Reviving cocoa, oil palm industries as main economic drivers

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Cocoa and palm oil, among others, were the bedrock of the country’s economy before the Oloibiri oil rig became a metaphor for complacency and mono-cultural economy 60 years after independence. However, the government has been advised to restore farmers’ productivity, through the Central Bank of Nigeria (CBN), Cocoa Research Institute of Nigeria (CRIN) and the Nigeria Institute for Oil Palm Research (NIFOR) to stimulate socio-economic development.

Steadily, their production has retrogressed, and 60 years on, Nigeria remains oil and gas economy so vulnerable at the slightest distortion to forces of demand and supply at the international market.

Despite the situation, the National Bureau of Statistics’ (NBS’) Top Products by Imports and Exports for the first quarter (Q1) 2020 report indicated that though Nigeria’s total export value decreased by 14.42% in Q1, 2020 compared to the value recorded in Q4, 2019, the value of agricultural goods exports grew 85.36% in Q1, 2020 compared to Q4, 2019 and 46.76% compared to Q1, 2019.

The implication is that agricultural exports and raw materials, which were mainly semi-finished agricultural products, drove the export sector of the country’s international trade in the first quarter of 2020. And by extension, it indicates a strong comparative advantage of the country in agriculture.

Value of good fermented Nigerian cocoa beans was N35.2billion and superior quality cocoa beans was N16.8 billion.

Good fermented cocoa beans were exported mainly to The Netherlands (valued at N16.5 billion) and Germany (valued at N6.6 billion). Superior raw cocoa beans were also exported mainly to The Netherlands at a value of N11.2 billion.

However, production of cocoa has been retarded and industrialisation of the beans is hindered by a number of avoidable factors, with total yearly production nosediving to about 245,000 metric tonnes, from about 300,000 metric tonnes in the 2013 season.

Reviving cocoa, oil palm industries as main economic drivers
Reviving cocoa, oil palm industries as main economic drivers

International cocoa production data puts Ghana and Côte d’Ivoire ahead of Nigeria per hectare in several folds. Ghana Cocoa Board (COCOBOD) reported a total purchase of 742,725 tonnes for the 2019/2020 cocoa season as of June 4, 2020, according to the International Cocoa Organisation (ICCO). Côte d’Ivoire’s cumulative cocoa records, since the 2019/20 season started, established 2.043 million tonnes, down by 5.4 per cent from the 2.160 million tonnes reached during the same period in the previous season.

Challenges of production

The Board Chairman, Cocoa Research Institute of Nigeria (CRIN), Ibadan, Alhaji Abdulahi Jao, said the World Bank’s advice to scrap the cocoa coordinating body in the mid-70s and Nigeria’s compliance was the genesis of the cocoa production challenges.

“But Cote d’Ivoire was said not to have complied fully. Ghana rejected the neo-colonial advice. The results are there for all to see today. Those countries that refused the egregious notion are in the millionaire group of global cocoa production today,” Jao said.

Also, outgoing President, Cocoa Association of Nigeria (CAN), Mr Sayina Riman, identified lack of finance, Nigeria’s low production per hectare, neglect of extension service and lack of encouragement for youth participation in farming as some of the factors responsible for the constant decline of Nigeria’s cocoa output.

He said: “One of the biggest challenges of the industry is total neglect. Finances are not given as at when needed for the industry. How many banks will be ready to give out loans for tree crop development? As much as CBN pushes them, they still give you facility to pay in 24 months at most. How can a farmer take facility and grow cocoa within 24 months and start repaying a loan?

“Cocoa farmers and the private sectors have not failed the country but the country has failed those who still produce what we still call the golden egg. If cocoa has given so much to Nigeria, what has Nigeria given to cocoa?”

Also, Managing Director, Oluji Cocoa Products Ltd, Mr Akin Olusuyi, said Bank of Agriculture that should help cocoa and other farmers are located in cities, rather than in local government headquarters and villages for greater access of farmers.

President, Cocoa Framers Association of Nigeria (CFAN), Mr Adeola Adegoke, admitted that challenges include lack of access to improved cocoa seedlings, finance, manpower and cocoa agro-chemicals.

“Smallholders farmers are affected…. the kind of sustainability assistance which smallholders enjoy in Cote D’Ivoire, Cameroon and Ghana is not forthcoming here.”

He disclosed that each farmer in Nigeria is left to source for cocoa production inputs, such as quality seedlings, fungicide, insecticide and fertiliser.

“If you look at the situation on ground, Nigeria is not exempted from the pandemic, which has created some gap, especially in manpower,” he added.

In summary, poor financing, lack of coordination, land clearing and input challenges are major retardants.

The oil palm sector

In the oil palm sector, Nigeria produces about 1 million metric tonnes of crude palm oil yearly, according to international production data confirmed by industry players. But consumption is about 2.5 million metric tonnes. The deficit can create millions of jobs if produced locally through the value chain and fetch the country several billions of naira yearly. Producing for export too would imply creating more jobs and sustaining the economy.

But, Managing Director, Calabar Oil Palm Estate, Mr Muyi Ladoja, said oil palm is capital-intensive, and one hectare of oil palm farm costs between $500,000 and $10,000 to develop. This retards deepening oil palm sector in the absence of uncoordinated financial support.

Major challenges he identified include land clearing, costs of seedlings, inputs such as fertiliser, agro-chemicals and labour.

He said: “With all of those costs, the Federal Government, through the CBN, allows you to borrow at nine per cent, but the tenor of that borrowing is so short that you have not even started producing before you start to pay back. You start paying interest from day zero. You need at least a loan that will take 10 years before you start paying, without payment of interest from the start. You can spread the interest with the capital for the next 20 years.

“But here is the problem: when you borrow this money, it does not encourage, as it is now, the development of anything from the scratch. I repeat, it does not encourage starting a farm from the scratch.”

He argued that if Nigeria wants to deepen production and the value chain, oil palm funding must start from zero, not from 50 per cent of the operations, saying, only non-indigenous companies from Malaysia, Thailand, Indonesia and Singapore have cheaper capital at about three per cent.

Ladoja added: “We look at it from a more practical point of view. The CBN loan is available, but the conditions of accessing it are what are very difficult. For you to borrow, you need a big balance sheet. And a lot of smallholders do not have the balance sheets.”

General Manager, Calabar Oil Palm Estate, Anthony Awelewa Rotimi, said before crude oil was discovered, palm oil and cocoa were highest forex revenue earners for Nigeria, saying the potentialities in the industries are enormous, and once a plantation is developed, it provides employment and will continue to give good yield for at least 30 years.

“In the time past, the Nigerian economy was anchored on oil palm and cocoa cultivations in the south and southwest respectively,” he said.

How to deepen production

Rotimi said in the 70’s and 80’s, the value system was such that everybody wanted to invest and be patient for returns on investments, but when the value system changed to spontaneous acquisition of wealth, everybody started drifting away from agriculture.

He added: “But if we begin to re-orientate the value system, we will begin to see the enormous potential in the oil palm industry.”

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The agronomist argued that agriculture is a matter of national security. And if the government pays attention to farmers, where inputs, land clearing and support are given before returns come in, a lot of farmers would return to cocoa and oil palm farming, and their production would begin to rebound, he advised.

“Our country should not just let foreigners take over the farming industry because they have cheaper resources from their countries, which is an incentive from their governments,” he warns.

“And even when we package incentives of funding in our country, it is often tailored to favour foreigners, because indigenous players, one way or the other, are schemed out because of heavy collaterals and all that. Foreigners are still the ones getting agricultural incentives in our own countries. So, we need to actually re-engineer our entire processes, and see that we must survive as a nation.”

Can CBN interventions make a difference?

As of April 2020, the CBN said it had disbursed a total of N34.34 billion to major oil palm companies through its intervention programmes to support the industry, with a plan to plant 100,000 hectares of palm trees by 2025, from 20,000 hectares in 2020. Stakeholders have commended the efforts to refocus on cash crop production and value chains.

However, Ladoja suggested that: “What I think is practical is, if you look at land clearing, the government can do it. They have agencies to do it.”

He said seedlings from NIFOR should be certified to be sure of the products coming out of it, and the Federal Government could give indigenous farms free once they are certified.

“NIFOR has good indigenous breeds to develop from, but they are not certified, which means that if I plant today, I am not sure what my final product will be. In oil palm, if my final product is less than five per cent of what it should be, I am in trouble. Most of us end up buying planting materials from Palm Elite or from Australia, which will give us better yields, but it is not from Nigeria.

“I do not want to gamble, because out of the $10,000 to develop one hectare, $2000 is spent on seedlings,” he explained.

Agro-inputs of fertiliser and chemicals should be given to farmers for free if really the country wants to develop the industry, he insisted, saying: “The investor can borrow a little amount of money that is left from the CBN loans, let us say about 20 per cent of the total investment. That is, if we want to develop the sector.”

He added that if 80 per cent of the burden is taken off investors in terms of inputs and land clearing, the sector would develop, saying, as the government spends on stabilising the banking and oil/gas sectors, it should also commit national resources to other sectors, including agriculture, because they are crucial for economic diversification.

Meanwhile, on cocoa intervention, The Guardian gathered that each farmer would get N592,332 for maintaining about three hectares of existing cocoa plantations in an ongoing CBN cocoa funding scheme, which will translate to over N723,237,372 million to the first batch of 1,221 participating farmers in 10 cocoa producing states.

N197,444 per hectare is allocated per hectare, and three hectares are calculated for each farmer, according to President of CFAN, Adegoke, through the Anchor Borrowers’ scheme.

“They are partnering with us to bring the first batch of beneficiaries into the scheme,” he said.

The loan, Adegoke added, attracts a five-per cent interest rate payable within 18 months. It is expected that the loan, for maintenance and good agricultural practices (GAP), would increase beneficiaries’ productivity to about 300kg of cocoa beans per hectare. He believed that such interventions would help to restore Nigeria to path of cocoa productivity.

Similarly, Director/Chief Executive of the Cocoa Research Institute of Nigeria (CRIN), Olayiwola Olubamiwa, said the institute had developed improved and early maturing varieties (TC1-8) that could transform production level, yielding some three to five times (1.5-2.0 tonnes per hectare), against the old materials yielding 300 to 400kgs.

However, the conventional propagation method of nursery production of the seedlings cannot translate to much productivity in decades.

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He said: “For instance, an injection of 10 million seedlings yearly will add just 13.500 tonnes yearly after the initial two-three years. We have to move to tissue culture production.

“Tens of millions of mini-sets can be produced if CRIN has the embryogenesis equipment. Until this is done, we cannot achieve much.”

He also suggested establishment of a Cocoa School at CRIN to train graduates, full –time, for one to two years on the A-Z of cocoa production.

“As a means of youth employment drive, the school fees should be greatly discounted. Our willing young graduates can be started on this programme. The graduates should be assisted by the state governments on land issue, while a designated loan strategy should be put in place,” Olubamiwa suggested.


Source: The Guardian

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