Enhancing Cocoa value chain for revenue, job creation

By Phillip Oladunjoye / Snr Correspondent Lagos


The efforts at diversifying the economy through non oil export by the federal government may soon be realized in the Cocoa production segment of the agricultural sector.

This is hinged on the avowed commitment and the renewed decision of the federal government to intensify an expansion projects for cocoa processing and manufacturing.

The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said the Federal Government would intensify the implementation of expansion projects for cocoa processing and manufacturing in order to claim a greater share of the annual $200b global market for finished goods made from Cocoa.

Aganga, who said this in Abuja at a summit on Cocoa Value Addition in Nigeria, was optimistic that with the repositioning, Nigeria would extract immense value out of the Cocoa industry.

The minister explained that the total global value of exporting raw cocoa is approximately $10 billion a year; while the total value from chocolates alone, all made from cocoa, is over $100 billion a year, and the total value of all finished goods made from cocoa is estimated to be as high as $200 billion a year, all drawing from the same $10 billion raw cocoa beans produced.

He lamented that while about 76 per cent of total cocoa produced is from Africa, less than five per cent of the wealth in the value chain is retained in the continent, adding that after many decades of dominating cocoa production, it is worrying that Nigeria still remains price takers, and captures so little value. “This is not right, and this is what we have set out to change,” he said, noting that with the expansion of cocoa processing and manufacturing capacity, Government was set to retain more of the value of the Cocoa industry in Nigeria, create jobs and wealth for citizens and generate income for government.

The minister noted that the partnership between his Ministry, the Ministry of Agriculture and Organised Private Sector (OPS) was a very good evidence of President Goodluck Jonathan’s unwavering commitment to pushing the frontiers of economic development and returning Nigeria to the heights of its glory in the cocoa industry.

Minister of Agriculture and Rural Development, Dr. Akinwunmi Adesina, said his Ministry was working with the Ministry of Industry, Trade and Investment on a ministerial memo on value chain that would unlock the cocoa sector.

He said the memo would be presented to the Federal Executive Council, adding that Government had provided 1.4 million pods of high breed cocoa to farmers, free of charge, within two years, which he said had increased cocoa output from 250,000 to 300,000.

The European Union Ambassador to Nigeria, Mr. Michel Arrior, who was also at the summit, said Nigeria was the number one largest trading partner with Europe with total trade volume of $50 billion in 2013, noting that a good and well-functioning West Africa and Common External Tariff would be a welcome development and that the European Union has no trade offensive in Nigeria. “Consumer and finished products would be excluded from trading agreement with Nigeria,” he noted.

The Regional Director, United Nations Industrial Development Organisation, Dr. Patrick Kormawa, said despite growing efforts of many African governments and private sector to move their way up the value chain, they remained constrained by the lack of appropriate financing, technical and management deficiencies and limited market access opportunities. He urged the stakeholders’ forum to further examine and come up with plausible strategies to address the four key problems inhibiting increased value addition to cocoa in Nigeria.

Chairman, Cocoa Processors Association of Nigeria (COPAN), Dimeji Owofemi, reiterated the importance of the commodity board and the need to encourage youth in cocoa and local processing, among others.

Cocoa was arguably one of the major cash-crops relied upon as a foreign exchange earner by the country before oil was discovered in commercial quantity.

Based on the determination of the federal government to diversify the economy, industry watchers are of the opinion that cocoa production and processing should be considered as a major step to enhance job opportunities and economic development


Historical perspective

Cocoa and groundnuts were Nigeria’s two major exports until petroleum surpassed both in 1965. Cocoa, cotton, groundnuts, oil palm products, and rubber were the principal export crops in the 1960s and early 1970s, but with export reorientation, only cocoa remained of any importance after 1975. Although Nigeria was the world’s largest exporter of groundnuts in the early 1970s, groundnuts fell from the export list by the end of the 1970s as a result of the severe Sahel drought of 1972-74 and a viral disease in 1975. With assistance from the World Bank, the government restored cocoa production in the late 1970s and 1980s through replanting programs and producer price supports. The resulting increase in cocoa output (to 200,000 tons in 1988) kept Nigeria in third place among world cocoa producers, after Ivory Coast and Ghana.

Cocoa came to be one of the symbols of commerce and industry and a stamp of legacy and honour bequeathed to the Southwest Nigeria by the pantheon of Yoruba politics, late Chief Obafemi Awolowo. As the Premier of the Old Western Region, revenues from cocoa formed parts of the funds deployed for the many landmark projects – infrastructural developments and funding of free education, among other many regional investments executed in the region by Awolowo. One of the famous relics is the Cocoa House in Ibadan, the Oyo State capital. The edifice, attests not only to the region’s strong ties with cocoa farming but also represents one of the efficient avenues proceeds from the produce was well utilised and managed.



National President of the Cocoa Association of Nigeria (CAN), Mr. Sayima Riman, said the major problem in the cocoa industry is finance and sustainability.

He said the association has been working on how to develop a synergy between cocoa farmers and the financial sector so as to develop a model in funding the growing aspect of cocoa, noting that other sector of cocoa may not have been problematic like the growing sector.

“If we can succeed in getting finance for the growing aspect, we would be able to compete in the competitive market of cocoa.

“The strength of the industry as of today lies in the growing of cocoa and a little funding here and there will go a long way to give the necessary impetus that would raise the standard and boost cocoa production in the country,” he said.

Cocoa Processors Association of Nigeria (COPAN), the umbrella organisation of cocoa processors, had in a statement issued to highlight the challenges being faced by its members, urged Government to give advantage to value addition sub-sector for increased foreign exchange earnings and employment creation by removing incentives in form of Export Grant to all exporters of raw agricultural commodities like cocoa beans without processing to semi and finished products.

It added that government should impose substantial export tax on all raw commodities exported as is done in other cocoa-producing counties such as Indonesia, Malaysia, Ghana, Cote d’Ivoire and Cameroun; instead of rewarding the raw commodities exporters, at the expense of additional employment that could have been created in Nigeria, through value addition.”


Renewed efforts

Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, said the Federal Government would soon create a N100b cocoa development fund, which will be used to finance the rehabilitation and expansions of cocoa plantations across the producing states nationwide; expand access of farmers to agricultural inputs and support the take off of the proposed Cocoa Corporation of Nigeria.

He said it has become imperative for the government to revive the cocoa industry as a strategic option of enabling the country to explore the increasing opportunities in the global market for national economic benefits.

The minister lamented the uncoordinated operations of the nation’s cocoa industry and its revenue loss implications for the country occasioned by the scrapping of the marketing boards several years ago, explaining that the planned development fund and the cocoa corporation would create the institutional platform for revitalising the sector and transforming its huge socioeconomic potential to real economic gains for the country.

Governor of the State of Osun, Ogbeni Rauf Aregbesola said recently that the moribund Cocoa Product Industry in Ede would soon become operational.

The governor, who spoke through his Senior Special Assistant on Community Forum, Olatunbosun Oyintiloye, at a recent public sensitization programme in Ede on government policies and programmes, said his government had last year signed a Memorandum of Understanding with a company from China for the resuscitation of the industry, saying that the resuscitation process is now at final stage.

“The resuscitation process of CPI is almost at the final stage and what this means is that we are bringing the industry back to life fully. When it is back to life, it will boost the economy of Ede, its environ, and Osun State in general and it would create job for our youths. This development is a departure from the past, this commitment is for real,” he said.

The company, which was grossly undervalued at 156 million naira is now worth 544.5 million naira by the effort of independent valuers from both sides.

In the new arrangement the state government shall own 30% equity share  while the 70% equity share of the Chinese company shall be one billion twenty-one million, five hundred thousand naira (N1,021,500.00) only.

Also the new arrangement provides that the board of directors of the company shall consist of five directors, two representing the interest of the state while the other shall be appointed by the Chinese firm.

The Ogun State government had also during the 3rd Roundtable Conference on Nigeria Cocoa Value Chain held in Abeokuta, called for Nigeria to “set forth an industrial skills training programme that is relevant to linkages between the cocoa processing industry and other sectors of the Nigerian economy.”

Speaking at the conference, the State’s Deputy Governor, Chief Segun Olusegun, said: “Cocoa processing should be part of priority in Nigeria’s industrial development agenda; Nigeria must have a published industrial policy of strategy for local value addition in terms of local content or local processing of cocoa. Cocoa export and processing companies must continue to embark on forward integration and invest heavily in plant and machinery to add value to indigenous commodities.”

Source : Independent

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