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Stakeholders’ strategies for re-awakening Nigeria’s cocoa economy

By Femi Ibirogba
17 December 2018   |   3:26 am
Head, Agro-Economy Desk, FEMI IBIROGBA writes on the efforts of stakeholders in the cocoa value chain development to make the crop the mainstay of the economy; climate change management through agro-forestry and yardsticks for certification to meet international standards, among other industry issues. With the realities that there are structural bottlenecks in Nigeria causing inadequate…

Cocoa plantation. PHOTO: Google image

Head, Agro-Economy Desk, FEMI IBIROGBA writes on the efforts of stakeholders in the cocoa value chain development to make the crop the mainstay of the economy; climate change management through agro-forestry and yardsticks for certification to meet international standards, among other industry issues.

With the realities that there are structural bottlenecks in Nigeria causing inadequate growth of the economy; high imports of all categories of goods; low exports of non-oil goods and increased unemployment and high level of poverty, stakeholders in the cocoa sector have proactively moved to infuse game-changing activities in the production and value chain development of the economic crop to become, once again, the hotbed of the economy.

Nigeria’s warped economy

NIGERIA’S economy, for the sake of emphasis, is highly dependent on crude oil as the driver of economic activities, fiscal revenues and foreign exchange.

Non-crude oil export’s contribution to exports and foreign exchange earnings has not been impressive; it was a maximum of 31% for the years 2011 to 2017, showing clearly the overbearing influence of the oil sector in the economy.

Professor Adegboyega Oguntade of the Federal University of Technology, Akure, while speaking on ‘Re-awakening the Nigerian Cocoa Economy, Our Collective Responsibilities’ at the Rainforest Alliance’s stakeholders’ workshop in Akure to engage public and private sector operators on the status of cocoa sustainability in Nigeria recently, bewailed that “Nigeria imports all categories of products, ranging from food and live animals (14.74%); mineral fuel, etc. (27.92%); chemicals and related products (14.24%) to manufactured goods (9.61%).

These are items that should largely be produced locally to generate employment and save foreign exchange expenditures.”

The scholar said “the trend in unemployment figures for Nigeria gives the impression that unemployment is an overwhelming challenge that the nation needs to address headlong and overcome” to keep the nation above the waters.

Both unemployment and under-employment, he added, have been fluctuating upwards from 2010 through 2016 with under-employment being at a much higher level.

An analysis of the employment rate for 2016 by age groups shows that the highest unemployment rates were recorded among Nigerians who were in the 15 to 24 years age group (25.2%).

Nigerians in the age bracket 25 to 34 years recorded unemployment rate of 15.4%.

The National Bureau of Statistics (NBS) reported youth unemployment/underemployment figure of 52.65 % for the third quarter of 2017.

With high unemployment and under-employment rates in the economy, coupled with high dependency ratios in families, extreme level of poverty is unavoidable.

The fact is that poverty has been on the increase over the years.

This means that more and more Nigerians are living in social exclusion; they are just struggling to be part of the socio-economic landscape of the nation.

This accounts for the recent World Bank report that Nigeria is home to the largest number of extremely poor people (87 million).

Importance of cocoa economy

Up till the late 1960s, agricultural exports accounted for not less than 60 per cent of Nigeria’s exports. Nigeria’s major exports were cocoa, palm oil, palm kernel, rubber, groundnuts and cotton.

From the 1970s, crude oil gradually became more dominant and the share of agricultural commodities in the nation’s exports began to decline.

Oguntade told the cocoa stakeholders at the conference that “Nigeria’s agricultural sector could help to generate employment and foreign exchange earnings; increase household incomes and reduce poverty, to a large extent, if the agricultural sector could be made to perform optimally.”

Cocoa was one of the sources of Nigeria’s prosperity in the time past, Oguntade continued. “It is one of the major cash crops with significant impact on the contribution of agricultural sector to the Nigerian economy,” he added.

The contributions of cocoa to the nation’s economic development have been reported by many authors.

Cocoa has made significant contributions in terms of total production, foreign exchange earning capacity and income generation to Nigerian economy since its introduction into the country.

He also argued that cocoa had contributed 70.6 per cent to Nigeria foreign exchange earnings in the agricultural sector between 1971 and 1975, saying no single agricultural export commodity had earned more than cocoa for Nigeria.

“Among the six major agricultural exports of the pre-petroleum exporting years (cocoa, palm oil, palm kernel, rubber, groundnuts and cotton), cocoa is the one still standing tall in terms of non-oil exports,” he said.

In fact, Oguntade emphatically said the tax from cocoa was used to fund education, build roads, hospitals and other infrastructure, saying, the “Government has taken more from cocoa than it has given back to the crop. It is still the most important contributor to the nation’s non-oil exports.”

Having established the facts that cocoa was a major source of employment and foreign exchange earnings in the 1960s and 70s from production to marketing, and that it was a major source of government revenues through the government tax on cocoa to finance development, the stakeholders said the country should strategically shift its focus back to the sector.

The major challenges facing the cocoa industry, as experts synthesised, include rapid population growth in Nigeria, leading to large-scale conversion of agricultural land to non-agricultural uses; low productivity emanating from old and low-yielding cocoa varieties/farms; inadequate information on cocoa farm assets; small-holding production of farmers; low income and limited level of diversification; weak and poorly coordinated organizations of farmers; inadequate support services; land tenure system which impairs transfer of farm ownership; increasing demand for certification and traceability in the global cocoa market; need to improve research and development infrastructure and low capacity utilisation among cocoa processors.

Strategies going forward

FARMERS, scientists, agronomists, public and private stakeholders as well as training organisations resolved to inject energy and freshness into the sector in the following ways.

Integrated cocoa production

COCOA production alone, it has been observed, does not fully engage farmers all the year round. After the harvest period around November/December to June/July of the following year, farmers are mostly redundant and usually have no sustainable incomes.

Most of them cultivate cassava and other food crops, but for family consumption. This leads to annual rituals of poverty.

There is therefore, a need to introduce new farm enterprises to ensure that cocoa farmers are gainfully and fully engaged.

With adequate capacity development of farmers, poultry, fishery and livestock production can be combined with cocoa farming sustainably.

Egg or chicken production will lucratively occupy farmers, bringing in returns and compounding wealth.

Goat/sheep rearing would also financially empower cocoa farmers. Farmers can as well choose to combine cocoa production with catfish farming.

Manures from poultry or goat/sheep rearing could be used on the cocoa plantations to boost productivity, and water discharged from fish ponds on the farm could be used to irrigate the cocoa trees or for vegetable production, apart from returns on ancillary investments.

Professor Oguntade buttressed this by saying that “Enterprises that may not compete with cocoa for land that can be introduced are poultry and aquaculture.

Introduction of such new enterprises will open new business opportunities for support service providers in addition to diversification and better spread of farmers’ incomes.”

Professor Emmanuel Ajani, Head of Department of Aquaculture and Fisheries Management and Professor Bamidele Omitoyin, Dean, Faculty of Renewable Natural Resources, University of Ibadan, have been on the forefront of the research and advocacy of poultry/piggery/aquaculture with rice and other types of farming. They have recommended integrated farming as a lasting solution not only to food security challenges but also to poverty alleviation among various categories of farmers.

Integrated farming, they have claimed in their research, would always sustainably engage farmers, increase their earning capacity and set them free from cyclic poverty.

Similarly, Oguntade advised, while emphasising the need for replacement of old cocoa plantations, that cocoa farm renewal would require replanting of old farms, transfer of ownership of abandoned farms and replanting where necessary.

“This will require significant amount of resources – pods, seedlings, pesticides, fertiliser and labour. Significant amount of specially packaged credit may be required to achieve the replanting that is required,” he added.

Renewing cocoa farms will require significant private sector investments in input supply and distribution to maintain existing farms and replant old ones.

Re-organising cocoa trade

TO solve the financing and data collation challenges, production credit should be linked to cocoa sales. This was recommended at the conference. There should be an effort to review existing framework(s) in the industry and develop better industry-wide framework that would ensure adequate enforcement of contracts.

Oguntade also suggested that the “development of bonded warehouse receipts financing for marketing operations for cocoa and other agricultural commodities is required. This will increase access to trade credits by exporters, cooperative societies and farmers.”

Power improvement and joint advocacy on local consumption

IT was identified that cocoa processors are facing significant challenges.

Hence, it suggested that the governments of cocoa producing states should explore whatever opportunities are available to promote the interests of processors with the Federal Government.

Two areas of interests, they pointed out, are power supply and prompt settlement of Export Expansion Grant (EEG) claims.

The EEG scheme was introduced in 1986 through the Export (Incentives and Miscellaneous Provisions) Act (amended in 1992) to stimulate non-oil exports.

The scheme is administered by the Nigerian Export Promotion Council (NEPC).

It was suspended in 2014 to ensure a review and redesign in order to prevent abuse and ensure that the scheme is fit for purpose.

Most processors of semi-finished and finished cocoa products in the country rely on unsustainable independent power sources using power generating sets running on diesel.

The average cost of the products is neither competitive nor sustainable.

The cocoa conference also recommended that processors and the government should jointly promote local consumption of cocoa products.

Options include newspaper, radio and television programmes to create awareness, and introduction of school children to the consumption of cocoa products under the school feeding programme of the current government.

Research, development and extension delivery

One of the resolutions at the conference is that renewal and restructuring of the cocoa economy depend on effective agricultural research and extension.

Funding research is a long-term investment strategy, while the full impact of extension efforts in a tree crop system may not be felt in a couple of years.

Collaborative efforts of the private and public sectors to support research and development and extension delivery would eventually yield benefits to farmers, the private sector participants in the economy and to the government.

Making agriculture attractive

Most of the existing cocoa plantations and farmers in Nigeria are old.

Apart from rejuvenation of plantations with improved high-yielding varieties, cocoa production should be made attractive to educated young Nigerians.

Making cocoa farming attractive starts with improving the infrastructure in the rural and semi-urban areas where cocoa farming is undertaken.

The conference participants argued that new infrastructure must be skewed in favour of the rural areas.

“Provision of new infrastructure will inject money into the rural economy through the provision of off-farm employment and income during the process of infrastructure development.

The income earned by construction workers will also be partly expended in the rural economy, thus boosting household income and further injecting resources into agriculture,” the conference resolution stated.

Business development training

FARMING is a business and should be run as such. It was argued in the summit that young cocoa farmers would do better in planning, managing and growing their cocoa farms if they had appropriate business skills and orientation.

Providing business development/management skills would re-orientate young cocoa farmers towards better management of their farm business.

A successfully managed farm business has the tendency to yield better income, grow over time and become an employer of labour, as well as a role-model to other farms.

Farmer-to-farmer transmission of business knowledge, it was concluded, could help to create similar successful farm businesses.

Cocoa certification as a way forward

Oladokun Bolawa Isiaka, a cocoa value chain specialist, while talking on ‘Cocoa Certification in Nigeria: Impacts, Challenges, Opportunities,’ said past efforts by the government and other interest groups to control the quality of cocoa beans produced in Nigeria had yielded little or no results until about 2010 when certification became known in the Nigerian value chain.

He observed that certification is a panacea for the vicious cycles of “low quality and low quantity of cocoa” with its attendant problems of poor recognition and poor pricing of Nigeria’s cocoa beans in the international market.

He described certification as a document or combination of documents established by consensus and approved by a recognised body which provides for common repeatedly used rules and guidelines of which adherence is not enforceable by law.

Tracing the history of certification efforts, he recalled SARO Agro Allied Limited pioneered cocoa certification in Nigeria by achieving first exportation of organic cocoa to the international market in 2009 with the shipment of the first consignment of premium organic cocoa to ADM and by achieving the first UTZ certified cocoa by May 2011.

Isiaka added that Olam Group started working with cocoa out-growers groups in about 2010 with the aim to getting Rainforest Alliance certification,
which was achieved by 2011/2012.

Thereafter, many cocoa exporting and processing companies like Bolawole, Agro Trader and Yara and so on followed suit with their own cocoa out-grower cum certification programmes.

Solidaridad Nigeria was a non-profit certification institution that has been carrying out training of farmers on sustainable cocoa and palm production, which encompasses agro-forestry conservation, avoidance of child labour and exploitation, use of recommended chemicals and good quality control measures while harvesting and doing elementary processing (fermentation) of cocoa beans.

Isiaka said certified farmers and groups had recorded improved yields over the years and now getting 550 to 600kgs/ha as against the national average of about 400kgs.

In addition, they earn premium payment on top the selling prices for certified cocoa. Hence, certification has impacted farmers to earn more incomes than their counterparts who are not certified.

Also, there’s positive impact in the area of database of cocoa farmers in the sector, as data has become more available and easy to get in certification circles.

This is so because record keeping and database management is a requirement under certification for traceability purposes.

He concluded that farmer’s knowledge of good agricultural practices, good social practices and good business/environmental practices have been impacted positively and application of same in cocoa production and trade is on the increase.

Over 60 participants attended the cocoa summit, drawn from relevant federal and cocoa producing states, companies, development organisations, certification bodies, producer groups, farmer cooperative societies, farmers and the press.

Mrs Mopelola Fabunmi of Sucden-Olakoko Nigeria, Ms. Jennifer Abuah of Olam Nigeria and Dr. Taiwo Osun of Tulip Nigeria spoke on behalf of their companies and the private sector on their experiences with the Rainforest Alliance certification programmes over the past decade.

Ibraheem Ahmed (Owo, Ondo State) and Moses Nkum (Ikom, Cross River State) spoke on behalf of the farmers. Participants were formed into five different discussion groups to address different aspects of the central topic, ‘Contribution of Certification to Sector Transformation Agenda.’

Overall, the conference resolution communiqué states, in part, that “cocoa remains the number one non-oil commodity in Nigeria with the potential to contribute even more with the injection of the right policies, strategies and effective monitoring of implementation.

“There is a growing concern about encroachment on forest resources due to unsustainable farming activities in the agricultural sector, for which cocoa plays a leading role because of low yield and low income. The lateral expansion of settlements is a threat to land availability for other uses, especially in the peri-urban settings.”

Therefore, there is the need for diversification into additional, non-competitive commercial and business activities to support cocoa farming income.

The government agencies, among which was the Cocoa Research Institute (CRIN), companies, farmer organisations, cocoa farmers, development organizations and researchers agree to take greater individual and collective responsibilities to transform the cocoa economy by securing sustainable cocoa production, trade and consumption in Nigeria.

The questions that have not been properly answered, however, are that, will actions be taken to implement these recommendations? And if the answer is yes; who will take the lead and when?