By Chibuzor EmejorAbuja — It was with nostalgic feeling for participants at the 2014 Cocoa Summit in Abuja, when the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, went down the memory lane to recall the great exploits the South West and cocoa producing states were able to achieve through the revenues earned from cocoa sector before the discovery of crude oil.
Adesina told the august gathering, "I was born in Ibadan and I cannot forget cocoa house. As a young boy, I used to take walks with my dad to the tall building, the tallest in Africa at that time. I was fascinated the day my father told me that this edifice was built by farmers. I asked him "are they millionaires? He said "cocoa farmers are the kings of farmers." Nigeria soon lost that position and pride of place when it discovered crude oil and agriculture took the back seat."
However, it was heart-warming recently when critical stakeholders drawn from the producers input suppliers, traders, exporters, indigenous and multinational companies, cocoa processors, among others, converged to brainstorm on how to resuscitate the sector and make "Nigeria a global powerhouse in cocoa production."
To underscore the seriousness of the two-day summit, the Ministers of Agriculture and Rural Development and his counter part from Industry, Trade and Investment were in attendance to lend the Federal Government's support aimed at restoring the past glory of the cocoa sector.
The present administration had before now developed Cocoa Value Chain under the Agricultural Transformation Agenda (ATA) to shore up the country's cocoa output which has been very low in the international market. According to Adesina, "Global demand for cocoa is rising rapidly with increased income growth and demand in India and China. Demand is projected to far outstrip supply with an expected deficit of one million metric tonnes of coco beans by 2020.
"While Ivory Coast's cocoa has grown to over 1.4 million metric tonnes and Ghana at over 720,000 metric tonnes in the last decade, cocoa output in Nigeria had remained low at about 250,000metric tonnes, until recent efforts which are turning this around."
Corroborating Nigeria's backwardness in cocoa production, the Minister of Industry, Trade and Investment, Olusegun Aganga, said "The total global value of exporting raw cocoa is approximately $10 billion a year; the total value from chocolates alone, all made from cocoa, is over $100 billion a year, while 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.
"With the situation today, about 76 per cent of total cocoa produced is from Africa, but less than five per cent of the wealth in the value chain is retained here. After many decades of dominating cocoa production, it is worrying that we still remain price takers, and capture so little value. This is not right, and this is what we have set out to change".
Currently, Nigeria is the fourth largest producer of cocoa in the world, after Ivory Coast, Ghana, Indonesia. It merely produces and exports cocoa raw beans, without paying adequate attention to processing of cocoa to produce chocolates. "The global confectionary market is worth $80billion per year. West African farmers, with Nigeria being the fourth largest producer of cocoa in the world, grow 70 per cent of the world's cocoa, but receive 3-6per cent of the final consumer price for a bar of chocolate.
"Nigeria should be processing chocolate instead of exporting raw beans. This requires investments in chocolate manufacturing companies and transforming the Export Enhancement Grant (EEG) to value addition. Expansion Grant to boost industrial processing of cocoa into cocoa liquor, cocoa cakes, cocoa powder, cocoa butter and chocolates."
Stakeholders have also pointed out that Nigeria's cocoa sector is un-coordinated at present, apart from the challenges of low yields, poor farm management, lack of tissue culture to propagate new clones, weak extension services, low grade and standards, among others.
The Regional Director, United Nations Industrial Development Organisation (UNIDO), Dr. Patrick Kormawa, said despite growing efforts by many African governments and private sector to move the sector forward, they have been constrained by lack of appropriate financing, technical and management deficiencies and limited market access opportunities. He urged the stakeholders to further examine and come up with workable strategies to address the problems inhibiting increased value addition to cocoa in Nigeria.
In his submission, the Chairman, Cocoa Processors Association of Nigeria (COPAN), Dimeji Owofemi, underscored the importance of the establishment of the Commodity Board as well as the need to encourage the youth to embrace local processing of cocoa through empowering them.
Nigeria's cocoa is purchased by a few multinationals and unregulated buyers who offer low prices for farmers and over 90 per cent of the cocoa also loses on the global market as it is not branded, as different types and grades of cocoa are sold off, leading to a huge discount on cocoa from Nigeria.
Speaking further on the challenges confronting the sector, Agriculture Minister identified "the absence of marketing institutions around cocoa in Nigeria, which have led to uncertainties around policies and supportive systems that have for decades stifled the potential of cocoa sector. To correct this anomaly, he announced that the Federal Government would soon float Cocoa Corporation of Nigeria (CCN) to fill the institutional gap created following the dissolution of Cocoa Marketing Boards by the past administrations in Nigeria.
While shedding light on the core mandate of the proposed CCN, he said the CCN will be a private-sector driven but public-sector enabled institution, professionally run, and with a mandate to put in place and support international best practices and institutional arrangements that will ensure global competitiveness, long-term sustainability and growth of the Nigeria cocoa sector.
"The mission of the CCN will be to support, coordinate, facilitate and regulate the growth of a sustainable, commercially vibrant cocoa value chain. Effective coordination among all sectors in the cocoa sector will increase the industry's contribution to Nigeria's revenue base and, ultimately, lead to job creation, a more robust rural economy, and an improved quality of life for our cocoa farmers.
"The CCN will be a vehicle to grow Nigeria's share of the world cocoa market as we target to control at least 20 per cent of the market by 2020. We know that this is achievable because we have the natural, human, financial and intellectual resources to make this happen. We also have the political will to provide an enabling environment for the operation of the value chain actors to reach the target," he said.
In addition, to ensure short and long term financing mechanisms as well as protect Nigerian farmers and processors, the minister proposed the setting up of N100billion Cocoa Sector Development Fund to finance the rehabilitation and expansion of cocoa plantations across current and potential new growing states, expand access of farmers to agricultural inputs, support the CCN and support the upgrade of cocoa processors. The fund, he explained would also support the provision of chocolate drinks to schools to boost health, domestic consumption and value addition.
It should be noted that Cocoa Value Chain under the ATA, has the goal of expanding Nigeria's cocoa output by 500,000metric tonnes by 2015 and achieving one million metric tonnes within 10 years. Its strategy hinges on "massive rehabilitation of Nigeria's old cocoa plantations, improvement of productivity and expansion of cultivated areas as well as value added processing.
As part of the achievements recorded in the sector in the last three years, the Nigerian Cocoa Research Institute has released eight new cocoa hybrids that give yields to 2.5mt (five times current yields of farmers) and mature two and half years. Similarly, over 1.4 million pods of these hybrids, according to Adesina, have been distributed to farmers.
To this end, cocoa output has grown from 250,000mt to 370,000mt in the last three years and it is projected that more than 600,000mt would be produced by 2016. In addition, Nigeria's revenue in cocoa has increased over this period. In the words of agric minister, "The renewed boost in cocoa production under the ATA has led to the expansion of non-oil export earnings from cocoa from $900million in 2012 to $1.2 billion in 2013 and expected to grow to $1.3 billion in 2014."
In the light of all these, many stakeholders have called on the government at all levels to pay priority attention to this sector, in view of the current dwindling fortunes of crude oil, occasioned by the fall in its price in the global market.
The non-oil sector, particularly cocoa sector, could salvage the economy that is perched on the edge of precipice, as a result of running of monolithic economy following the discovery of oil. For the stakeholders at the Summit, the time to create opportunities and enabling environment for new wealth generation for the country through cocoa sector is now.