Almost forty years after Nigeria omitted the Cocoa Industrial Regulation Commission in 1986, a new enforcement bill is replacing it towards Parliament to create a replacement. By the time it was discarded, the Cocoa Marketing Committee, which fixed and regulated other industry practices, was considered a major obstacle to progress, as it was so disliked by farmers.
Thirty-nine years later, the government is preparing to launch a new regulatory body. On May 5, Minister Abubakar Chiari announced that President Bora Tinubu's cabinet had approved a bill to establish a national cocoa management committee that is responsible for regulating the industry but has no authority to modify prices.
“We will use this new framework to compete directly with top global producers like Ghana and Ivory Coast,” Kyari said.
For President Bola Tinubu's government, this is an opportunity to raise the chances of an industry that has broken several price records in recent years, with prices rising 400% in three years to reach $12,000 per point. The value of cocoa exports from Nigeria more than seven times between 2023 and 2024, jumping to 2.7 trillion naira ($1.7 billion), driven by demand and depreciation of naira. Therefore, cocoa offers Nigeria a viable opportunity to move away from impeding oil exports.
The Tinubu administration is based on daily oil production of 2.06m of crude oil, which is sold for $75 per barrel, based on its 2025 budget, based on Naira 54.9 trillion. The year began with January production of 1.53m barrels per day, but within the next few months it fell below that number, with prices close to $60 per barrel. So the thoughts turn to Cocoa as a potential driver of export revenue.
Requests for better traceability
Nigerian cocoa farmers and the industry generally enjoy the freedom to set prices, but Nigerian and Origin cocoa can be sold at discounts due to quality inconsistencies, an indicator of various industry standard. However, recent global developments calling for the introduction of sustainable ethical practices, particularly European Union deforestation regulations, have required regulated standards.
Regulations passed by the European Parliament in 2023 require that all exporters of agricultural goods to the EU provide evidence that the crops are grown sustainably and not causing deforestation. Adeola Adegoke, president of Nigeria's Cocoa Farmers Association, says agricultural exports must be traceable where they are grown. “The Nigerian cocoa industry cannot continue to be autopilot,” Adegoke said. “There must be a deliberate plan to reposition the lost glory of the Cocoa economy.” Nigeria has emerged from its leadership in cocoa production as oil became the mainstay of the economy since the 1970s, and agricultural exports have been sidelined by successive governments.
Farmers need the support they need
In recent years, the trade has suffered from a lack of incentives and government support, especially in a year when farmers were threatened by price volatility, Adegoke said. The board's main mission is to fill that gap, he said.
Moves to a new board began in August 2022 with the establishment of the National Cocoa Management Committee. It consisted of industry stakeholders and officials from the Ministry of Agriculture, and its main challenge was to devise measures to revitalize cocoa as a major export commodity.
The committee has identified key issues, including difficulty in cocoa pests and diseases, an overwhelming increase in aging plantations and farmers, a lack of finance, and lack of national regulations.
The draft bill will convert national cocoa management committees into national cocoa management committees to address identified issues facing the industry.
High prices bring opportunities
The rise in cocoa prices more than three times between 2023 and 2024 appears to have been a government call for awakening. Nigeria has been ranked fifth among global cocoa producers in recent years, including Ivory Coast, Ghana, Ecuador and Cameroon. Two top producers, Ivory Coast and Ghana, had a major shortage of power due to unfavourable weather, but Nigeria had better crops, which left them short of production to make the most of the opportunity.
Still, the country produced over 300,000 tonnes of crops between 2023 and 24. Some people expect the harvest to be even better in the current season as the weather has improved. The government is keen to take advantage of this.
Cocoa futures prices began to recede from record levels, ranging from $7,844 to $8,415 in March.
Market weight weakened demand, with most West African producers, which account for 70% of global production, expected to have a better season than the 2023-24 season. The current season is the first in three years when ICCO expects production surplus. However, given the whims of the supply chain, it is unlikely to result in a wholesale reset of prices.
In fact, young people in Nigeria are beginning to see the future at Cocoa Farms as hedge funds bet on cocoa futures and push for record prices in recent years. According to officials from the Nigerian Cocoa Association (CAN), they have set up new farms and plant early onset varieties that will generate pods within three years.
But even while the government has been praised for starting the industry committee's return, some stakeholders are unsettling.
Seina Liman, a cocoa farmer who groups farmers, buyers and processors and former president of cans, says the board could sneak in government interference that could not ultimately benefit the farmers. What the industry needs, not the interfering body, is its targeting sensitivity to the challenges faced by farmers and support to make the most of the high-priced era, according to Liman. “What the cocoa industry needs is an increase in investment and standardization,” Liman concludes.
