The price of cocoa rose in Nigeria, which boosts its exports and increase its revenue for the federal government. Indeed, Nigeria is a major producer and exporter of cocoa beans. In 2021, Nigeria exported around 344.6 thousand metric tons of cocoa beans, with a value of $779 million. This made Nigeria the fourth largest exporter of cocoa beans in the world after Ivory Coast, Ghana, and Cameroon.
It must be said that cocoa prices in Nigeria have been rising in recent months due to an increased demand from chocolate manufacturers in Europe and North America; to a decline in cocoa production in other tropical countries such as Ghana and Ivory Coast, which remain, nonetheless, the major exporters of cocoa in the world; and the ongoing conflict in Ukraine, which continues to disrupt global supply chains.
Cocoa Production in Nigeria, 2012-2023
Source: Statista
Ghana and Ivory Coast are the world's two largest cocoa producers. However, cocoa production in these countries has been declining in recent years, due to factors such as climate change and pests. This decline in production is also contributing to the rise in cocoa prices.
Nigeria is a major producer of cocoa beans, and it is the world's fourth largest exporter of cocoa beans. As the demand for cocoa beans increases, chocolate manufacturers in Europe and North America were more likely to buy Nigerian cocoa beans, as they are a reliable and high-quality source of cocoa beans. This increased demand for Nigerian cocoa beans also drives up the price of cocoa beans in Nigeria.
Moreover, the Nigerian currency, the naira, is relatively weak compared to the currencies of Europe and North America. This means that it takes more naira to buy the same amount of US dollars or euros. When the price of cocoa beans is quoted in US dollars or euros, it means that Nigerian cocoa farmers receive more naira for their cocoa beans. This is because the naira is worth less, so it takes more naira to buy the same amount of US dollars or euros.
The ongoing conflict in Ukraine is disrupting global supply chains, which is also contributing to the rise in cocoa prices. Ukraine is a major exporter of wheat, which is used to make cocoa powder. The conflict in Ukraine has caused wheat prices to rise, which is making it more expensive to produce cocoa powder.
As a result of these factors, cocoa prices in Nigeria have risen by more than 50% in the past year. This has benefited cocoa farmers in Nigeria, who are now receiving higher prices for their crops. However, it has also led to higher prices for chocolate products in Nigeria, which could impact consumer demand.
The rise in cocoa prices is likely to continue in the short term, as demand remains strong and supply remains tight. However, it is possible that prices could fall in the long term, if production increases in other countries or if the conflict in Ukraine is resolved.
The rise in cocoa prices is likely to have a number of implications for Nigeria. First, it will benefit cocoa farmers in Nigeria, who are now receiving higher prices for their crops. This could lead to an increase in cocoa production in Nigeria, which could further boost the country's economy. Second, the rise in cocoa prices could lead to higher prices for chocolate products in Nigeria. This could impact consumer demand for chocolate, but it could also lead to increased investment in the chocolate industry in Nigeria.
Overall, the rise in cocoa prices is likely to be a positive development for Nigeria, but it is important to monitor the situation closely to ensure that any negative impacts are mitigated.