Addressing the Challenges in the Nigerian Cocoa Supply Chain

Sunpress Weekly Bulletin - Issue 12

The Nigerian Cocoa supply chain is a complex system with several junctions connecting the pathways cocoa beans travel from the production site to processing factories and the final consumers worldwide.

The Nigerian cocoa supply chain follows the typical farm-to-broker, broker-to-LBA, LBA-to-distributor, and distributor-to-factory/consumer process. In the system, the farm is the origin, the brokers, LBAs, and distributors serve as intermediaries, while the factories are the final destination of the cocoa beans.

Expectedly, this complex chain has its fair share of challenges affecting its efficiency, profitability and long-term sustainability at different levels.

Challenges at the Lowest Level of the Supply Chain

Arguably the most crucial part of the chain – the base of the pyramid contains the cocoa farmers and cocoa-producing communities. It goes without saying that the supply chain wouldn’t be operational without the individuals at this level doing the grunt work.

But, many of the issues in the Nigerian cocoa supply chain arise at this level. These issues pertain to;

●?????? Unsustainable farming practices by farmers such as deforestation, child labour, and forced labour which undermine the image of the Nigerian cocoa industry in the international market and affect its patronage.

●?????? Low farmer literacy which contributes to poor production practices, inefficient farm management, and ultimately, reduced productivity.

●?????? Insufficient infrastructure to enable efficient production and logistical operations in rural cocoa communities.

●?????? Scarcity of specialized mechanical equipment for cocoa farming

Challenges at the Middle Part of the Supply Chain

The intermediaries make up the middle level of the supply chain. These are the brokers and local buying agents (LBAs), who take on the responsibility of getting the cocoa out of the rural communities.

The predominant challenge at this level involves integrity issues. Dishonest, self-seeking intermediaries frequently engage in unethical tactics that serve their own purposes and undermine the profitability of the other participants.

For example, some intermediaries regularly attempt to severely underprice the commodity when purchasing from farmers. This issue is a contributing factor to the prevalent rate of poverty among local cocoa farmers in Nigeria.

Similarly, intermediaries can sometimes fail to deliver products to off-takers as agreed on, causing a stall in the supply chain.

Challenges at the Top of the Supply Chain

At the top of the Nigerian cocoa supply chain are major distributors/suppliers such as Sunbeth Global Concept who obtain cocoa beans from several LBAs and distribute them to processors and factories worldwide.

The challenges often experienced by players at this level lean towards lack of policy support from the government, and the effects of poor infrastructure conditions such as bad road networks, and poor state of port facilities among others.

Solutions to Supply Chain Challenges in the Nigerian Cocoa Industry

●?????? Encouraging sustainable farming practices and sustainability/traceability compliance

●?????? Investing in infrastructure development to improve existing transport networks connecting cocoa origins to destination and port facilities.

●?????? Introducing policy reforms, export incentives, and price stabilization measures to encourage increased participation in the supply chain.

●?????? Implementing capacity development programs such as training for farmers to improve their literacy and cooperative development to protect their rights.

While the cocoa supply chain is widely regarded as a lucrative field in Nigeria, many challenges such as the ones discussed above threaten the profitability of the players and the sustainability of the business. It is important to resolve these issues quickly and comprehensively so that the Nigerian cocoa industry can hit its full potential.

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