NIGERIA – The United States has made a landmark decision to abolish customs duties on imports of cocoa and derived products from Nigeria to foster bilateral trade between the two countries.
Nigeria, the 4th largest cocoa producer in Africa behind Côte d’Ivoire, Ghana, and Cameroon, stands to benefit greatly from this policy change, with analysts forecasting an increased investment in the production and processing of the bean to capture a greater share of the American market.
According to data from the United States Department of Agriculture (USDA), the United States imported an average of US$5.06 billion a year worth of cocoa and products between 2017–21 (not adjusted for inflation).
The amount includes the transaction in cocoa beans, paste, butter, and powder, as well as foods prepared with cocoa such as chocolate. The import value of cocoa beans averaged more than US$1.1 billion annually over the 5-year period.
For 2021 only, The Observatory of Economic Complexity points out that the US became the second-largest importer of Cocoa Beans in the world, with cocoa beans taking the 331st most imported product position in the country.
The imports primarily came from Cote d’Ivoire (US$723M), Ecuador (US$183M), Ghana (US$130M), Nigeria (US$53.6M), and Dominican Republic (US$46.8M).
Nigerian cocoa farmers have made significant strides in adopting sustainable farming practices, such as improved fermentation techniques, quality control measures, and environmentally friendly cultivation methods.
The elimination of customs duties will further encourage these efforts by providing access to a larger market, attracting investments, and ultimately enhancing the livelihoods of cocoa farmers in Nigeria.
Nigerian Minister of Agriculture said: “We are delighted by the United States’ decision to abolish customs duties on our cocoa imports. This will undoubtedly enhance our trade relations and provide a significant boost to our cocoa industry.
“We look forward to capitalizing on this opportunity to further strengthen our cocoa value chain and contribute to the economic growth of our nation.”
The new trade deal comes at a time when the prices of cocoa have surged to the highest in 46 years on the Intercontinental Exchange in London.
The benchmark September contract for cocoa in London gained more than 2% this week to 2,590 pounds per metric ton, the highest price since 1977 at 2,594 pounds.
Cocoa prices rose in New York as well. The September contract gained 2.7% to US$3,348 a metric ton, its highest point in 7-1/2 years.
At the same time, many West African countries, particularly Ghana say that the demand for sustainability in cocoa production translates into additional costs to be shouldered by European consumers who demand it the most.
The Ghana Cocoa Board (COCOBOD) executive director Joseph Boahen Aidoo, recently explained that the adaptation of production methods to the new regulations should require investment and, in turn, a higher price for the acquisition of raw materials and therefore more expensive finished products.
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