In the report that was released last week, West Africa is expected to remain the world’s primary source of cocoa, with a forecast 3.2m MT of exports in 2013/14, 80% of which will comprise of raw beans. Nonetheless, Nigeria’s cocoa output fell by 4.3 per cent in 2012/13 due to the impacts of flooding in 2012.
“I think there’ll be a strong rebound. The flooding caused lots of different problems in the agricultural sector. The direct impact on cocoa output was not as strong as we feared which is why the crop was only down slightly,” Edward George, Head of Soft Commodities Research at Ecobank told CNBC Africa.
In 2012, Nigeria faced the worst flooding in decades as the banks of country’s two biggest rivers, the Niger and the Benue, overflowed. However, George is certain that Nigeria will establish itself as the third largest cocoa producer in the Africa, overtaking Cameroon this year.
“A lot of that has to do with new investments, we have a number of companies which are really trying to get involved in the value chain such as Saro, a Nigerian champion. I think we are going to see a lot more investment particularly in processing,” he said.
The government introduced the Cocoa Transformation Agenda and established a Cocoa Marketing and Trade Corporation, with a target to aggressively and rapidly expand cocoa acreage to at least 1 million hectares in the next four years.
“Of all of the soft commodities, the one [price] we expect to rise in 2014 is cocoa and that is because we are seeing a very strong return in global buying and demand. Even though there is a strong crop in Ghana and Cote d’Ivoire at the moment, we expect the mid-crop may not be as good and the same goes for Nigeria as well,” he explained.
According to George, there is a positive outlook for prices and one of the reasons prices went up so strongly in Nigeria recently was because of the lack of cocoa and although this might be corrected, the outlook is currently good for farmers.