BusinessDay

Fall of cocoa export in Nigeria: Implication for the economy

Gradually but steadily, Nigeria is dropping from its position as the second largest cocoa producer just as the commodity is ceasing to be the highest source of foreign exchange for the country.

Available records show that cocoa was one of the main sources of income in Nigeria before the country’s independence in 1960. But that changed following the discovery and exportation of crude oil in commercial quantities in the 1970s.

Before the rise of crude oil and the petro-dollar that followed, the agriculture sector was the dominant contributor to domestic output, employment, and foreign exchange earnings.

Expectedly, as the export was falling, so was the value dropping. According to Adeola Adegoke, president, Cocoa Farmers Association of Nigeria (CFAN), over 50 percent of all exports in the 1970s and over 60 percent in the 1980s were made up of cocoa.

The decline in the export of this commodity speaks to Nigeria’s story where consumption is preferred to production. Nobody is comfortable with the crisis in the country’s foreign exchange market where $1 exchanges for N650

During the 1970s, the commodity’s share steadily decreased, falling from 49 percent in 1989 to 22 percent in 1998, he said.

A report by Observatory of Economic Complexity shows that Nigeria’s cocoa beans 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.

It is disturbing to note that from second position, Nigeria has moved down to the fourth largest cocoa producer worldwide, according to World Atlas. The country’s major cocoa-producing states are 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 tons, compared to Côte d’Ivoire, which has been able to increase production volume by 33 percent to 2,105,000 tons, and Cameroon, by 32.7 percent to 280,000 tons, according to data from the International Cocoa Organisation (ICCO).

Ghana Cocoa Board, despite the Covid-19 pandemic, reported total production of 771,000 tons 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.

Data obtained from the National Bureau of Statistics (NBS) show that, in the first quarter of 2022, urea, not cocoa, was the leading 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 positions, amounting to N56.4 billion and N13.2 billion, respectively.

We are pained that even with the crisis in the international oil market, Nigeria does not see the need to invest in the non-oil sector of the economy, especially this cocoa, the country knows is big foreign exchange earner.

The decline in the export of this commodity speaks to Nigeria story where consumption is preferred to production. Nobody is comfortable with the crisis in the country’s foreign exchange market where $1 exchanges for N650. The scarcity of the dollar is generally linked to lack of exports.

The decline in both production and export of cocoa, which has serious implication for the economy in terms of expensive foreign exchange, low job creation, among others, is attributed to a number of challenges which the producers of the commodity are contending with.

Besides farmers not adopting new ways of farming as done in countries like Ivory Coast and Ghana, which are continental leaders, cocoa farming requires large expanse of land, which is not readily available because of Nigeria’s rigid land tenure system.

Again, most of the farmers are ageing, 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. This is made worse by climate change, technological modernisation, access to finance, pests and diseases.

Read also: Nigeria can unlock non-oil export opportunities, say Ovia, Dangote, others

Other challenges faced by the sector range from reduction in the number of cocoa farmers, lack of finance for remunerating the farmers, low investment, to low productivity per hectare. Record shows that Nigeria has about 350 kilograms per hectare as against what obtains in Ghana, Ivory Coast and Indonesia.

Despite the high potential of this commodity, government has always neglected it, which explains why processing firms that would have made value addition necessary have been left to ‘die’ in Lagos, Ibadan and Ondo.

We are worried by this state of affairs in the cocoa sector and the challenges the sector is facing, which, in our view, are not insurmountable if there is the political will to deal with them by the government where they are sited.

The economic condition in Nigeria today is sufficient reason for the country to beam searchlight on that sector with a view to turning it around so as to get all the foreign exchange it can earn. That will also lead to job creation for the large army of the unemployed in the country.

To improve yield, increase production and jerk up export, we urge the government to encourage farmers to do away with old trees and go for new seedlings that do not take long time to mature.

Because the crops take time to mature and bear fruits, banks hardly give credit to farmers. We therefore advocate dedicated funding for the sector in order to assist the farmers.

We also want the government to support blenders or processors financially. At the same time, the government should deal with internal issues in the country, notably foreign exchange crisis and the soaring energy costs, especially diesel prices.

It is our hope and expectation that when these measures are put in place, and the government puts its acts together by resolving issues around insecurity and macro-economy, the fall in the export of this commodity will turn to a rise.

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