Why Nigeria Must Engineer a New Cocoa Boom

Proshare

Wednesday, November 17, 2021 / 04:04 PM / By Funsho Idowu, Proshare Research / Header Image Credit:CGTN

 

On the back of a slowly rebounding global economy, Cocoa yields in Nigeria are lower than that in other pod-producing countries worldwide, representing a marked difference from the heydays of Nigeria's Cocoa bonanza in the 1960s.


Chart 1: Cocoa Production in Nigeria from 2012/2013- 2020/2021 in MT

Proshare Nigeria Pvt. Ltd.

Source: statista.com, Proshare Research

** Data is forecast for 2020/2021 production


Proshare Nigeria Pvt. Ltd.


Nigeria, according to Statista, continues to struggle with the production of between 250,000MT and 300,000MT annually, in contrast to Ivory Coast, which produces above 2m MT of cocoa.


Illustration 1: Nigeria's Cocoa Conundrum

Proshare Nigeria Pvt. Ltd. 


Chart 2: Top Cocoa Producers in the World as of 2020(MT)

Proshare Nigeria Pvt. Ltd.

Source: WorldAtlas, Proshare Research

 

Presently, Ivory Coast and Ghana are the largest producers of Cocoa, followed by Indonesia and Nigeria. The average yields in these countries remain low because of aged farms and poor replanting programmes. The total harvested area in Nigeria is 640,000 ha, and the average yield is about 400kg per ha.


Low yields in Nigeria have worsened because of ageing farmers, improper farm management, low farm input, infrastructure, and weak extension services.


Also limiting the output is the prevalence of diseases. Globally, there are many hundreds of insects and pathogens that affect Cocoa. Only a fraction are commercially significant. For instance, the black pod is a major fungal disease in Africa, responsible for an estimated loss of about 44% of global production annually.


Proshare Nigeria Pvt. Ltd.


Getting Cosy with Cocoa

The rise in the demand for chocolates worldwide, especially in Europe and North America, has supported the global cocoa market growth. Although the worldwide chocolate industry is valued at over $150bn, West Africa, which accounts for 70% of cocoa beans supply, receives less than $6bn (4%) of the total market share.


Chart 3: Global Cocoa Prices in $/MT (Jan 2021-Nov 2021)

Proshare Nigeria Pvt. Ltd. 


Source: CNBC, Proshare Research

 

80% of the cocoa market revenue results from the secondary processing stages, dominated by Europe and Asia. Commodity market analysts note that the large potential of the Cocoa market lies in processing and not bean growing and harvesting.


The International Cocoa Organization (ICCO) forecasted a 10 percent increase in world cocoa production and a 25 percent increase in cocoa price over the next decade. According to the forecast, global production may rise to 4.7mMT in 2022/2023.


Illustration 2: Steps Nigeria Should Take to Raise its Cocoa Yield and Market Share

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd. 


The analysts observe that for Nigeria to benefit from the expected growth, it must improve its yield per hectare; farms must produce between 1000 and 1500kg/ha compared to the present 400-450 kg/ha. Rehabilitation and replanting of cocoa fields become essential as most trees are between 30 and 40 years old.


Agronomists suggest improved planting inputs such as hybrid cocoa seedlings are critical elements of the government supporting the Cocoa replanting drive.

 

Conclusion

Local economists have insisted that Nigeria needs to reduce its imports and invest heavily in its export potential. Nigeria must turn off consumption taps and open up production pipelines to reduce the strain on its foreign reserves.


Besides, the provision of hybrid cocoa seedlings and improved planting materials should help increase domestic yields and reverse the poor output per hectare plaguing the business in the last two decades. Cocoa may not have had a sterling decade since 2010, but the opportunities seem to be opening up as demand rises on the back of a post-COVID-19 demand surge.


Proshare Nigeria Pvt. Ltd.


Related News

1.       Notable Movements in the Prices of Grains Amid Harvest - AFEX Commodities Weekly Report 121121

2.      AFEX Releases 2021 Crop Production Survey and Forecast Report

3.      Notable Performances of Grains Amid Harvest - AFEX Commodities Weekly Report 051121

4.      How to Trade Cocoa on ComX

5.      Higher Grain Yields Expected in 2021, But Still Not Enough to Meet Local Demand

6.      Mixed Performances Across Commodities - AFEX Commodities Weekly Report 011121

7.      Price of Grains Remain Unchanged Amid Early Harvest - AFEX Commodities Weekly Report 221021

8.     Unveiling AFEX Crop Production Report 2021

9.      Soaring Energy Prices Pose Inflation Risks as Supply Constraints Persist

10.  Grains Dip Further Amid Early Harvest- AFEX Commodities Weekly Report 181021

11.   Prolong Early Harvest Induced Price Decline in Grains - AFEX Commodities Weekly Report 111021

 

 Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP