Cocoa Production in Nigeria: A Literature Review

 In Analysis, Food & Agribusiness

Introduction

Given renewed interest in the development of cocoa and government decision to recognize it as one of the key sources of foreign earnings, the Center for Public Policy Alternatives carried out a review of existing literature including reports of research carried out by experts in the sector. The intention was to explore the state of cocoa, focusing on South West Nigeria. Attempts were made to aggregate production information and examine farmers access to planting input and finance.

 

Nigeria’s Cocoa

Cocoa crop thrives in tropical climate and production is therefore dominated by countries in those regions, while consumption is mostly by countries in temperate regions of the world. West Africa is a major producer accounting for approximately 70% of global production which fluctuates annually with climatic variations. This is often cyclical with periods of rapid expansion followed by periods of stasis. However, overall production continues to expand with cultivation becoming more widespread.

In West Africa, Nigeria is the third largest producer of Cocoa. While the crop is sometimes farmed on a large scale in Nigeria, the sector is dominated by small scale farmers and remains a critical source of livelihood for rural populations in states where the crop is produced. In the South-west, cocoa-producing states include Ondo, Oyo, Osun Ogun and Ekiti where farmers either operate on inherited field or operate a share cropping system in which two-thirds of the produce accrues to the land owner who also contributes to purchase of farming input.

An analysis of labour-use patterns among small holder farmers in South-west Nigeria showed that 80% of respondents to survey have 5 hectares or less, 19% operate at medium scale level and 1% had farms that are bigger than 10 hectares. Farmers used labour as outlined on table below:

Table 1 Labour Types and how farmers use them[1]

The report stated that farmers would use share croppers because of the perception that they are more honest and dedicated in the discharge of their duties.

The country is currently reported to be experiencing low and declining yields due to inconsistent production patterns, disease and pest attack. Low levels of mechanization with dependence on cutlass and hoe agriculture and ageing of cocoa fields play a role in decreased productivity, especially in southwest states that contribute nearly 80% of national cocoa yields. Although reports are conflicting, annual cocoa yields for Nigeria are generally estimated at an average of between 300 to 350,000[2].   Reports also set production per hectare at 0.38 tonnes but these are reported to have declined to less than 0.3 hectares mostly due to reduced rainfall[3]

Problems with production according to available literature, include high cost attendant to the establishment of nurseries and plantations, a dearth of market information, high levels of spoilag, low quality of beans and extremely weak linkage between producers and processor/exporters. Even with this, reports indicate that there is positive relationship between area harvested or farm size and cocoa production in Nigeria (Fadipe et al 2012).

It is widely acknowledged that there is under-investment in agriculture while studies have highlighted a strong relationship between cocoa out and farm size and access to finance (Fadipe et al, 2012)

Nigeria’s cocoa is cultivated on (estimated) 800,000 hectares of land and makes up 5% of global cocoa production which is contributed by an estimated 300,000 cocoa farmers, two-thirds of which live in south west Nigeria. Majority of them inherited farms with trees that are more than 25 years old with declined production.

Prone to disease, maintenance of cocoa farms is labour intensive and requires the use of expensive chemicals to keep black pod disease at bay. Cultivation is a delicate process and trees are sensitive to changing weather conditions such as excessive rain or drought which negatively affects yield per hectare.

Osun, Ondo and Cross River states are reported to contribute approximately 68% of Nigeria’s yearly cocoa output which reached a high of 350,000 MT in 2014[4]  when the Ministry of Trade and Industry also reported that Nigeria made $1.3 billion from cocoa export. There is however poor price transmission between export markets and producers[5]

 

Yield

The Cocoa Transformation Plan of the Federal Ministry of Agriculture and Rural Development set a national target for production at 500,000 MT by 2015 and 1 million MT by 2018. This is to build on the target of 600,000 MT by 2015 set by the National Cocoa Development Committee. Between 2002 and 2007 NCDC distributed inputs for cocoa farming to farmers at 50% subsidy. The Committee also raised 62 million high yielding early maturing hybrid seedlings – enough to plant 56,000 hectares of new cocoa fields.

Farmers are responding to rising international market prices for cocoa and reports indicate a potential increase in production resulting from adoption of improved production practices to meet the UTZ certification requirements. There are indications that farmers are willing to rehabilitate abandoned farms and to increase area under production[6]. Production has however been hampered by the inability of the Cocoa Research Institute of Nigeria to meet demand for seedlings, and utilize adequate mechanisms for distributing improved varieties of cocoa to farmers. Production has therefore fallen short of 2015 targets of 500,000 MT.

Table 2 Yield, Area Harvested and production of cocoa in Nigeria[7]

  2000 2002 2004 2006 2008 2010 2012 2013 2014 2015/2016
Yield/

hectare

0.3499 0.3515 0.3879 0.4393 0.2720 0.3137 0.3018 0.2948 0.1804
Area harvested/hectare 96,600 1,030,000 1,062,000 1,104,000 1,349,130 1,272,430 1,269,136 1,244,755 1,374,399
production 338,000 362,000 412,000 485,000 367,020 399,200 383,000 367,000 248,000 200,00[8]

 

A study of technical efficiency of cocoa production in southwest Nigeria[9]  showed that more than 80% of cocoa farmers in the region had more than 10 years of coca farming experience and were relatively technically efficient in their use of resources although they were largely resource constrained. The study report also explained that labour constituted the highest cost of cocoa production and that it would likely determine the viability and profitability of cocoa production. The report concluded that there is potential to minimize inputs to maintain current production levels and/or maximize output at current input levels in southwest cocoa production although technical efficiency was found to be high at 0.8126.  A critical factor that affects technical efficiency was reported as the age of cocoa trees (the older the trees the less efficient), education of farmers (the better educated and inform the more efficient due to likelihood of adopting progressive farming practices) and land area cultivated (better to increase yield and efficiency). The report recommended sustained improvements by planting younger trees to replace aging ones to raise technical efficiency.

It has been estimated that there can be a 15 – 30% rise in cocoa production if more fertilizer is used in cocoa production[10]. Nigerian cocoa farmers use a lot less fertilizer than farmers in Ghana where production was increased from 650,000 to 1 million tonnes in one season (2011/2012). Farmers in Nigeria were introduced to fertilizer usage in 2012/2013 season.

Many NGOs and donor organisations including USAID are supporting on-farm capacity development for farmers to improve productivity and quality. Researchers have also been supported through the Cochran Fellowship and Borlaug training programmes to build knowledge and skills. However, yield improvement continues to be constrained by poor farm management, inadequate extension services, low farm input utilization, farmers’ reluctance to replant old trees and slow uptake of new technology.

Quality

Crop quality has improved since the Sixties but quality of cocoa from Nigeria is currently considered lower than the quality on offer by other West African countries. Quality control mechanisms are severely compromised given a liberalized market and limited value chain governance.

Nigeria’s cocoa is reputed in the world market for its aroma which makes it a great choice for blending with cocoa from other sources. Quality provides opportunity for price differential and, where there is a premium, provides an incentive for the farmer and others in the value chain. Nigeria suffered a setback in cocoa quality following the market liberalization in 1986 and reduced confidence the trade.

There are continual efforts by the Cocoa Association of Nigeria (CAN) and Cocoa Processors association of Nigeria (CPAN) to raise farmer awareness on appropriate use of chemicals as well as quality parameters for fermentation and drying of beans. Government produce inspectors however pay more attention to revenue capture than to quality grading.  There are wide disparities in grading fees set by state governments and this range from N3000 to N5000 per tonne.

Quality issues range from simple cleanliness of the bean bag, preparation by farmer to genetic origins of the beans. Many processors rate flavour (which is a combination of genetic factors influencing the varieties) as highly important.

A study on the effect of farm management practices on cocoa quality carried out in Ondo State concluded that Nigerian cocoa farmers receive low prices for their crops because of poor quality arising from inappropriate farm management practices[11]

Cocoa Seedlings and Seed Gardens

Federal Ministry of Agriculture and Rural Development’s Cocoa transformation agenda reported estimated that if Nigeria is to meet national targets for cocoa beans productions, it will be necessary to raise 111 million improved hybrid seedlings in 2012, 116 million in 2013 with a decrease to 80 million by 2015. Seedlings produced fell far short of these estimates.

Seed Gardens owned by CRIN and State Government

[12]As of 2010 there were 18 government owned seed gardens in Nigeria with average annual pod production of 564,331.

Table 3 Seed Gardens owned by CRIN and State Government

State Number of seed gardens Area of land (hectares) Year planted Varieties
Ondo 7 106.46 1956 – 1978 C69 x C20 Trinidad; CRIN Series I & II IT, CRIN Elite; NA 32 x PA 35 C75 x C18; C75 x C25; C75 x C14; C77 x C27 C75 x C25; C74 x C24
Osun 3 16.2 1961 – 1979 C77 x C27

C74 x C18

C77 x C27

Oyo 5 229.98 1964[13] F2 and F3 Amazon, CRIN Elite. Clones planted in CFC plots areT65XT10/15, T86/2X T22/28, T86/2XT9/15, P7XPA150, P7XT60/887.
Edo 2 31.5 1967 Trinidad and F3 Amazon
Cross River[14] 4.4 1975 F3 Amazon and CRIN Elite
South east zone 1 28.5 1971 – 1986 F3 Amazon

 

Seed gardens use open or hand pollination method for hybrid pod production. 471,866 pods were produced 2008/2009. Farmer pod demand was not estimated.

Pod distribution

Reports indicate low demand of improved seeds from seed gardens and attributed this to (i) reliance on seedlings raised by state governments – Federal and State governments provide seeds and seedlings at subsidised prices. (ii) farmers raise cocoa seedlings from pods collected from their farms or other unapproved sources.

Ondo State was reported to have produced and distributed seeds as follows:

Year                               No of seedlings produced          
2005 2,736,530
2006  3,040,000
2007 2,000,000
2008                1,000,000
2010 1.5m (projection for 2010)

 

The report of a study carried out in 2016 indicated that Oyo and Ondo States are reported to have been supplying an annual one million cocoa seedlings to farmers while Osun state has been supplying 800,000[15].  While the seedlings cost between N10 and N20 in Ondo and Osun State because of a 50% government subsidy, they delivered free to farmers in Oyo State. These government policies were to increase access of cocoa farmers to improved planting materials and provide an incentive for rehabilitating old farms and opening up new fields.

Findings from a study[16] to determine the effect of seedling subsidy in three states (Oyo, Osun and Ondo) showed that in spite of yearly seedling supplies in excess of one million over a period of 7 years (2005 to 2011), supply of seedlings was inadequate to the needs of farmers. Demand from farmers was not determined for respective years.

Table 4 Yearly supply of seedlings to farmers
State 2005 2006 2007 2008 2009 2010 2011
Oyo 843,251 1,400,000 1,500,000 1,000,000 1,000,000 1,100,000 N/A
Osun N/A 404,000 1,600,000 600,000 900,000 1,300,000 100,000
Ondo 1,540,000 3,040,000 1,292,312 908,126 906,993 1,192,503 1,232,360

 

Cost of seedlings also varied. While it sold for between N20 and N50 per stand in Osun and Oyo States, it sold for between N12 and N20 in Ondo state.

The study also reported a gradual increase in size of farms (hectares) planted with hybrid seedlings.

Table 5 Farm size (hectares) planted with hybrid seedlings
State 2005 2006 2007 2008 2009 2010 2011
Oyo 532 719 1275 1367 911 903 1296
Osun 2932 1240 873 884 872 1147
Ondo 402 211 294 270 324 180 90

However, in terms of number of old trees replanted, only Oyo State had data which showed that more than 20,000 trees annually were replanted in the period between 2005 to 2009. The study also highlighted distribution challenges.

Ondo State has the largest cumulative hectarage of cocoa seed gardens of 14 states. These seed gardens typically obtain cocoa pods from the Cocoa Research Institute of Nigeria who produce sexually generated improved planting materials. CRIN has 15 cocoa seed generating sites[17]  which are reported to have challenges that include aged trees, depleted soils, reduced tree population and low yield resulting in insufficient supply of planting materials to farmers.

Table 6 Cocoa and generation sites and list of available hybrids [18]

Following the release of 8 new cocoa hybrids with proven genetic qualities in 2011, CRIN established 2 hectares of cocoa seed gardens in each of 14 states identified as cocoa growing. These new gardens make improved cocoa hybrids available to farmers and promote vegetative propagation.

Table 7 List of cocoa clones established in 14 states[19]

A separate project supported by the World Cocoa foundation also resulted in the establishment of community based seed gardens in four communities including Ikoromaja (Osun State), Ago-Store Owena (Ondo State), Okwoyi (Abia State), Etomi (Cross River State). Each of the gardens have seven parental clones of cocoa established in four bi-clonal blocks. The parental combinations generate four hybrids of cocoa.[20]

Extension services and technical information is provided to farmer by ADPS. A study of cocoa farmers[21] in Ekiti State reported that 71.1% of the surveyed population received such support while 13.3% received extension information from agro chemical companies. 11.7% received extension information from IITA extension services and 1.7% receive information from unspecified sources. The same study report stated that 73.7% of farmers surveyed believed there has was considerable reduction in production problems with extension information and that 60.8% thought that production input was easier to acquire.  65% thought produce marketing was also easier and more profitable with support from extension services.

The study also observed that in addition to extension services that provided information about production technologies, farm size, ownership status, frequency of contact with extension agents and whether farmers had other occupation, have a relationship with the level of use of disseminated technologies.

Seed gardens in Ondo State faced challenges with bush fires in 2016 that threatened production of hybrid cocoa pods. This was compounded by the drought that was reported as the worst in 30 years with no rainfall in Cross River and Akwa Ibom States since November of the previous year[22]

CAN also reported that 90% of seedlings and new cocoa planting of 2015 in Ogun State were lost to the protracted dry weather

The seed gardens face challenges of inadequate and untimely release of government funds, aged trees, depleted soils inadequate equipment and limited infrastructure. It was estimated that it took N937,667 to maintain one hectare of seed garden in Nigeria

Table 8 Estimate of labour and infrastructure required per 3-hectare seed garden [23]

Cost of seed propagation in West Africa was also estimated by Biodiversity International[24].  Acknowledging differences in cost of establishing a farm nursery and community nursery, the report outlined ideal features of a cocoa seed production system.

The cost estimates were based on assumptions that the nursery would be set up close to water supply, that an area sufficient for sowing 5,000 seedlings as root stock for budding can be created for $915 including purchase of netting and equipment. (see cost estimate in appendix). The publication also provided estimates for field costs based on requirements for land that has suitable permanent shade and on assumption of planting density of 1,111 plants per hectare and an expected 20% loss in the first dry season for clonal materials.

The document[25] provided information on field testing of SE plants and based on experience in Ecuador estimated that with scale up and use of liquid medium, production costs for SE plants could be brought down to between 30 to 50 (USA) cents and that orthotropic rooted cuttings could be sold 20 cents basing their calculation on the establishment of 10,000 SE plants. It was reported that in Indonesia, retail price for SE plants are 50 (US) cents and following establishment in distribution nurseries it sells for 70 cents per plant. By comparison, open pollinated seedlings sell for approximately 40 cents while hand pollinated seedlings sell for 50 cents. Meanwhile grafted plants sell for 70 cents per unit.

Given success with field testing in Ecuador (see chart) long term goal is to transfer the SE technology to West Africa and with initial funding from the Sustainable Tree Crops programme some training has been provided to research institutes including CRIN in Nigeria

 

 

Credit for Cocoa Production

Along with other crops in Nigeria, cocoa farming is hindered by availability of credit to sustain or expand production. Shortage of credit for agriculture production is attributed to reluctance by banks given high risks associated with the sector. To address the challenge, the Central Bank of Nigeria set up some development finance to target agriculture; one of this is the Commercial Agriculture Credit Scheme designed to boost production of selected cash crops including cocoa. Despite this and other schemes, studies show that few cocoa farmers in Cross River State (6% of owner managers and 12% of lease managers) were able to obtain bank loans although the likelihood of obtaining bank loans was also correlated to level of education. Other cocoa farmers, especially small scale farmers and share croppers were deemed unable to meet requirements for bank loans and relied on credit from relatives or on savings[26].  The same study demonstrated that to make appreciable income from cocoa production, farmers need to make large cost outlays; the larger the investment, the more likely the returns[27].

A study carried out in Ondo State reported that despite the mean size of cocoa farms being 1.28 hectares and 66.7% of farmers surveyed having no more that primary school education (32.8% had no formal education) 58.5% procured credit in the 1009/2010 production season although 83.2% of these, obtained credit from produce merchants. Mean age of farmers in this study was 49.8 years and 95.1% of them were male. The study concluded that inadequate credit affected production efficiency. In addition to access to finance, poor infrastructure was indicated by respondents as being a major challenge[28].

Credit available in the cocoa economy is short term and provided within season production in cash or kind to farmers by merchants and buying agents. Size and structure of loans makes it difficult to apply them to significant improvement or expansion or cocoa farms. Here are however options for special on-lending facilities backed by government guaranties.

Conclusion

Evidence from documents reviewed demonstrate that in spite of Nigeria being considered a major contributor to cocoa production, the industry is precarious and requires strategic interventions if it is to become the productive resource that government wants to make it. Farmers, especially in the south west, farm very small holdings and are experiencing declining yields. Although it has been reported that they are willing to rehabilitate cocoa fields, they are poor resourced and have scant technical know-how or technology support.

Recommendation is for strengthened governance of the cocoa value chain. Large off-takers should be helped – utilising industry studies and preparation of a sector strategy – to see the potential for generous returns on investment and policy documents should highlight this as well as make provisions for appropriate mechanisms for regulating the sector including prioritising certification of farms, seedlings and products.

[1]Kassim Adekunle Akanni and Alfred Olayinka Dada – Analysis of Labour-Use Patterns among Small-Holder Cocoa Farmers in South Western Nigeria

[2] Cocoa Association of Nigeria

[3] Peter Aikpopodion who also explained that there are challenges with data

[4] Federal Ministry of Agriculture

[5] UNFAO, ANALYSIS OF INCENTIVES AND DISINCENTIVES FOR COCOA IN NIGERIA (February 2013)

[6] Global Agriculture Information Network Report – August 2014

[7] http://www.factfish.com/statistic-country/nigeria/cocoa%20beans,%20yield

[8] Source : https://www.statista.com/statistics/263855/cocoa-bean-production-worldwide-by-region/

[9] Popoola Olufemi A., Ogunsola Grace O. and Salman Kabir K. (2015)

[10] Robo Adhuze – Cocoa Analyst. Ondo State Cocoa Revolution

[11] M.G. Olujide and S.O. Adeogun  – Assessment of cocoa growers’ farm management practices in Ondo State, Nigeria (2006)

[12] Richard Asare, Victor Afari-Sefa, Isaac Gyamfi, Chris Okafor and Jonas Mva – Cocoa seed multiplication: an assessment of seed gardens in Cameroon, Ghana and Nigeria –

[13] 4 were established in 1964 and a 5th one in 1999

[14] Experimental plot with clonal materials

[15] Alamu Salawu Abideen – Analysis of seedling subsidy policy and cocoa production in South West Nigeria, NISER 2013

[16] ibid

[17] Adewale, B. D., Adeigbe, O. O. and Muyiwa, A. A. –  Cocoa Seed Garden: a means to disseminating improved planting materials for enhanced national productivity: A review (2016)

[18] ibid

[19] ibid

[20] ibid

[21] Oladosu, I. O. and O. T. Yekinni – An Assessment of Agricultural Extension Activities to Cocoa Farmers in Ekiti West Local Government Area of Ekiti State (2008)

[22] Saia Riman, Chairman Cocoa Association of Nigeria

[23] ibid

[24] Supplying New Cocoa planting materials to farmers: A review of propagation methodologies (2015) Edited by B. Laliberte and M. End

[25] ibid

[26] Nkang N M, EA Ajah, SO Abang and EO Edet –  INVESTMENT IN COCOA PRODUCTION IN NIGERIA: A COST AND RETURN ANALYSIS OF THREE COCOA PRODUCTION MANAGEMENT SYSTEMS IN THE CROSS-RIVER STATE COCOA BELT

[27] ibid

[28] http://journal.unaab.edu.ng/index.php/theses/thesis/view/790

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