Course Title: BUS 6100

Module 3: Case Study Cocoa Business

Submitted By

TAWAKALIT M. OLALERE

Learner’s ID: 018457

24th October 2023.

According to Market Research conducted by industrial experts, revenue in the Cocoa market

amounts to US$12.8bn in 2023. The market is expected to grow annually by 5.89% (CAGR

2023-2028). This significant growth trajectory is expected to continue until 2030 (Statista).

This growth can be attributed to several factors, including increasing demand from emerging

economies and technological advancements in the industry such as the fusion of cocoa

derivatives into other food products, especially chocolate, leading to new launches within

beverages, bakery items, and confectionery. This trend is expected to fuel the demand for cocoa

butter and cocoa powder further in the foreseeable future. The market is also expected to witness

a shift towards sustainable and eco-friendly products, which is expected to further drive growth

(Statista).

INTERNATIONAL MARKET

On the international scene, about 70 % of the world’s cocoa beans come from four West African

countries: Ivory Coast, Ghana, Nigeria, and Cameroon. Between 2021 & 2022 The Ivory Coast

and Ghana accounted for over 50% of the world's cocoa, producing approximately 2.1 million

metric tons of its beans. However, our attention is focused on Nigeria, as a recent analysis shows

that she produced approximately 320 thousand tons of cocoa beans in 2022/2013 (Shahbandeh

2023). With annual revenue of 349.2 million dollars generated in 2022 thereby contributing

about 41.6% to Nigeria’s export earnings (Statista).

GOVERNING BODY
In Nigeria, Cocoa is the largest non-oil foreign exchange earner for the country, and a significant

source of employment to millions of Nigerians as farmers, processors, licensed buying agents,

marketers, and exporters.

This has led to the creation of the National Agricultural Technology and Innovation Policy

document (NATIP) with the aim of cocoa production and marketing occupying a preeminent

position in the recently launched.

Cocoa Farmers Association of Nigeria (CFAN), is the umbrella body for the smallholder Cocoa

Farmers in all the Cocoa communities, regions, and states in Nigeria

It was established on November 25, 1999, to protect the interest of the smallholder Cocoa

Farmers. This enables such registered farmers to have access to low-interest loans, Government-

subsidized fertilizer, and other agro-allied chemicals.

These associations in collaboration with the Ministry of Agriculture and other stakeholders will

help build an economic blueprint that is to develop a sustainable value chain (Premium Times

2022).

SUSTAINABILITY

The cocoa business in Nigeria has the potential to be sustainable, but there are several

challenges that need to be addressed. These challenges include poor infrastructure, low

productivity, and the impact of climate change. However, there are also opportunities for

improvement, such as increasing investment in research and development, improving access

to finance, and promoting sustainable farming practices.

One key factor in the sustainability of the cocoa business in Nigeria is the adoption of sustainable

farming practices. This includes using agroforestry techniques, such as intercropping cocoa with
other crops, to improve soil fertility and reduce the need for chemical fertilizers. It also involves

promoting the use of organic farming methods, which can reduce the use of pesticides and other

harmful chemicals.

Another important factor is the need for investment in research and development. This includes

developing new cocoa varieties that are more resistant to pests and diseases, as well as improving

post-harvest processing techniques to reduce waste and improve quality.

Access to finance is also critical for the sustainability of the cocoa business in Nigeria. Farmers

need access to credit to invest in their farms and improve productivity. This can be facilitated

through the development of microfinance institutions and other financial services tailored to the

needs of smallholder farmers.

Finally, the cocoa industry in Nigeria needs to address the impact of climate change. This

includes developing strategies to mitigate the effects of climate change, such as planting shade

trees to protect cocoa trees from extreme temperatures and droughts. It also involves promoting

climate-smart farming practices, such as rainwater harvesting and conservation agriculture.

In conclusion, while there are challenges facing the cocoa business in Nigeria, there are also

opportunities for improvement. By adopting sustainable farming practices, investing in research

and development, improving access to finance, and addressing the impact of climate change, the

cocoa industry in Nigeria can become more sustainable and profitable for farmers.

SUPPLY CHAIN MANAGEMENT

The cocoa supply chain in Nigeria involves multiple stakeholders, from farmers to exporters and

consumers. It is a complex process that encompasses cultivation, harvesting, processing, and

marketing of cocoa beans. However, there are several challenges within the cocoa supply chain

in Nigeria that need to be addressed to ensure its sustainability and profitability.

1. Farming and Cultivation: The cocoa supply chain starts at the farm level, where farmers

cultivate and harvest cocoa beans. In Nigeria, the majority of cocoa farmers are
 smallholders with limited access to resources and knowledge. They face challenges such

as low productivity, aging cocoa trees, and limited access to credit and inputs. To

improve the supply chain, there is a need for training and capacity building programs for

farmers, provision of better farming practices, and access to finance and inputs.

2. Post-Harvest Processing: After harvesting, cocoa beans need to be properly fermented

and dried to ensure quality. However, in Nigeria, post-harvest processing is often done

using traditional methods, leading to inconsistent quality and lower market value. There

is a need for investment in improved processing facilities and training programs to

enhance post-harvest practices and increase the value of Nigerian cocoa beans.

3. Marketing and Export: The marketing and export of cocoa beans in Nigeria face

challenges such as poor infrastructure, inadequate storage facilities, and limited market

access. These factors result in high post-harvest losses and lower prices for farmers. To

address these challenges, there is a need for investment in infrastructure development,

establishment of quality control systems, and the promotion of direct market access for

farmers.

4. Sustainability and Certification: Sustainable and certified cocoa production is gaining

importance in the global market. However, in Nigeria, the adoption of sustainable

farming practices and certification schemes is still limited. To improve sustainability in

the cocoa supply chain, there is a need for awareness campaigns, training programs, and

incentives for farmers to adopt sustainable practices. Additionally, partnerships with

certification bodies and international organizations can help promote sustainable cocoa

production in Nigeria.

Technology is an important component of supply chain Management

The below software will also be explored to aid supply chain management efficiency.
 1. Enterprise Resources Planning

2. RFID – Radio Frequency Identification

CONCLUSION

Premium Times (October 2022) Nigeria earns N122.9bn from cocoa export – Official. Retrievd

from Premium Times

 https://www.premiumtimesng.com/regional/ssouth-west/559558-nigeria-earns-n122-9bn-

from-cocoa-export-official.html?tztc=1

 https://www.statista.com/forecasts/758619/revenue-of-the-cocoa-market-worldwide-by-

country

 Shahbandeh M. (September 2023).Cocoa bean production worldwide 2020/2021-

2022/2023, by country. Retrieved from Statista

https://www.statista.com/statistics/263855/cocoa-bean-production-worldwide-by-

region/#:~:text=The%20Ivory%20Coast%20and%20Ghana,metric%20tons%20of

%20cocoa%20beans.
  Statista (n.d). Cocoa – Worldwide Retrieved from Statista.

https://www.statista.com/outlook/cmo/hot-drinks/cocoa/worldwide#:~:text=Revenue

%20in%20the%20Cocoa%20market,US%241%2C709m%20in%202023).

The UN Global Compact has since 2008 organized annual summits of the UN Private Sector

Forum, aiming to improve the involvement of governments and the private sector to global

sustainability. This forum focuses on the SDGs since they were adopted in 2015, including the

obligations of multinational companies to support the SDGs, particularly focusing on pilot

projects, gender quota, and investment in sustainable infrastructure (Abshagen et al. 2018).

Adopting sustainability strategies can be incredibly challenging. The Santa Fe Institute outlines

three major impediments for firms seeking to improve their environmental impacts: First, it is

hard to understand the impact of any individual firm. Second, it is difficult to rank the
environmental impact of some activities, and finally, it is difficult to predict how economic

agents respond to changing incentives.

REFERENCES