NIGERIA– The Cocoa Processors Association of Nigeria (COPAN) has revealed the installed operation and production capacity of the five cocoa processing facilities in the West African country have declined to 8% due to global pricing and supply chain issues despite the government’s export drive initiative.
According to COPAN, 10 out of the country’s 15 cocoa processing facilities have closed in the past few years. These facilities had a combined installed capacity of 250,000 processed tons annually. The remaining five facilities operate at a capacity of 20,000 processed tons.
The facilities have closed because of an array of local factors, including high energy costs, taxation and insecurity. According to the Association, electricity alone accounts for 30% of the total cost for cocoa processors in Nigeria. These high production costs have made Nigeria less competitive compared to cocoa producing giants like Ivory Coast and Ghana.
Cocoa prices have also significantly increased in the past year, with prices reaching an all-time high of US$12,260 in mid-April due to global shortages and supply chain difficulties.
COPAN also revealed these pricing and supply chain challenges have created a preference among cocoa farmers to sell their bean directly to merchants as opposed to selling them directly to processors.
The cocoa association revealed the current situation is so dire it might require some form of intervention from the government and other stakeholders, warning production of the remaining facilities could close entirely.
Felix Oladunjoye, COPAN’s Chairman, said, “It is very challenging and tough for Nigerian cocoa processors, and there is a need to declare a state of emergency in the sector. In addition to other rising production costs, we need about five times the working capital used last year to secure key inputs now.”
The Chairman also warned the proposed export requirement by the National Agency for Food and Drug Administration and Control (NAFDAC) would further exacerbate the situation.
According to Felix, the new export regulations for 2024 are a replication of duties of existing government agencies, which would result in double taxation, delayed shipments, fines, and significant job losses.
The Association implored the government to implement more proactive and industry-supporting regulations.
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