The Minister of Finance and Coordinating Minister of the Economy, Olawale Edun; the Minister of Budget and Economic Planning, Senator Abubakar Bagudu and several stakeholders within the Nigerian Ministry of Agriculture have revealed how the country lost $2 billion yearly to under-explored cocoa industry.
This was contained in a communiqué jointly signed on Tuesday by the founder of the International Cocoa Diplomacy, Oba Dokun Thompson; the Executive Director of the Cocoa Research Institute of Nigeria, Dr Patrick Adebola and the Managing Director of Nexim Bank, Mr Abba Bello.
The communiqué noted that the ministers and other stakeholders disclosed this recently at the 2024 International Cocoa and Chocolate Forum held simultaneously at the Transcorp Hilton Hotel, Abuja and the Sheraton Hotel, Victoria Island, Lagos.
According to the communiqué, Edun and others observed that the Nigerian cocoa sector “is dominated by a few global players, creating an oligopolistic market that makes trading difficult because they determine the price, sustainability measures and certifications, required training modules for farmers, etc.
“Although the country remains the fourth largest producer of cocoa with about 6.5 percent of the world’s production output and remains the fourth largest exporter with receipts of close to $700 million, the country’s industry has continued to decline even though cocoa can be produced in over 24 states in the country with tremendous potential for growth.
“There are several value chain development opportunities within the global cocoa industry that are not being explored in Nigeria due to a lack of cocoa culture and full appreciation of the value propositions with the country losing over $2 billion every year.
“The Nigerian cocoa industry does not have any form of policy, mapping, identification or data that can help respond to the European Union Deforestation Regulation (EUDR) or COP28 resolutions and to also plan for social and economic development purposes.
“Europe remains the biggest market for West African cocoa and its derivatives but cocoa from the region will be subjected to the new EUDR policy which will come into effect on January 1, 2025 and will possibly disrupt the industry supply chain and the country’s forex earnings from cocoa and other products, namely, coffee, soya, timber, palm oil, rubber and cattle and their derivatives.”
“The different aspect of the Nigerian cocoa supply chain and the smallholder cocoa farmers appear to be unaware of the new EUDR policy and its compliance requirements and remain unprepared as to who is responsible for what.”
On underfunding of the sector, the stakeholders said, “There is a lack of proper and creative funding to fully develop the opportunities within the industry. Cocoa Research Institute of Nigeria (CRIN) is underfunded and NEXIM Bank is not structured or funded like its counterparts, eg, AFREXIM or EXIM Bank of India, to undertake major investments and financing of necessary and required major infrastructure projects to further the export trade.
“Manufacturing has become unattractive due to the lack of necessary infrastructure to support the services rendered that will make the cost of production and quality competitive with imported products and we need agriculture that must lead to industrialisation.
They said to address the present challenge, “N100 billion was set aside for an Agric Development Fund out of the 2024 agric budget of N900 billion to support endeavours such as the ICD forum, which had world views because the country will be competing with other countries who may have several policies and subsidy regimes to take advantage of market share and it is important to recalibrate government policies now and again to compensate for gaps and to provide the infrastructure that will ensure various sectors of the economy work.”
Among several recommendations, the stakeholders said, “There is a need to and it is imperative that cocoa is de-commoditised as the prerequisite to fully achieve value addition and make cocoa a vehicle for inclusive development, wealth and prosperity creation with sustained awareness about the economic value of cocoa and its value chain opportunities
“The country needs to transit from being a cocoa-producing to a consuming one. There must be deliberate consumption of cocoa products as a way to create the cocoa culture being promoted by ICD including cocoa derivatives or cocoa beverages in the existing schools feeding program as this will also encourage domestic and international investments into the sector.”
The conference brought together policymakers, financial institutions and stakeholders from across the continent to exploit ways of taking advantage of AfCFTA and other emerging cocoa and chocolate markets. It looked at the issues around the new European Union Deforestation Regulation (EUDR).
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