The rise and fall of cocoa as Nigeria’s top export

Cocoa was one of the main sources of income in Nigeria prior to Independence, but that changed following the exportation of crude oil in commercial quantities in the 1970s.

Prior to the rise of crude oil, the agriculture sector was the dominant contributor to domestic output, employment, and foreign exchange earnings.

Three decades later, oil now contributes more than agriculture to foreign exchange earnings.

In the first quarter of 2022, the agriculture sector contributed 4.96 percent to total trade, while the oil sector contributed 63.77 percent.

“Looking back to the 1960s, Nigeria was the second largest producer of cocoa and highest source of FX before investments in the oil sector. Consistently, cocoa became the second highest source of FX for the country,” Adeola Adegoke, president of Cocoa Farmers Association of Nigeria (CFAN), said.

Over 50 percent of all exports in the 1970s and over 60 percent in 1980 were made up of cocoa. But during the 1970s, its share steadily decreased, falling from 49 percent in 1989 to 22 percent in 1998.

According to the Observatory of Economic Complexity, Nigeria’s cocoa bean’s net export value from 2000 to 2005 was $1.734 billion; it increased to $3.15 billion from 2006 to 2010, and to $5.397 billion from 2010 to 2014, before declining to $3.193 billion from 2015 to 2020.

Nigeria is the fourth largest cocoa producer worldwide, according to World Atlas, with major cocoa-producing states in Ondo, Cross River, Ogun, Akwa Ibom, Ekiti, Delta, Osun, and Oyo.

Between 2015 and 2020, the country was able to increase cocoa production by 25 percent to 250,000 tonnes, compared to Côte d’Ivoire, which has been able to increase production volume by 33 percent to 2,105,000 tonnes, and Cameroon, by 32.7 percent to 280,000 tonnes, data from the International Cocoa Organization (ICCO) show.

But Ghana Cocoa Board, despite the COVID-19 pandemic, reported total production of 771,000 tonnes for the 2019/2020 cocoa season as of November 2020, which is a 0.9 percent decline in cocoa production since 2015, according to ICCO.

Many cocoa processing factories in Nigeria are not functional or produce below capacity. About 90 percent of the nation’s cocoa beans are exported while about 10 percent are processed locally.

The country earned over N103 billion from cocoa products exported in 2018, according to Segun Awolowo, CEO of Nigeria Export Promotion Council.

Data obtained from the National Bureau of Statistics showed that in the first quarter of 2022, urea was the leading top non-oil export, amounting to N208.39 billion; superior cocoa beans came second with a total of N72.6 billion, while sesame seeds and standard quality cocoa beans came in third and fourth respectively, amounting to N56.4 billion and N13.2 billion respectively.

Mufutau Abolarinwa, national president of Cocoa Association of Nigeria, explained that sesame seed is a yearly seed, and because it is a perilous crop that can go every year, production for the crop can always increase.

“There’s more awareness of the demand for sesame seeds worldwide at the moment, hence it is the leading crop for non-oil export in Nigeria,” he said.

Abolarinwa said the demand for cocoa had not declined.

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“Still, production of the crop has declined because farmlands, where cocoa production takes place, have been given out by the state government to pantries. Most of the farmers are aging, and youths are not ready to farm because of insecurity in the farmlands, and the cost of chemicals and insecticides to maintain existing farmlands is high,” he added.

The sector is facing a plethora of challenges including climate change, technological modernisation, access to finance, and pests and diseases.

Adegoke said: “Some of the challenges faced range from downsizing to the number of cocoa farmers, lack of finance in remunerating the farmers, low investment in the cocoa sector, and lack of finance in terms of productivity per hectare. Nigeria has about 350 kilograms per hectare in comparison to what is obtainable in Ghana, Ivory Coast and Indonesia, hence the low productivity and inconsistency in production.

“Low investment in the cocoa sector in comparison to other sectors, for instance, the cash flow in terms of investments that went into cocoa production is less than N2 billion, whereas that of rice was above N1 trillion in rice production. These issues have also affected processing companies in the country.”

According to Adegoke, CFAN is working hand in hand with the government to ensure that cocoa returns to its glory days as top non-oil export, by ensuring the government’s commitment to expansion and focus on rehabilitation to make sure existing cocoa farms are regenerated, loan availability for cocoa farmers, adequate funding of research institutes, and government policies to assist investors in proving help for the average cocoa farmers.