Nigeria is making little money from cocoa as it fails to turn it into chocolates.
Nigeria produces 250,000 metric tons of cocoa, earning $547.5 million at Friday’s price of $2,190 per ton. The country has a 5.2 percent share of the global cocoa market estimated at 4.85 million tons in 2019.
A report puts the global chocolates market at $103.28 billion in 2017 and is expected to hit $161.56 billion in revenue by 2024, growing at a compound annual growth rate (CAGR) of around 7.0 percent between 2018 and 2024.
Assuming that Nigeria produced chocolates in 2017, it would earn $5.37 billion in 2017, with a market share of 5.2 percent.
“So the money-making thing here is value addition,” said Attah Anzaku, CEO of AgroEknor, an international commodity trading firm,
“Why most people are not so interested in exporting value added products is that they are just satisfied with the little dollar they get from raw products. But if that is what you want out of life, good for you. If you go abroad to all the shelves and retail stores, you see most of the things we sell to them. I was in Barcelona around some time ago and I saw tiger nuts bar. A tiger nut was selling for 20 euros. If you are selling that in a raw form, you will not get as much as that,” he said.
Cocoa is a local crop product widely known for its uses and versatility as well as its economic value.
Although abundant in various countries, 70 percent of the world’s cocoa beans come from West African countries of Ivory Coast, Ghana, Brazil, Nigeria, and Cameroon.
Reports from WorldAtlas show that Ivory Coast is the top cocoa-producing country globally, supplying 33 percent of the world’s total cocoa with its annual output of 1.44 million metric tonnes.
Before the discovery of oil in the 1960s, agriculture was the mainstay of the Nigerian economy, with cocoa and palm oil as the major drivers. The country produced an average of 400,000 metric tons through its cocoa producing states such as Ondo, Cross River, Edo, Osun, Oyo, Kwara, Kogi, Adamawa and earning favorable foreign exchange for the economy.
Data from The International Cocoa Organization (ICCO) show that cocoa production in Nigeria declined to 210,000 metric tons in 2017 despite the increasing demand for the product, with the country ranking 6th among cocoa-producing countries globally.
The major export destinations of Nigeria’s cocoa beans are Netherlands, Germany, Indonesia, Malaysia and Belgium where it is converted into products like chocolate, meal spread, and Choco drink.
Cocoa and cocoa products earnings by Nigeria were valued at $338.17 million, accounting for 20.8 percent of the total non-oil exports value in 2015. It declined in 2016 to $242.23 million, representing 20.13 percent.
Aging trees, aging farmers and low investments in the last decade are key challenges facing the industry.
Speaking on problems of the cocoa industry, Dara Akala, executive director of Partnership Initiatives in the Niger Delta (PIND), said at a breakfast meeting that “Nigerian cocoa beans are being sold at a discount price in the international market, resulting in low profitability for actors in the value chain especially the farmers.”
He also noted that a value chain study had revealed that the poor yields and poor quality of local cocoa beans were reasons for low productivity and profitability of the cocoa industry.
According to U.S. Department of State Country Commercial Guide, Nigeria’s total agricultural income is estimated to be approximately US$1.6 billion yearly and the agricultural sector has the prospects of contributing more to improving the country’s export earnings if properly equipped with value addition that can compete globally.
Experts are of the opinion that value addition will contribute more to the country’s economic development and GDP growth.
Gbemi Faminu
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