, Nigeria has been recognised as one of the most important cocoa producers in the world.
In the past, it was the nation’s stunning economic success. The revenues from this sector bolster Nigeria’s balance of payments.
For instance, while Nigeria produces 250,000 metric tons of cocoa annually, the country has a 5.2 per cent share of the global cocoa market estimated at 4.85 million tons in 2019, earning $547.5 million recently at the price of $2,190 per ton.
The Nigerian Export Promotion Council (NEPC), said the country earned N103.8 billion (£222 million) from cocoa in 2018 from exports of by-products of cocoa, such as cocoa butter and fermented cocoa beans.
According to the National Bureau Statistics (NBS, 2019), exports of fermented cocoa beans in the first half of 2019 was estimated at N31 billion (£65 million), while raw cocoa beans exports worth N17.15 billion (£37 million) and natural cocoa butter at 2.26 billion naira (£4.8 million).
Similarly, the cocoa supply chain is a growing part of the economy involving more than 100,000 families in terms of people in employment. This demonstrates the importance of this sector to all actors involved in the value chain process.
Indeed, cocoa is the nation’s most important agricultural product with a significant socio-economic impact.
Statistics from FAOSTAT show that in 2015, Nigeria had a production of 302,066 tons of cocoa beans, 298,029 tons in 2016, and 328,263 tons in 2017. In 2018, the capacity of the nation’s cocoa beans production was around 245,000 metric tons.
Increasingly, Nigeria faces fierce competition from Asia and Latin American producers which Europe and the United States of America are looking forward to as sources of supply advantage.
Currently, the global demand for cocoa is growing. According to analysts, a huge gap between the production and consumption of chocolate is projected for the next five years.
Although Nigeria has a large cocoa industry, exports have generally not been impressive.
Constraints remain
While cocoa production has been a booming business in Nigeria, analysts believe cocoa has not generated enough foreign exchange in recent years to satisfy the country’s needs.
One of them is Chief Executive Officer, Multimix Group and President, Association of Outsourcing Professionals of Nigeria, Dr Obiora Madu.
For analysts such as Madu, the low output of cocoa beans is undermining Nigeria’s potential. This is because international cocoa processors were already looking elsewhere for a reliable source of beans.
He noted that there were need for the government to support large companies, small and medium enterprises ((SMEs) and farmers to export more cocoa abroad.
This, according to him, will assist the government in diversifying the economy as well as increase participation in the different agro-commodities value chain.
Southwest’s cocoa bean production under threat
The Southwest is a national powerhouse across numerous industries, including the agricultural sector. The region boasts fertile land and ample water resources. It generates millions of dollars from its export earnings from all agricultural products.
Agricultural Policy Research in Africa (APRA) Consortium, an international research programme that analyses the pathways to agricultural commercialisation in sub-Saharan Africa engaged the stakeholders in Southwest, including Osun, Ondo and Ogun states to uncover areas of concern that are restricting cocoa commercialisation in the region.
With headquarters at the Institute of Development Studies, United Kingdom, APRA is funded by the Department for International Development (DFID). The consortium offers high quality evidence and policy advice that makes a difference in crucial areas of central importance in sub-Saharan Africa.
From its survey, cocoa farmers across the region face a number of challenges: small plots of land, ageing trees that are less productive and small profits that make it difficult to support themselves and send their children to school.
Through, there have been initiatives to help community replant cocoa trees, on the balance, many cocoa trees are well past their prime and are not producing enough cocoa for farmers to break out of the poverty cycle.
Generally, cocoa trees take three to five years to produce crops, which can present a challenge to replacing the ageing tree population.
An exploratory survey of cocoa producing areas in the Southwest conducted by APRA showed that most of the cocoa farmers were among the older generation.
Osun State
In Osun State, for instance, eight out of every 10 farmers interviewed were 50 years and above. Mr Isaac Olaitan and other cocoa farmers in Osu village said more must be done not only to improve cocoa farmers’ livelihoods but also to make it an attractive job for future generations to ensure sustainable supply.
Along with ageing trees, most cocoa farmers in Osu are also ageing and youth in those communities do not see it as an appealing career option.
The study also revealed disinterest in cocoa farming among the youth specifically, and agriculture in general. Some of the reasons gathered from the survey included problem of erratic power supply or total absence of power supply in the cocoa-producing area.
Some of the farmers in the state have been growing cocoa for decades and it means everything to them, but the declining production is affecting them. Farmers in the area have lost hope in the cultivation of the crop.
A visit to cocoa farmers in Iwara, Osun State, provided an insight into the country’s cocoa value chain, and a glimpse of the potential for turning waste into wealth.
Cocoa pods were broken to remove the beans, while the pods are discarded as waste material, which is either burned or left on the farm to decompose. For a long time, the pods were considered waste, until some community members – particularly women – used the cocoa pod as the main raw material in the production of indigenous ‘black soap’, to help generate additional income.
Some of the immediate findings are that farmers acquire their cocoa territory either by inheritance, rent, and lease, or through the payment of royalty – which involves payment of an agreed sum of money or kind (farm produce) with the landowner, who can be an individual or a representative of a family called olori-ebi. Farmers often use the land for production through renting or leasing from others.
In some cases, farmers acted as produce buyers to fellow farmers in order to increase their own ‘output’ and ultimately, income for the season. The survey noted that tenure rights through inheritance were secure, particularly for locals in the community, but purchasing land, although practised, is not common.
The experts stressed that cocoa production is paramount for raising farmers’ income and economic status.
According to them, cocoa production is essential to the livelihoods of the people of Iwara, which is one of the major cocoa-producing states in Nigeria.
Most of Iwara’s farmers have small (one to two hectares and medium-sized farms (four to five ha), which are often family-run.
The cocoa farmers expressed their fear of unpredictable weather.
However, some in Osun State referred to the irrigation technologies that the Federal Government and other agricultural organisations provided farmers in northern states, such as Kano and Sokoto, to aid their production.
From APRA survey results concerning Osun State, experts say the state has great potential.
Ondo State
During the stakeholders’ engagement meeting, urbanisation and timber logging were the major concerns that negatively affected future commercialisation of cocoa in the state.
Other associated problems included ageing cocoa trees, parasitic organisms, lack of improved cocoa varieties, high cost of inputs, poor knowledge of agrochemicals, low-quality chemicals, climate change, poor enabling policy environment and poor access to extension services.
However, an increase in the amount of logging in the state is becoming problematic. As was expressed by one of the discussants, “cocoa production has been bedevilled with lumbering activities, which has affected cocoa enterprise as a major contributor to livelihood in the state.”
Ogun State
From a study carried out by the APRA Nigeria team on cocoa farming in Odeda Local Government Area in Ogun State revealed a significant decline in the yield and production of cocoa, affecting the commercialisation of the bean in the state.
Farmers there explained that their cocoa beans are mainly sold in ‘kongos’ to local buyers, who then sell to cocoa store dealers. The store dealers repackage the beans and export them, but cocoa stores in Odeda no longer exist due to the low supply of cocoa beans in the community.
Farmers also revealed that labourers are scarce and their demands are often high. The labourers are hired and paid three months at a time. They are mostly from Benue and are paid N25, 000 for three months of work. The survey team observed low participation of youths in cocoa farming in Odeda.
This is as a result of a large number of the youth taking to other activities such as motorcycle transportation, popularly called okada.
Other reasons behind the lack of youth involvement in farming included the seasonal nature of cocoa harvesting, the low market price of cocoa beans with little or no profit for farmers.
Despite the low production level of cocoa farming in Odeda, cocoa farmers were still optimistic that there was a bright future for cocoa farming in their community, but only if the challenges are addressed.
The Team Leader and Senior Lecturer, Department of Agricultural Economics, University of Ibadan, Dr Olajide Adeola noted that poor yields, shrinking cropping areas and the fact that fewer young people want to work as farmers were major challenges when it comes to satisfying cocoa demand.
Another team member, Dr Kehinde Adesina Thomas of the Department of Agricultural Extension and Rural Development, Faculty of Agriculture and Forestry, the University of Ibadan echoed her comments and urged the government to support cocoa farming in the country.
