Are you looking for a profitable business in Nigeria that you can start? Cocoa is one of the most sought-after food ingredients in the universe. At the mention of cocoa, the first thing that’s goes through the mind are chocolate and tea.
If you are looking for the most lucrative agricultural business to venture into cocoa exportation business is the answer. The cocoa bean is the seed of the cacao tree which is a tropical plant. Botanically it is called Theobroma cacao.
When the cocoa bean is processed, a liquor or paste is formed depending on what product is to be made from it, be it cocoa powder or chocolate. Chocolate has numerous uses especially by the beverage and confectionery industries and especially as a commodity of direct consumption.
Everyone enjoys the strong appeal of the chocolate with its sharp taste and pleasant aroma. Cocoa is widely used in the production processes of flavours for various foods and chocolate products as syrups, chocolate milk, toppings, cake mixes, beverages, cosmetics and even pharmaceuticals.
After harvesting, cocoa is fermented. Then it is cleaned, roasted and grinded and conched. If cocoa would be used as chocolates, then they are molded into bars or blocks for use by confectioners.
The content of cocoa are numerous as it is a highly concentrated food. It contains fats, carbohydrates, fats, proteins and minerals. In fact, cocoa contains theobromine and caffeine which have stimulating effects and are used as stimulants in beverages and pharmaceutical industries.
Top 10 Tips On How To Start Cocoa Exportation Business In Nigeria
Here are the Top 10 Tips On How To Start Cocoa Exportation Business in Nigeria
1. First Thing To Do In Cocoa Business
The first thing to do, as what should be done when trying to begin a business is to make research on the major things that are concerned with cocoa exportation. Do not go into cocoa exportation business without knowing your way around it.
The information you get from the research will give you a mindset or a platform to make decision whether you are good to go or not fit for it. Thank your stars that you are on this site acquiring these precious knowledge on a platter of gold. It is the knowledge you gain from your research that gets your mind prepared about what you need to do to rank up in this line of business.
Fortunately, the information at your grasp right now will do a lot of good for you, informing you about the most vital peripheries of cocoa exportation business. Thus, here is what you should know;
a. First, the cocoa business as far as it goes is an international endeavor and this means that as a prospective cocoa business dealer, one must have an international cocoa production knowledge.
I want you to note that as far as the world is concerned, the world’s biggest exporters of cocoa products are Ivory Coast with a revenue of about $3.75B and others are Indonesia, Ghana, Cameroon, Brazil, Ecuador, Mexico, Dominica’s Republic, Peru and Nigeria.
The leading importers however are the USA with about an expenditure of $1.38B on cocoa while others are France, UK, Belgium, Canada, Czech Republic, Italy, Malaysia and Germany.
Recently, naira has been devaluated to a large extent and farmers earn about $1,800 for a metric tons of cocoa but the ICCO made a different report as at March 2021 which claims that a metric tone of cocoa is currently worth $2,615.
b. Secondly, just like most other cash crops, cocoa is also produced in many states in Nigeria. Some of these states are Osun, Ekiti, Edo, Akwa Ibom and Ogun states. More than sixty percent of the total cocoa production in Nigeria are accrued from these states.
I want to bring to your knowledge that these states are within the geography of southern Nigeria and hence, this region has the best supporting weather for the successful and healthy growth of cocoa trees.
Hence, let the entrepreneur who wishes to excel at cocoa exportation take these states as friendly zones for cocoa acquisition in large scales and cheaper prices. On the other hand, Osun, Ekiti, Edo, Akwa Ibom and Ogun states are the places you want to be getting your cocoa from as source markets.
c. Thirdly, depending on the scale of trading one would like to go into, one should note that cocoa can both move from the cocoa farmers to small-scale cocoa buyers or from the farmers to cocoa cooperatives.
Thus, if you are willing to be a small scale-buyer, you may proceed to renowned cocoa farmers and negotiate quantities of cocoa with prices with them. These would be bought at cheaper prices and you may then decide to sell to other buyers from within or outside of the countries.
You may also wish to join a cocoa farmers’ cooperative where you and partners can pool resources together to buy huge amounts of cocoa in extra-large scales for selling to the exporters directly. This is safer and more profitable since capital is pooled together and large profits are shared.
Note that there are thousands of cocoa farmers in Nigeria. There are those with the cocoa plantations and there are also those who cultivate cocoa on smaller scales of lands but they are not worse off because the cocoa must be bought as it is highly needed by the sundry of private individuals and organizations who are into the business.
d. The cocoa supply begins with the plantation farmers or local farmers who are the original cultivators and harvesters of large or small hectares of land of cocoa plantations or farmlands respectively. Where to begin cocoa plantation from will be to determine whether to be a plantation farmer or cocoa middleman (as a wholesaler).
2. Areas Of Cocoa Business You Can Go Into
Although, there are only two areas of cocoa, as far as exportation is concerned, that you can go into in order to make real money. Knowing these areas will let you know which aspect you can do well. The areas are;
a. Cocoa Plantation Business
This area has to do with cultivation of a cocoa farm. This is how to make cocoa available through cultivating it by one’s self for strictly exportation. This is very capital intensive because one needs a whole lot of capital to kick off.
This is very capital intensive because one needs a whole lot of capital to kick off. It begins from owning and developing a Cocoa plantation. Acquisition of large hectares of land and tending to young cocoa plants from beds to maturity.
Cocoa may not be easy to cultivate especially at the inception because the plantation needs a lot of care and attention. The problem facing cocoa plantation is that they cannot just be sited anywhere because there is need for situation of the plantation in zones of high rainfall and super rich soil for healthy germination.
- Acquire large area of land worthy of becoming a plantation
- Ensure the quality of the soil by inviting experienced agriculturists who are good in soil area to ascertain the viability of the soil to support cocoa cultivation.
- Invite experts in the field of cocoa plantations so as to nurse the plantation for you on till you can handle things yourself.
- Let these experts do the planting and spacing as required for healthy formation of the cocoa plantation area.
- Monitor the plantation for the growth period.
- Harvest at maturity.
Once harvest is done, it is now a matter of selling directly to foreigners or a sole industry in Nigeria. Because there is only one cocoa processing plant in Nigeria which is the Ede cocoa processing plant but even at that, they only process cocoa and export in the raw form.
One is now looking at getting connection with the foreigners themselves or conveying the products to Ede in Osun state, if needed.
b. Cocoa Middlemanship Business
This is the alternate entrance way into the cocoa business. A person who has no huge sum of capital for cocoa plantation can decide to become a middleman, as a wholesaler. There are a lot of farmers in the rural zones who cultivate cocoa and are only waiting for private individuals to come and buy them.
This is to say, that some cocoa farmers actually have no direct connection or contact with the main users of the cocoa as such foreign people who come from outside Nigeria to buy.
They cultivate cocoa and expect to sell them. This is an opportunity for one to buy from these unconnected farmers in large fresh quantities and sell to the foreigners who need the products. You necessarily do not have to own a plantation by yourself in order to get involved in the business of cocoa exportation.
So, the capital level is not too demanding because you are not buying land hectares or consulting experts for your plantation, neither are you employing labour. You are simply buying cocoa with money and reselling.
3. Choose And Prepare Your Cocoa Plantation Site
If cocoa tree is to grow well, it needs a soil of good structure with permeability and depth. This means that one has to choose a site with good and lose soil.
This is because they give protection to the young cocoa plants that do not like too much sunlight. Before planting, dig the hole in order to stir the soil and loosen it and water the soil and then transfer the young cocoa plants from their beds (when they are about six months old) to the main soil.
After a while, come a second time to cut down all the trees so that they don’t prevent the growing plants from the sunlight that is much needed as at that particular stage of their growth. It is best to plant cocoa in the beginning of the rainy season where the soil is moist and the sky is cloudy.
4. Starting The Cocoa Exportation Business
As a middleman exporter of cocoa in Nigeria, apart from exporting the raw cocoa bean, you can also specialize in exporting it in different forms such as in form of cocoa butter, cocoa cake, raw cocoa beans and cocoa powder.
It should be strongly noted that you can only export cocoa in other forms when you are also a buyer from the only cocoa processing plant in Nigeria known as Ede Cocoa Processing Plant in Ede of Osun State.
It is mostly unfortunate that up till this moment in Nigeria, there has been no stable manufacturers who can really process cocoa to its final form of chocolate.
Nigeria exports a large quantities of cocoa but only in the raw forms as cakes, powders, the raw beans and cocoa butter. Hence, to maximize gain, it is better to buy raw cocoa from the main farmers and sell directly. As a plantation owner however, one has to find a link to the buyers.
Before diving into the business of cocoa exportation, it will be pertinent for you to know the countries that are leading in the importation of cocoa from Nigeria into their own countries.
- Netherlands: about half of the yearly exported cocoa in Nigeria goes to Netherland since they account for almost 45% of the total volume of cocoa that leaves Nigeria annually.
- Germany: They are the next leading cocoa buyers from Nigeria as they account for 22% volume of the cocoa exportation from Nigeria.
- Malaysia: They get at least, 6% of the Nigerian cocoa exportation volumes.
While these countries account for the major exportation volume buyers, there are other countries too that are either irregular or require negligible amounts. These countries are those who used imported cocoa raw materials to manufacture chocolate items as chocolate bars, candies, beverages and cakes.
So in exportation of cocoa, you should be able to determine the genuineness of a potential buyer when he hails from these enumerated countries.
5. Know How To Tackle Problems
The following points below are what you should watch out for when you are concerned with being a middleman in the cocoa business arena;
a. Inconsistent delivery
You should be able to tackle inconsistent delivery of cocoa by local/plantation farmers on requests due to the unforeseen challenges that are faced by the farmers.
Some farmers complain about not getting the cocoa seedlings on time while others complain about weather factors which affects the growth and production capacities of the plantations.
This means that as a middleman, you need to have a consistent farmer or farmers which you deal with and is/are trusted to always deliver on time.
b. Inadequate cocoa farmers
Despite the fact that cocoa farming is luxurious. One hardly sees much farmers in it because it takes a lot of struggle and steadfastness to cultivate cocoa. This fact makes some farmers shy away from it and thus, it becomes a feat looking for farmers who are really into cocoa farming.
As a consistent cocoa business man thus, you need to have made connections with a lot of farmers so that if one is not available, another will be.
Cocoa farming is not easy but getting your network of farmers is vital so as to defeat any issues you may encounter on getting who to deliver when you need it most.
We all know that in Nigeria, making it big has a lot to do with connections. An entrepreneur who doesn’t associate himself with those who are deeply rooted in the business might not be making a strong headway. Hence, find the right people to connect with is important.
6. Current Cocoa Beans Price In Nigeria
For the cocoa middlemen, it might be important for you to know the average cost of tones of cocoa beans so as to know the level of capital you have to get ready and also, the possible profit margin outcome.
This means that if one had tones of cocoa in the store before the rise, there is a wide margin of profit. It is better to have about two tones in store always so as to maximize profits.
The price of cocoa rises as the difference between the dollar and the naira widens because it is a cash crop and an international one at that. This price though, is the current one and may increase before the next month but you should have the knowledge of the range of what you are planning to get in stock.
7. Storing Raw Cocoa Beans
It is very important to know how to store your cocoa harvests after harvesting or buying in large quantity. This will enable the product to be safe and free from perishing before sales and even during the process of transporting them from one place to another.
While it is possible to be able to sell the harvested cocoa beans the same day they are harvested, it is usually advisable to know how to store cocoa beans after harvest in the warehouse.
Cocoa is not like many other cash crops that can just be kept without proper care. Cocoa beans can last for up to six months to a year in store but with proper handling.
Cocoa beans can last for up to six months to a year in store but with proper handling. In the warehouse for example, all purchased or harvested cocoa beans must be kept in a cool, dry and sealed location.
They are not to be frozen or refrigerated because they can tap moisture from this process and begin to decay. This also means that the warehouse where cocoa is kept must be absolutely protected from heat or water influence.
Some people store large quantities of cocoa in airtight barrels and keep them in the warehouse which must always be kept totally dry and away from direct sunlight influence.
8. Transporting The Cocoa To Warehouse
The roads that are plied in the movement of harvested or semi-processed cocoa products are usually affected by a number of issues that hinder or slows down the process of exporting cocoa products to the warehouse.
It is also no news that those force men found on the roads intentionally want to receive some cash from vehicles that carry loads of goods too and these add to costs. While these could tend to hinder the trading of cocoa products, one must be tactical enough not to be affected by these hindrances and always prepare for everything extra of possible occurrences.
To this end, get trusted carriers/drivers of cargo vehicles who will always be the ones to handle the transportation of your produces.
9. The Cocoa Exporters In Nigeria
As a prospective cocoa dealer, you should have an idea of the top cocoa exporters in Nigeria as a way of learning from their tracks and building a platform for strong competition.
The following are the list of cocoa bean exporters in Nigeria:
- Yinka Akintilo Enterprises
- Agro Traders Ltd
- Crystal Green Ltd
- Terry Cocoa Merchant
- Ose Global Binzess Links Nig. Ltd
- Gbemtan Investment Ltd
- Okon & Sons Intergrated Services Ltd
- Olatunde Int’l Ltd
- Agebelere Cocoa Farm
The rest of them are cocoa exporters which may be in the sub processed forms of cocoa such as cocoa butter, cocoa cake, raw cocoa beans and cocoa powder are;
- Shinwillcrown Cocoa Producing Company
- FTN Cocoa Processors Plc.
- Remedy Crown Investment
- Ideal Risku Global Ltd
- Cocoa Products, Ile Oluji Ltd
- Saro Agro-Allied
- Berveek Ltd
- Tosmega Cocoa Nig. Ltd
- Akeen and Kamoru Nig Ltd
10. Get Support For Your Cocoa Business
In the bid to get the right connection, one can get support from the following set of cocoa organization in Nigeria.
They are concerned with whatever has to do with cocoa and hence, one should seek the indulgence of these two associations while taking note of their functions:
a. International Cocoa Organisation (ICCO)
- they support the proper, complete and effective payment of cocoa farmers and traders.
- They make information available about all that has to do with the trading of cocoa available on a platter of gold.
- They ensure international involvement of all cocoa farmers and traders.
- They ensure balanced dealing in the markets.
b. Cocoa Association of Nigeria (CAN)
- They support cocoa farmers and traders by encouraging them to improve quality and productive capacity.
- They enhance the standard production of cocoa to meet up with the standards of the international markets.
- Collaborate with all cocoa stake holders to develop the local cocoa sector.
It is very vital to understand the rules of importing countries that one will have to be dealing with by making good business plans and having good records of the business running.
Make full scale market research before taking any commercial steps and it is better to check some western part of Nigeria as the base of your cocoa exportation business origin. Go for it, you will get there.