Nigeria Loses $2 Billion Yearly as Cocoa Processing Capacity Sits Idle

Nigeria is forgoing an estimated $2 billion in annual revenue by using only about 30 per cent of its installed cocoa processing capacity, the Federal Ministry of Agriculture and Food Security has disclosed, highlighting a structural gap between farm production and industrial value addition.

Agriculture Minister Abubakar Kyari disclosed the estimate at the Africa Cocoa and Coffee Conference in Lagos, organised by the Cocoa and Coffee Farmers Alliance Association of Africa with the ministry and the Cocoa Research Institute of Nigeria. He said the country has installed processing capacity of roughly 2,000 tonnes, of which only about 30 per cent is utilised. The gap between farm output and industrial capacity has widened as exporters have preferred the simpler logistics of raw-bean shipments. Processors argue that reliable bean supply, predictable export rules and consistent power are prerequisites before they will commit to higher utilisation of existing plants.

"Roughly $2 billion in value addition slips away every year. It is not a shortage of resources; it is an opportunity waiting for the right investors," the minister said, calling for investment in domestic facilities that can produce cocoa butter, liquor, powder and chocolate instead of exporting raw beans.

Yields are the other constraint

Processing is only half the problem. Cocoa Research Institute of Nigeria acting executive director Abiodun Adedeji said productivity has remained between 250kg and 300kg per hectare for years, despite distribution of 601,000 improved pods between 2011 and 2015 and 300,000 seedlings during the COVID period. The ministry has now mandated the institute to produce and distribute one million hybrid seedlings.

Post-harvest losses compound the shortfall. Industry estimates cited at the conference suggest Nigeria loses 30% to 50% of agricultural output after harvest, including about 37% of cocoa, to inadequate storage, transport and handling. Weak farm-gate supply is itself a deterrent to processors justifying high utilisation.

Price volatility compounds the case

COCCEFAAA founder Adeola Adegoke noted the 2023-24 global cocoa deficit of roughly 490,000 tonnes drove prices above $10,000 a tonne before a subsequent correction, illustrating why raw-bean exporters are exposed to swings they cannot control. "When there is bumper harvest, price goes down. When there is shock, price goes to $12,000. Why should we produce more and earn less?" he asked.

The policy direction is value addition without banning raw exports, leaving room for beans shipments while trying to pull processors downstream. Whether $2 billion of stranded value moves depends on power, logistics, patient capital and a predictable export framework, none of which a conference communiqué can deliver alone.

For investors, the test is whether utilisation can be raised without solving every upstream problem at once, or whether reliable bean supply must come first. For policymakers, the risk is export restrictions that strand farmers without building the factories the strategy promises.