The unrelenting pressure on the Nigerian economy has underscored the urgency of tapping into the nation’s agricultural sector as a buffer in this period of uncertainties, writes Festus Akanbi

As of last week, the Nigerian economy, while showing signs of growth, faces challenges including high inflation, a depreciating naira, and reliance on oil, with the services sector playing a key role in GDP growth.

Economists say that Nigeria stands at a pivotal crossroads, grappling with economic reforms that, while aiming for long-term stability, have intensified immediate hardships, including soaring inflation and escalating unemployment.

In response, economic experts and commentators are fervently advocating for a strategic pivot towards agriculture—a sector ripe with potential to not only achieve food security but also to serve as a robust engine for job creation, particularly for the nation’s burgeoning youth population.

The African Development Bank’s initiative to mobilise $2.2 billion for establishing agricultural processing zones across 28 states underscores the transformative promise of this sector. The argument is that by harnessing the untapped potential within agriculture, Nigeria can cultivate a more diversified and resilient economy, ensuring sustainable livelihoods and a prosperous future for its citizens.

This is why the current agitation by Nigerian Cocoa farmers for adequate funding from the federal government to enable them to conform to international regulations is timely.

Cocoa is one of Nigeria’s most significant agricultural exports. As the world’s fourth-largest producer, and with an industry worth $700 million, Nigeria plays a crucial role in the global cocoa market. Among these, cocoa stands tall as a significant contributor to the country’s economy.

Cocoa played a significant role in developing several states in southern Nigeria, particularly in the South-west. Still, its impact was also felt in parts of the South-south region.

In the old Western Region in the First Republic, a booming cocoa business was the foundation of the robust economy as Chief Obafemi Awolowo, the premier, deployed earnings from cocoa to develop the region through infrastructural development, which were constructed to prepare the region for modern socio-economic activities and bring Western civilisation to the Yoruba nation. These include the famous 25-storey Cocoa House, the Western Nigerian Television (WNTV) and the Liberty Stadium (now Obafemi Awolowo Stadium), among others.

Today, across the South-west, there are many old storey buildings of various designs. These are the houses of many prosperous traders who thrived across the zones in those days.

Unfortunately, agriculture was neglected in the country upon the discovery of crude oil in commercial quantities.

Speaking during a recent television programme, the Special Adviser to the President on Economic Matters, Dr. Tope Fasua, alluded to the immense business opportunity in the cocoa business, boasting that many young men in Idanre, his hometown in Ondo State, and elsewhere in the South-west were raking millions of naira exporting cocoa seeds daily. He noted that youths are now shifting attention to the cocoa business, which is producing a new class of millionaires.

Incidentally, his claims are in tandem with data from the foreign trade report, which shows that cocoa exports surged by 304 per cent in the first quarter of 2024 owing to the global price rally and weak naira.

According to data from the National Bureau of Statistics, cocoa farmers and exporters in the country have earned N644 billion from the export of cocoa beans in the first half of 2024, saying Nigeria’s cocoa export surged 298 per cent in the first six months of the year from N161.8 billion in the first half of 2023 to N644 billion in 2024.

Farmers attributed the surge to the cost of cocoa – a key ingredient for making chocolate – which has tripled since the start of the year, with quoted prices on the International Cocoa Organisation’s website reaching a new historic high of $8,246 per tonne on November 27, 2024.

The surge is owing to bad weather that battered harvests in top West African growers – Ivory Coast and Ghana, and Nigerian farmers benefited from it on the back of the continued depreciation of the naira.

Making Farming Efficient, Profitable

Nigeria must seize the opportunity presented by the current surge in global cocoa prices to revitalise its agricultural sector and drive economic diversification. With cocoa prices reaching historic highs due to supply shortages from major producers like Ghana and Ivory Coast, Nigeria can position itself as a key player in the market. By investing in modern farming techniques, improving access to credit, and providing infrastructure support, the government can empower farmers to scale up production and enhance quality. This will not only increase foreign exchange earnings but also reduce the country’s dependence on oil revenue, ensuring a more resilient economy.

To sustain this momentum, Nigeria must make cocoa farming attractive to young people, who are often deterred by the perception of agriculture as labour-intensive and unprofitable. By integrating technology into cocoa farming—such as precision agriculture, automated irrigation, and digital market access—farming can become more efficient and profitable. Additionally, offering incentives like start-up grants, land access, and training programs will encourage youth participation. If properly harnessed, this cocoa boom can create employment, drive rural development, and position Nigeria as a global leader in the industry.

The National president of the Cocoa Association of Nigeria, Mufutau Abolarinwa, said cocoa farmers and exporters are benefitting from the record surge in global prices. “As we speak, the farm-gate price is N12.5 million,” he said. “We will see a marginal increase in this maincrop season and we expect an output boost next year if weather conditions are favourable,” he noted.

Nigeria is currently the world’s fourth largest producer of cocoa, with 280,000 metric tonnes in the 2022–2023 season, according to the International Cocoa Organisation’s latest data on global production, and the third largest exporter, after Ivory Coast and Ghana.

Cocoa, Still an Untapped Goldmine

But to gain more mileage, an expert in agribusiness, Dominic Joshua insisted that Nigeria must prioritise investment in cocoa processing if it hopes to transform the sector into a major economic driver.

Joshua, who is also the Founder of Cultivate Africa, described cocoa as an untapped goldmine, stressing that value addition could generate billions in revenue and create thousands of jobs.

He lamented Nigeria’s failure to maximise its cocoa potential despite being the world’s fourth-largest producer, contributing approximately 270,000 metric tonnes annually. Unlike Ghana and Côte d’Ivoire, which have heavily invested in processing, Nigeria exports around 90% of its cocoa as raw beans, reaping only a fraction of the lucrative $130 billion global chocolate market.

Despite accounting for over 25% of Nigeria’s agricultural GDP, the complaint from cocoa farmers is that the sector has been largely neglected. The Cocoa Research Institute of Nigeria (CRIN) reports that more than 80% of the country’s cocoa farms are over 40 years old, leading to dwindling productivity. Additionally, limited access to credit, poor infrastructure, and fluctuating global prices have made cocoa farming increasingly unsustainable.

Despite the federal government’s export drive initiative, the operation of Nigeria’s five surviving cocoa processing plants has slumped to eight per cent of the industry-installed capacity over worsening macroeconomic challenges. The once-thriving industry that had 15 cocoa processing factories with a combined installed capacity of 250,000MT now has only five factories functional with a combined utilisation capacity of 20,000MT per annum. A combination of issues ranging from high energy costs, multiple taxations, farmers’ preference to sell their cocoa beans to merchants -who offer premium prices over processors and a difficult operating environment is making it unattractive for Nigeria’s remaining cocoa processing factories to tap export demand for butter, cake, and powder.

“It is very challenging and tough for the Nigerian cocoa processors and there is a need to declare a state of emergency in the sector,” the chairman of the Cocoa Processors Association of Nigeria (COPAN), Felix Oladunjoye, recently lamented.

“We need about five times the working capital used last year to secure key inputs now, coupled with other rising costs associated with production,” he added.

Experts insist that Nigeria can reclaim its position as a dominant player in the global cocoa industry if the right policies and investments are implemented. They called for investment in processing, financial support for farmers, adoption of high-yield hybrid varieties, improvement in infrastructure and supply chains, and enhancement of trade agreements and supply chains.