Cocoa farming in Nigeria has a rich history dating back to the early 20th century, introduced by missionaries and colonial authorities. By the 1960s, Nigeria was one of the world’s largest cocoa producers, alongside Ghana and Côte d’Ivoire.
However, the sector experienced a significant decline due to factors like the neglect of agriculture in favour of oil, mismanagement, and ageing plantations.
Current State of Cocoa Farming in Nigeria
Cocoa farming remains a vital part of Nigeria’s agricultural sector, providing employment for millions and significant foreign exchange earnings. Despite its decline, Nigeria remains the fourth-largest cocoa producer globally, with production estimated at around 280,000 metric tonnes for the 2023/2024 cocoa year, according to the International Cocoa Organisation.
Economic Significance
Cocoa is crucial for rural development in Nigeria, providing jobs from farming to processing and export. Despite challenges like poor infrastructure, ageing trees, and limited access to modern farming techniques and inputs, the sector holds significant economic importance.
Recent Developments
In 2024, Nigerian cocoa farmers experienced a six-fold increase in cocoa prices due to global supply shortages and currency devaluation. This surge has led to increased investment in high-yielding seedlings and expansion of growing areas.
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According to Adeola Adegoke, national president of the Cocoa Farmers Association of Nigeria, production may climb to between 500,000 and 800,000 metric tonnes by 2026, representing a 132 per cent increase from the 2022-2023 estimates.
A metric tonne of cocoa now sells for N11.2 million at the Matori warehouse in Oshodi, Lagos, compared to N1.8 million in January 2024 according to Finbold.
Comparing with Major Cocoa-Producing Countries
Côte d’Ivoire and Ghana
Côte d’Ivoire and Ghana dominate global cocoa production, contributing over 60 per cent of the world’s supply. These countries have more organised and well-funded cocoa sectors, with robust farmer support programs.
In the 2023/2024 season, Côte d’Ivoire produced approximately 1.9 million metric tonnes, while Ghana produced around 800,000 metric tonnes.
Indonesia
Indonesia, the third-largest producer, has a cocoa output of around 600,000 metric tonnes. The country benefits from government support and a focus on pest and disease management but faces issues similar to Nigeria, such as ageing trees.
Global Cocoa Market Dynamics
Production and Prices
In 2024, global cocoa prices reached unprecedented levels, with futures hitting over $10,000 per tonne due to adverse weather conditions and supply shortfalls in top West African producers like Ghana and Côte d’Ivoire. These nations, along with Nigeria and Cameroon, produce over 75 per cent of the world’s cocoa but have faced drastically reduced yields due to droughts and fires.
Fires destroyed over 30 hectares of cocoa farmlands in Nigeria’s Abia state, potentially reducing the country’s mid-crop harvest by 4 per cent, report says.
The ICCO projects a 10.9 per cent drop in global cocoa production for the season, with a resulting market deficit of 374,000 tonnes.
The high prices have encouraged Nigerian farmers to invest more in their cocoa farms. Farmers are planting more high-yielding seedlings and expanding their growing areas, with projections to significantly boost cocoa output by 2026.
The high prices have also drawn new farmers into the sector, further bolstering production efforts.
While the price surge has benefited Nigerian farmers, who have seen their incomes increase significantly due to the naira’s devaluation, farmers in Ghana and Côte d’Ivoire have also faced challenges.
The Ghana Cocoa Board raised the guaranteed cocoa price by over 63 per cent for the 2023/2024 season to support farmers amid the price surge. Similarly, Côte d’Ivoire and Cameroon increased their farmgate prices to incentivise production.
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Global Market Impact
The rising cocoa prices have also impacted global chocolate manufacturers. Barry Callebaut, the world’s top industrial chocolate supplier, reported a dip in sales volumes due to higher cocoa prices.
Despite a 0.3 per cent decline in sales volumes, the company’s revenues surged by nearly 27 per cent due to the increased input costs. The price hike has led to higher chocolate prices, affecting consumer demand and sales volumes across the global confectionary market.
Structural Issues and Solutions
The cocoa industry’s challenges are deep-rooted, with decades of underinvestment leading to ageing plantations and low productivity. West African farmers often export raw cocoa with little local value addition, capturing only a small part of the global value chain.
The African Export-Import Bank notes that while the global cocoa industry is worth $200 billion annually, only $10 billion benefits West Africa. Efforts to tackle these challenges include government initiatives, private sector investment, and multilateral support.
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Trade and Export
Cocoa beans are primarily exported to Europe and North America, where they are processed into products like cocoa butter, powder, and chocolate. Nigeria’s cocoa exports contribute significantly to its economy, though the country faces stiff competition from other leading producers.
Role of Cocoa in Chocolate Manufacturing
Cocoa is the primary ingredient in chocolate production. The process begins with fermentation and drying of cocoa beans, followed by roasting and grinding to produce cocoa mass. This mass is processed to separate cocoa butter and cocoa powder, which are then used to make various chocolate products.
The rising cost of cocoa has led to increased prices for chocolate products, impacting consumer demand.
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Challenges and Opportunities
Challenges
- Ageing Plantations: Declining yields due to old farms require replanting and rejuvenation programmes.
- Infrastructure Deficiencies: Poor transportation and storage infrastructure result in significant post-harvest losses.
- Access to Finance: Limited access to credit and modern inputs hinders investment in better farming practices.
- Climate Change: Adverse weather conditions severely impact cocoa production.
Opportunities
- Government Initiatives: Efforts to revive the cocoa sector through improved yields, training, and access to finance.
- Private Sector Investment: Increased investment in processing facilities can add local value, creating more jobs and boosting income.
- Global Demand: Rising global demand for chocolate presents a lucrative market for Nigerian cocoa.
- Sustainable Practices: Adoption of sustainable farming practices can enhance productivity and appeal to environmentally conscious consumers.
The global cocoa market dynamics underscore the importance of sustainable practices and efficient production techniques to meet the growing demand for cocoa products. As one of the world’s leading cocoa producers, Nigeria’s future in the cocoa industry looks promising, provided the right measures are taken to enhance productivity and sustainability.
While the cocoa sector faces numerous challenges, the current price surge and increased investment present an opportunity for revitalisation. By addressing structural issues and leveraging global market dynamics, Nigeria can significantly enhance its cocoa production and economic impact.
Cocoa farming and trade remain pivotal to Nigeria’s agricultural economy. Despite significant challenges, there are ample opportunities for growth and development. By addressing key issues such as ageing plantations, infrastructure deficiencies, and access to finance, Nigeria can strengthen its position in the global cocoa market. With strategic investments and support, Nigerian cocoa has the potential to contribute significantly to economic growth and rural development.
