Nigeria’s cocoa earnings spiked by 279% in the first quarter of 2024 on the back of elevated cocoa prices during the first quarter of 2024.
Data from the National Bureau of Statistics (NBS) reveals that in the first three months of the year, the value of cocoa exports reached a total of N408.66 billion.
This represents an increase of 279% from the N107.59 billion recorded in the first three months of 2023.
When compared to the preceding quarter, total cocoa exports increased by 138% from the N171.29 billion recorded in the preceding quarter.
This is according to the three categories of cocoa exports.
The dollar value of Nigeria’s cocoa exports
Despite the significant depreciation of the Naira in the first quarter of the year, the dollar value of cocoa exports saw a significant increase both year-on-year and quarter-on-quarter.
- There was a 65.3% increase in the USD value of Nigeria’s exports between Q4 2023 and Q1, 2024. Using the closing rate of the USD to the Naira at the end of December 2023, cocoa exports for the period stood at $188.83 million.
- This increased to $312.19 million at the end of Q1 2024 using the exchange rate at the end of March 2023.
- Year-on-year, the USD value of exports in the first quarter of 2023 stood at $233.8 million using the exchange rate of $460/$ at the end of March 2023. This represents an increase of 33.4% over the one year in the USD value of cocoa exports.
Increase in cocoa prices in the quarter
The significant rise in cocoa exports in the quarter under review stems from a rise in the prices of cocoa between January and March 2023.
In the first quarter, the average price of cocoa in the international market increased by 130%, closing the quarter at $9,900 per tonne since the beginning of the year.
- In January, the spot price of coca in the international market rose from $4,297 to end the month at $4,841. In February, the commodity continued its bullish wave to close the month at $6,443 and reached a monthly peak of $6,866. In the final month of the quarter, cocoa prices reached a staggering $9,828 to close for the month.
- The bullish trend in cocoa prices did not just end in the first quarter. In the following month of April, cocoa prices reached a record high of $12,216. However, the commodity currently trades around $9,800 with projections for further increases in the future.
Reasons for cocoa price increase
The increase in cocoa prices can be attributed to a global cocoa shortage. Climate change-induced droughts have severely impacted crops in West Africa, (Ghana, Ivory Coast and Nigeria) the countries responsible for approximately 80% of the world’s cocoa production. The International Cocoa Organization predicts that the global cocoa supply will decrease by nearly 11% during the 2023/2024 season.
- Also, deep-seated structural issues contribute to the problem, notably significant underinvestment in cocoa farms over the years especially in Nigeria- the one-time largest cocoa producer in the world.
- The crop is predominantly grown by smallholder farmers, many of whom struggle to earn a liveable income and lack the resources to reinvest in their land, resulting in lower yields over time.