August 17,2020 / 01:24
PM / by FDC Ltd / Header Image Credit: FDC Ltd
In light of the earlier plunge in oil prices and the resultant fiscal and external shocks, Nigeria is gradually expanding its revenue base using cash crops such as cocoa.
Cocoa remains a priority area for Nigeria as the country currently ranks the fifth largest cocoa producing country in the world. With a total output of approximately 300,000tonnes, the country is behind Ivory Coast (2million tonnes), Ghana (883,652tonnes) and Indonesia (659,776tonnes). Production of cocoa in Nigeria was hitherto clustered in Southwest states such as Ogun, Osun and Oyo.
However, Southeastern states such as Cross River are also tapping into the export potential of the commodity. The Cocoa Association of Nigeria (CAN) is targeting an increase in the state's cocoa output to 100,000 tons by 2028 from its current output of approximately 55,000 tons. The country has set a similar target to boost Ondo state's output to 100,000tons in the 2020/2021 season from 77,000tons in the previous season.
As an oil dependent economy, the Nigerian economy was severely affected by the slump in global oil price. This has forced the country to seek to revive its agricultural sector, which was the cash cow of the economy prior to the oil boom in the 1970s. Given the recent adjustment of the official exchange rate to N379/$ and the rally in global cocoa price, Nigeria stands to enjoy increased export revenue from higher cocoa output.
However, as other African countries such as Cameroon intensify their cocoa output there would be increased competition in the global market. There is also the risk of smuggling especially with the price of cocoa increasing at the ports of Cameroon, which border's Nigeria on the South East. Nigeria must therefore ensure that its cocoa output is competitive in both price and quality terms.