By STEVE AGBOTA
Although oil is by far the biggest foreign exchange earner for the Nigerian economy, cocoa has also made a significant contribution in recent years, bringing in $900 million in export earnings in 2012, according to Business Monitor International (BMI), in its research recently published on “Nigeria Agribusiness Report Q3 2013.”
However, the short to medium term prospects for the sector had been darkened by the fall in global prices expected in 2013 and 2014 as global demand continued to decline. Despite government’s desire to increase Nigeria’s market share, a temporary setback to production could be disastrous for the sector.
Meanwhile, rice importers have tried to beat government tariff hikes by buying in stocks before the new rules and smuggling is on the rise as people take advantage of restrictions on rice and poultry imports.
Poultry consumption grew by 37 percent to 378,000 tonnes as demand continues to outstrip supply with smuggling increasing to meet consumer demand for frozen poultry.
Rice consumption growth to 2017: 28.2 percent to 6.7mn tonnes. Tariff hikes imposed by government are unlikely to have the desired effect as lower prices in the global market would combine with higher incomes to sustain steady growth in consumption of mostly imported rice.
• BMI universe agribusiness market value: 2.4 percent year-on-year (y-o-y) decrease to $7.5 billion in 2012/13, forecast to grow on average 2.5 percent annually between 2011/12 and 2016/17.
Real GDP growth 2013: 6.7 percent y-o-y, up from 6.6 percent in 2012, unemployment rate 2013: 23.6 percent (down from 24.4 percent in 2012), inflation (annual average, % chg y-o-y) 2013: 9.1 percent (down from 12.2 percent in 2012).
On key revisions to forecasts, cocoa production forecast for 2016/17 revised down, to 273,000 tonnes (compared with a previous forecast of 331,000 tonnes). Significantly lower global prices in the early and middle years of forecast period would put the brakes on the revival of the sector.
On industry developments, while the government has ambitious plans to increase production of cocoa significantly to almost 500,000 tonnes by 2015 and to one million tonnes by 2018, lower prices in 2013 and 2014 combined with low levels of fertilizer usage cause us to remain sceptical about the possibility of meeting these goals.
BMI sees LIFFE cocoa prices averaging GBP1, 350/tonne in 2013 and 2014 before averaging higher in the following years. Cocoa production has been targeted for development by government with the setting up of the National Cocoa Development Committee (NCDC), which has distributed millions of seedlings and improved access to fertilizers and other input.
However, if farmers consider it wise to continue to grow other more profitable crops at the expense of cocoa – a move which is likely in the circumstances – then all of these efforts may be in vain.