Nigeria bets on Cocoa as futures settle at $9,187 per ton

Investors have renewed their interest in cocoa beans as prices skyrocketed due to Nigeria’s attempts to diversify its oil-dependent economy.

United Nations Food and Agriculture Organization (FAO) data showed Nigeria remained the world’s seventh-largest cocoa bean producer, with production exceeding 280,000 tons in 2023.

The government aims a production target of 500,000 tons for the 2024-2025 season, propelling Nigeria after Ivory Coast, Ghana, and Indonesia.

An expected decline in output from the top two cocoa-exporting countries, Ghana and Ivory Coast, which together represent 50% of global production, has pushed prices from $2,200-2,500 per metric ton in 2022 to nearly $11,000 by December 2024, as claimed by the International Cocoa Organization, an intergovernmental body.

New York cocoa futures skyrocketed due to poor weather and disease wreaking havoc on crops in West Africa, hitting a record near $13,000 a ton in 2024. Although prices have dipped from the peak due to expectations of a small surplus, cocoa is still significantly more expensive than historical prices.

Nigeria aims to be a major force in Coca production within the next three years, with an investment of $40.5 million made by British International Investment alongside manufacturing company Johnvents Group.

The funding will assist Johnvent’s subsidiary, Premium Cocoa Products Ile-Oluji, by increasing their production capacity from 13,000 to 30,000 metric tons per year, which would give Nigeria a more significant competitive advantage as a worldwide exporter of cocoa.

The Nigerian federal government is looking to boost the country’s cocoa industry and has proposed a bill to the national assembly to establish a National Cocoa Management Board.

Smallholder farmers’ membership in the Cocoa Farmers Association of Nigeria rose beyond 10,000 for the 2023-2024.

Senator Abubakar Kyari, the Minister of Agriculture and Food Security, stated that the newly proposed board will oversee all cocoa production, processing, and marketing to ensure it is done coherently and efficiently.

Delegations met with counterparts from Côte d’Ivoire and Ghana, which have national cocoa boards that efficiently oversee their cocoa industries.

The meetings discussed strategies for improving cooperation and coordinating efforts throughout the region. He added that the Nigerian Ministry of Agriculture had established a Cocoa Management Committee to evaluate the feasibility of such a board before drafting the bill.

The Federal Executive Council (FEC) approved an action plan in 2024 to achieve sustainable growth in the cocoa sector with a projected investment of more than $300 billion over the next decade.

The US division of Nestle SA, the largest food company in the world, will raise the prices of its Toll House morsels, baking cocoa, and fudge kits starting on June 23.