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Friday, 30 January 2015
NEW BUSINESS IDEAS: Dwindling Crude Oil Revenue…How Cocoa Can Help; Cocoa Has The Potential To Help Nigeria Out Of Oil-Induced Woes
The cacao tree has large glossy leaves that are roughly the size of an outstretched human hand. (Image source: thestoryofchocolate.com)
By Sina Fadare
Dwindling oil revenue has led to a crushing cash crunch in the country, forcing government to announce austerity measures and taxes on luxury items. But experts say proper harnessing of cocoa resources will help.
As Consul-General of the United States Diplomatic Mission in Nigeria, Mr. Jeffrey Hawkins is no stranger to any part of the country. But one thing that has shocked him most is the failure of the country to take maximum advantage of its cocoa resources. His belief is that the country could shore up its earnings by billions from chocolate – a bye product of the cash crop.
The envoy’s position will make more sense in the light of dwindling oil fortunes, a development which has made the Federal Government propose new tax regime next fiscal year.
Coordinating Minister of the Economy and Minister of Finance Dr Ngozi Okonjo -Iweala, presenting the 2015 Budget proposal to the National Assembly, said : “Government is going to implement a sole charge on luxury goods; a 10 per cent import sole charge will be imposed on new private jets which are being brought into the country.”
Mrs. Okonjo-Iweala added that a sole charge was also proposed on business and first class flight tickets and on luxury items.
The Facts: The fruit of the Cocoa tree grow directly from the trunk. They look like small melons, and the pulp inside contains 20 to 50 seeds or beans.
Hawkins feels cocoa has the potential to help the country out of oil-induced woes. The envoy told his audience at a conference on cocoa value chain that Nigeria has not positioned itself to take advantage of the opportunity of insatiable worldwide appetite for chocolate
He regretted that despite the trend of technology in assisting massive production and processing of agricultural produce, Nigeria is still lagging behind.
It was at a conference organized by Nigeria Expanded Trade and Transport, NEXTT, in collaboration with USAID and Olam to x-ray holistically the crises and forces that are militating against cocoa explosion.
His words: “When I travel through the regions of Nigeria, I am struck by the fact that cocoa is still raised by hand, not by machine, and remains a very labour-intensive commodity to produce. Cocoa production is still very much a family enterprise, from planting to carrying the bags of cocoa beans to the buyers, who may be far away from their farms. Despite the physical labour involved, farmers are realizing very limited incomes from their efforts.”
Hawkins pointed out that with the emerging trend in the demand of darker chocolate, especially in new markets such as China, international buyers were predicting a potential cocoa shortage by 2020. He challenged all the stakeholders to tap into the huge potentials by increasing the production level in the country.
According to him, the way out is a holistic approach to the massive production of cocoa in terms of finance and investment, technology and technical assistance to raise quality and making cocoa a viable prospect for youth employment.
But the Minister of Agriculture, Dr Akinwumi Adesina, believes the country is on the right track. He said Nigeria will soon witness an explosion in the cocoa industry due to the incentives introduced by the Federal Government to accelerate the expansion of cocoa production in the country has generated a lot of discourse among the industry stakeholders.
Adesina, who spoke at a cocoa summit in Abuja, said the Jonathan administration had developed the Cocoa Value Chain, under the Agricultural Transformation Agenda (ATA), to shore up the country’s cocoa output which has been very low in the international market.
The minister lamented that “While Cote d’Ivoire’s cocoa has grown to over 1.4 million metric tons and Ghana at over 720,000 metric tons in the last decade, Nigeria’s had remained low at about 250,000 metric tons, until the recent efforts which are beginning to yield the desired dividends.
Though, the minister argued that the production level has increased from 250,000 metric tons to about 370, 000 metric tons, stakeholders, comprising the producers, input suppliers, traders, exporters, indigenous and multinational companies, cocoa processors and cocoa farmers, disagreed with him. The stakeholders registered their opposition at a cocoa conference in Lagos, where they faulted the minister’s claim and insisted that the country has no concrete data on cocoa production.
Speaking on the global trend in the industry and understanding Nigeria’s market share, Mr. Dimeji Filani, the former Managing Director of Armajaro, a major player in the cocoa industry and an officer with Barry Callebaut, another stakeholder player in the cocoa business, noted that the fortune of cocoa began a downward slide following heavy politicization of policy on the crop.
Filani lamented that Armajaro, a company that was shipping about 60,000 metric tons at its peak now struggles to ship about 10,000 metric tons. He blamed the trend on the politicization of the cocoa business. He noted that politicians, and not professionals, are often appointed as managers.
He recalled that a lot of money earmarked for cocoa production under the administration of former President Olusegun Obasanjo, ended up in the pocket of politicians in farmer’s garment.
Filani noted that Nigeria’s production figure was deliberately inflated from 200,000 metric tons to 400,000 metric tons just to cover up.
He noted that the country may never get it right unless the government mustered the political will to wield the big stick against saboteurs and involve professionals, who have the passion for the cocoa industry.
Filani challenged the government to always monitor the Export Expanded Grants (EEGs) given out to cocoa exporters so that at the end of the day, the votes will not be diverted.
Speaking on how to boost production, the expert nobody needed a rocket science to understand the prevailing crisis. He said anything short of massive investment will amount to a waste of time.
In a similar submission, the Managing Director of Multi-Trex Integrated Foods Plc and one of the pioneer cocoa processor in the country, Mr. Dimeji Owofemi, said the time has come for the government to go back to the drawing board and jettison the issue of monotonous conferences that would lead to nowhere.
Owofemi urged the government to embark on aggressive enlightenment campaign on local consumption of cocoa to boost its production.
He regretted that the production of cocoa by peasant farmers has been abandoned for a very long time, adding that it was necessary to replace the ageing trees with improved varieties that can yield within 16 months. This, he said, should be done in collaboration with youth empowerment scheme so as to raise a new generation of cocoa farmers.
Besides, Owofemi said the youths must undergo re-orientation and re-training to re-focus their attention from non-existing white-collar jobs in other sectors of the economy. “You don’t invite the youths to a loose game, they will not come,” Owofemi said.
He identified poor funding, policy inconsistency as the bane of the cocoa business.
Perhaps the fundamental issue that gave the stakeholders serious concern was statistics which they put at zero level, a situation they agreed has contributed immensely to backwardness in the production of high grade cocoa.
The Executive Director of the Cocoa Research Institute of Nigeria (CRIN), Prof. Malachy Akoroda, said the country has learnt nothing since 140 years ago, when cocoa was introduced.
Akoroda said financial problem facing cocoa industry would end with the injection of the proceeds from if two and a half days oil drilling.
The agronomist argued that massive production of cocoa can only be achieved with adequate funding of the CRIN, which he noted, can provide all the needed statistics on the crop. He noted that the revolution in Cote d’Ivoire was attained by such intervention.
He said: “Each of the 22 cocoa producing states would be well mapped and once that is done, the foundation has been laid and this can be built upon.
“Research is the key to return cocoa to its lost glory in the country. All over the world, data is a global phenomenon on which new techniques and innovations are based. The sad story is that nobody knows the production statistic of cocoa and until we do that, we would not know where we are going.”
He regretted that the farmers who toil all-year round gets between six to 10 per cent of the several billions being generated from cocoa annually.
“The issue of raw materials, which is the cocoa beans, must be tackled with all seriousness with a back up consistent policy that will not short change the farmers at the long run. This will give room to address the issue of quality and packaging which will go a long way to improve cocoa explosion,” he explained.
Akoroda said the country needed cocoa philosophers with passion absolute commitment for the crop to make a change.
Advocating for a direct action and mobilization of cocoa farmers, Dr Jibayo Oyebade, who is the chairman of Cocoa Revolution Project, a pilot programme being funded by the Ondo State government said the experiment of Oda Cocoa Farm in Ondo should be reference a point for the Federal Government to demonstrate its readiness to rescue the industry.
Oyebade, who made a submission on how to attract youths to cocoa farming, noted that resuscitation of the Oda Cocoa Farm was was targeted towards the youths and that about 250 of them have been given intensive training on pruning and maintaining of large cocoa plantations.
He said: “We engaged the youths to prune the old coca tree and then plant another 100, 000 units on line and arable crops like tomatoes, banana are planted in the middle so that before cocoa started fruiting, something will be a fall back for the new farmers. Government also gives them allowances so that they will not run away.”
Speaking in the same vein, Mr. Kayode Faleti, the Senior Programme Manager in charge of the Southern Regional Office of the USAID, explained that a vibrant cocoa business will discourage youths from crime.
Faleti urged them to go straight into action by involving those who can actually explore all the potentials in cocoa from primary production to end-users.
According to him, lack of access to large parcels of land remained a major problem militating against commercial agriculture. He urged government’s intervention.
“In terms of production, we are not there and more worrisome we are not on the right track. Some of the farmers are not ready to lease their farms for commercial production and the old plantation needs re planting, therefore we need government intervention to arrest this situation,” he said.
Allaying the fear that all hope was not lost, Dr Peter Aikpokpodion, who is the Team Leader, Cocoa Chain Development in the Federal Ministry of Agriculture and Rural Development, informed that government was working round the clock to turn the fortune of cocoa for the better.
Aikpokpodion pointed out that there is a plan in the offing to include greater participation of the public sector in cocoa transformation, adding that a proposal has been sent to the presidency on the need to have a strong institutional framework for cocoa industry through a sustainable public-private partnership platform.
He explained that cocoa farmers have been encouraged to organize themselves into cooperative societies to widen their asset to funds. Aipokpodion assured that government will do everything to strengthening the policy.
He said: “We need to invest in the sector and to stimulate that we need a coordinating body in Cocoa Corporation of Nigeria, the strategy is to have everything relating with cocoa industry will be handled by this public and private sector.
“The first step is to get this body establish , Cocoa Corporation of Nigeria and let government fund it and all other aspect of cocoa sector from the upstream in terms of production, inputs, down to marketing and value addition would be coordinated so as to enhance grater production. It is capital intensive and the government is not shying away from this.”
Minister of Trade and Investments, Mr Olusegun Aganga
FG’s Marked Out 13 Export Products As Replacement For Oil – Aganga
Meanwhile the Federal Government has marked out 13 national strategic export products, meant to replace petroleum products, the prices of which have continued to tumble at the international markets, threatening the stability of the Nigerian economy, Minister of Trade and Investments, Mr Olusegun Aganga, has said.
He said that this was part of moves by the Federal Government to revive the dwindling national economy with emphasis on rapid growth of the non-oil sector for exports.
Aganga, during an unscheduled inspection and a meeting with the Executive Director of Nigerian Exports Promotion Council, NEPC, Mr. Olusegun Awolowo and members of his management team in Abuja, noted that originally 12 products were identified, but the number increased because the Executive Director of NEPC made a very strong case for the inclusion of Cashew in the list.
Unveiling plans by the Federal Government for diversifying the economy, Aganga listed the 13 national strategic export products, NSEP, in three categories to include: Agro-industrial — Palm oil, cocoa, cashew, sugar and rice; Mining related — cement, iron ore/metals, auto parts/cars, aluminium and oil and gas industrial products — Petroleum products, fertilizer/urea, petrochemical and methanol.Responding, Awolowo noted that NEPC under his leadership had long recognized the need to develop the non-oil export sub-sector and in the process held series of strategic meetings with stakeholders for the development of ideas aimed at improving the foreign exchange earnings by Nigeria through different avenues.
Originally published in The Nation & The Punch