Can Nigeria increase its cocoa production to 500,000MT by 2021?

Recently, Aisha Abubakar, Minister of State, Industry, Trade and Investment said that Nigeria will increase its cocoa production to 500,000 metric tons and processing by 50 percent by 2021 going by the renewed interest in the subsector.

But stakeholders say it will take the country more than the targeted four years for Nigeria to achieve 500,000MT if there are huge investments in the subsector, replacements of old and worn out cocoa trees as well as making cocoa farming more attractive to youths.

Also, farmers must have access to improved seeds and seedling, technology and adequate funding for the subsector.

According to them, the country has seen its production declining in recent years owing to the increase in the number of un-replaced old and worn-out cocoa trees as well as aging farmers, all of which have combined to cut the country’s cocoa supply.

Nigeria’s cocoa production has dropped from 248,000 metric tonnes (MT) to 190,000MT, which has seen the country fall in global cocoa production rankings from 4th to 7th position currently.

 “Cocoa production has been declining for some time now, but the current rate is very high as a result of cumulative effects. The government needs to provide funds and attract young people into cocoa farming and this would still take a while to achieve,” said Akin Olusuyi, chairman, Cocoa Processors Association of Nigeria (COPAN).

Cocoa is Nigeria’s flagship export products, occupying up to 25 percent of the total non-oil export value each year.

Like oil palm and rubber, Nigeria is losing a huge export earner to low investment, lack of government support and natural vagaries.

This is a big blow for a country, which was the topmost cocoa producer in the 60s, but now lags behind Ivory Coast, Ghana and Indonesia. The crash in cocoa supply is also coming at a time prices of ICE and Liffe cocoa beans have seen an increase in the prices of the crop and at a period when the country has lost over 60 percent of its revenue to oil price lows.

Inability of Africa’s biggest economy to sustain and improve its production of cocoa over the years has led to sharp decline in productivity to below 0.350 ton per hectare when other leading countries produce between two to five tons per hectare of improved variety.

“Nigeria currently produces less than 500kg of dry bean per hectare. This very low level of cocoa production has made it necessary to change protocol of production,” Daniel Adewale, a former crop scientist at the Cocoa Research Institute of Nigeria (CRIN), said at the USAID/ Nigeria/ NEXTT training in Lagos.

According to Ranjana Bhattacharjee, senior researcher, International Institute of Tropical Agriculture (IITA), Ibadan, for Nigeria to get it right, then it must use high quality planting materials in the right environment, while management plus market demands must all be linked and developed to increase cocoa yield.

 “Globally, the chocolate and cocoa industry are in crisis due to low productivity which is failing to meet a growing demand that is increasing by two percent annually,” Ranjana added.

Cocoa industry crisis

Nigeria’s cocoa processing industry has been choked by over N50 billion debt it owed commercial banks operators in the country.

This has led to a decline in the country’s value addition in recent years and resulting to a $2 billion annual loss, industry sources say.

Key players in the industry who spoke with BusinessDay said unless there is a well-defined policy for processing of agricultural commodities, the country would continue to exports it jobs and lose revenue it would have generated through value addition.

“Most of the indigenous cocoa processors are really under the heavy weight of debt and that why none is operating at full capacity today. The total debt in the industry today is not less that N50billion between six processors,” said Akin Olusuyi, chairman, Cocoa Processors Association of Nigeria (COPAN) during a press briefing with journalists in Lagos recently.

“We have a total of eight cocoa processing firms in the country with only 2 functional. The two that are functional now are foreigner owned. There is no indigenous processor that is functioning now as we speak,” said Olusuyi who is also the chief executive officer of Ile Oluji Nigeria Limited.

He stated that the total installed capacity of cocoa processing plants in the country is 270,000 metric tonnes but cumulatively, the industry is operating below 15 percent capacity currently.

According to COPAN, the debt incurred by the industry was as a result of the harsh operating environment in the country and the inability to secure loans at single digit interest rate.

“An average borrowing cost to any cocoa processors by any bank in the country is 25 percent interest rate, when processors in Ivory Coast and Ghana obtain loans at single digit. How can we be competitive?” asked Akin Laoye, executive director, FTN Cocoa Processors PLC.

“We are yet to access the EEG that was designed to cushion structural misalignment in our economy since 2013. Since last year we have been given approval by NEXIM and our banks but we are yet to get it,” said Laoye.

According to Olusuyi who was earlier quoted, the government has failed to provide a clear cut policy direction as to what it intends to do in terms of industrialising the economy through processing of agro commodities.

“This why our agriculture has remained at the rudimentary stage because the active players that take the commodity from the farmers do not add any value by processing it,”   he added.

He noted that Nigeria cannot develop without developing agriculture to include processing. “The direction to economic growth is industrialisation and not the exporting of raw agric commodities,” he further stated.

Similarly, another challenge facing the sector is the crisis rocking the 65,000 capacity of Multritrex Integrated, the country’s largest cocoa processor, which has cut industry production by over 26 percent, according to calculations.

Multritrex was shut down by the Asset Management Corporation of Nigeria (AMNCON) over N5 billion debt.

The company officials told BusinessDay that though firm had been handed over to a new receivership, production was at the peripheral level.

 “Since AMCON took over Multitrex Foods, nothing meaningful has been achieved. The best option is to work out a plan so that the business can continue,” Olusuyi told BusinessDay earlier.

On the global scale, cocoa grinding has been on the increase. “The grindings picture worldwide for the first quarter of the current cocoa season reflected a considerable increase, with Asian grindings data showing a 19.2 percent year-on-year increase to 177,450 tonnes,” data from  ICCO latest cocoa monthly report show.