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‘Cocoa value chain revival inevitable for sustainable economic growth’

By Femi Ibirogba, Head, Agro-Economy
22 November 2021   |   4:04 am
Researchers and industrialists have said efforts should be made to revive cocoa processing companies and woo more investors into the value chain to maximise benefits of cocoa production through emphasis on local consumption.

Photo: Cbc

Despite supplying 70% of cocoa beans, W/Africa gets $6bn of $150bn chocolate value
Researchers and industrialists have said efforts should be made to revive cocoa processing companies and woo more investors into the value chain to maximise benefits of cocoa production through emphasis on local consumption.

According to a report published by Allied Market Research, the global cocoa market garnered $12.87b in 2019, and is estimated to generate $15.50b by 2027. The increase in demand for chocolate worldwide has been fueling the global cocoa market growth. 

Reports also indicate that although the global chocolate industry is valued at over $150bn, West Africa, supplying about 70 per cent of cocoa beans, receives less than $6bn (four per cent) of the market value.

This follows that 80 per cent of cocoa market revenue is generated at the secondary processing stage, which is dominated by Europe and Asia, and it is the area where massive potential lies and where African cocoa bean producers need to invest in. Hence, emphasis must be placed on value chain development, local processing, consumption of cocoa-based products and exports of finished products.

The Director-General of the Raw Material Research and Development Council (RMRDC), Prof. Hussaini Doko Ibrahim, explained to The Guardian that cocoa is processed into chocolate, liquor, cocoa butter and cocoa powder and these products are now increasingly used in pharmaceuticals, bakeries, food and beverages, nutraceuticals, cosmetics and toiletry industries.

Explaining the global surge in demand for the products, he said the nutritive value of cocoa and health benefits are major factors boosting the surge in demand.  

“It is one of the major sources of polyphenols, which are naturally occurring antioxidants. Polyphenols have numerous health benefits, including reduced inflammation, blood pressure control, improved cholesterol and blood sugar levels. Polyphenols reduce the risk of neuro-degenerative diseases.

“Cocoa also contains flavanols, which have potent antioxidant and anti-inflammatory effects. Flavonoids improve nitric oxide levels, leading to lower blood pressure and reduce the formation of Low Density Lipoprotein, which is the main causes of cholesterol problems.”

He added that flavanols have a blood thinning effect similar to aspirin and are linked to a lower risk of heart attack, heart failure and stroke.

“Some studies have shown that a higher intake of flavanols can result in a lower risk of type 2 diabetes. Apart from the cancer protection properties, theobromine and theophylline contents of cocoa also reduce the incidence of asthma,” he added.

Supporting the view, the Executive Director, Cocoa Research Institute of Nigeria (CRIN), Dr Patrick Adebola, said the best thing to do is to promote local consumption because the country cannot continue to have a product which price is dictated by external buyers.

“Nigeria has about 200 million people and we consume chocolate and beverages made from cocoa. Why don’t we encourage local consumption? Nigeria is a huge market if we can start from primary schools.

“We can incorporate cocoa products into the school feeding programme. We know all the benefits of consuming cocoa-based beverages. If we start to encourage local consumption, the demand for cocoa will go up. This will definitely have impact on revival of the local industries as well as increase in productivity,” he said.

Cocoa production and challenges
In Nigeria, cocoa production grew from 165,000 in 1999-2000 to 250,000 tonnes in 2013-2014, mainly as a result of high prices and to a limited extent, to the government support as outlined in the Cocoa Transformation Agenda. 

The provision of improved planting materials is one of the key elements of support to farmers and CRIN has produced high-yielding varieties termed series TC1-8. Although, these are very high-yielding and early-bearing seeds, Nigeria still struggles with about 250,000 to 300,000 tonnes compared to Ivory Coast’s 2,000,000 tonnes. 

Also, Prof. Ibrahim said for Nigeria to increase its production, the tonnage per hectare should increase to at least 1000-1500kgs from the present 400-500kgs/ha in addition to bringing back the commodity boards.  

‘’There is need for rehabilitation and replanting of cocoa fields as most cocoa trees are between 30 and 40 years old.  

‘’Currently, cocoa beans are produced in tropical zones around the Equator. About 70 per cent of the world’s cocoa beans come from four West African countries. In these countries, more than some six million hectares of land are planted with cocoa.’’

He said most farmers are small holders who traditionally planted their cocoa at random under thinned forest shade. At present, Côte d’Ivoire and Ghana are the largest producers, which are closely followed by Nigeria and Cameroon.

The average yields in these countries, however, remain low because many farms are old and need replanting. Again, the forest land available for the expansion of plantations are thinning out, making intensive production imperative by replacing old unproductive cocoa trees with high-yielding seedlings and other inputs.
The International Cocoa Organisation (ICCO) forecasts a 10-per-cent increase in the world cocoa production and a 25-per-cent increase in the cocoa price in the next decade. Based on the forecast, the total cocoa production will be about 4,700,000 tonnes in 2022-2023.

Prof. Ibrahim and Dr Adebola argued that for Nigeria to be part of the envisaged production boom, a 10-per-cent increase in production would be needed within the next decade, and this should come from a higher yield per hectare of cocoa farms.

Local efforts on value chain and struggling processors
Historically, RMRDC has been in the vanguard of promoting cocoa processing in Nigeria. As early as 1990’s, after a comprehensive nationwide survey on commodities production and processing in Nigeria, the need to promote cocoa processing in Nigeria for enhanced foreign exchange generation was realised. 

As a result of this, the council, in collaboration with Ondo State government, established a cocoa processing plant at Alade-Idanre, Ondo State. The plant pioneered cocoa processing locally and has catalyzed the establishment of numerous other cocoa processing plants in the country.

Among these are the Ile-Oluji Cocoa Processing Company, Olam Cooperative Cocoa Industry, Akure, Stanmark Cocoa Industry and Agro Traders, Akure. Ondo State government, the joint venture partner, bought council’s equity in the project and took full control of the plant.

Other cocoa processing companies that are either moribund or grossly below capacity include Multi-Trex Foods, Ogun State, IMIT Nig Limited, Lagos, and Ede Cocoa Processing Company, Osun State, among others. Surviving medium-scale processing plants are Tulip Cocoa Processing Company, Ijebu-Mushin, Ogun State, and Cadbury Cocoa Plant in Ondo, Ondo State.

Research and development studies carried out by RMRDC in collaboration with CRIN and other research institutes have shown that the pod, which make up of 60 per cent of the cocoa fruit have numerous industrial applications. 

The pod can be used in the production of animal feeds, black soap, pectins for food and pharmaceutical industries and for fertiliser production. 

Studies have shown that cocoa pods can effectively be used to promote nutrient composts of acceptable quality by substituting mineral fertiliser requirements. It contains 1.63% potassium, which makes it useable as raw material for fertiliser and chemical production.

In addition, the growing needs of organically made soaps have made cocoa pods an essential commodity in skin care products.

RMRDC boss said: “It is our considered opinion that with time, Nigeria will be a major country to reckon with in secondary cocoa products export globally.”

Challenges facing processors include concentration of efforts on export of cocoa beans by exporters; cost of operations as power supply becomes worse; low supply of raw materials as productivity dwindles and poor financing of the manufacturing sector of the economy.

Ibrahim and Adebola said if challenges are tackled, the sector would be able to contribute significantly to poverty alleviation and employment generation potential of Nigerians.

Real challenges of processors
President of the Cocoa Association of Nigeria (CAN), Mr Adeola Adegoke, while analyzing factors responsible for the collapse of the cocoa processing industry, identified poor funding, low but expensive cocoa beans as raw materials for processors and non-competitiveness of cocoa butter, cake and powder processed in Nigeria in the international market as cost of production becomes higher for the manufacturing sector.

Other factors include power failure and over-taxation, which increase cost of production and worsens non-competitiveness.

A cocoa sustainability and certification specialist with an international agency, Kazeem Sanni, pin-pointed one of the challenges to nonchalant attitude of the government to the real value chain sector by encouraging export of raw beans because of ‘grants’ attached to its export.

Apart from that, he said processors in the country had identified about 11 different levies, tariffs and taxes in the manufacturing sector, cocoa processing inclusive. These, to him, are burdens fueling high cost of manufacturing and collapse of factories.

Sanni proved that processing cocoa with diesel/gas generators is a waste of resources, and staying in business becomes unsustainable, as profitability and return on investment are eroded, forcing investors to back down in the long run.

A former president of the Cocoa Association of Nigeria ((CAN) input dealers, exporters and processors), Sayina Riman, attributed the collapse of cocoa processing factories to lack of strategic plans to entrench home consumption. He explained that the focus of most processing companies was to export semi-finished products, such as butter, powder and others.

However, what could have sustained the factories is home consumption of cocoa-based products such as powder, chocolate and other finished products.

To revamp the sector, he recommended that the government, cocoa industry stakeholders and investors should strategically encourage home consumption through a national policy that makes cocoa-based foods and beverages mandatory in the school feeding schemes in private and public schools.

He said it was not a call for the government to fund school feeding in private schools, but to make it compulsory for private schools to include cocoa tea or cocoa-based foods in their menu.

Another strategic way of entrenching cocoa consumption, he said, is to include such foods in the food supplied at internally displaced people’s camps across the country.

Consuming cocoa, Riman added, has great scientifically-proven benefits as enumerated by Prof. Ibrahim, and therefore should be included in daily meals and ceremonial menu of the presidency, state government houses and at school levels.