Introduction
Between the 1940s and 1970s, Nigeria was the world’s second largest producer of cocoa. During this period, the cocoa sector contributed ~50% to the nation's exports, improving revenue, GDP and livelihood of farmers in the rural parts of the country. This trend continued until the oil boom occurred in the 1970s which shifted the country’s attention and investments from cocoa to the oil sector, leading to a decline in cocoa production and exports. Today, Nigeria ranks sixth in global cocoa production, far behind West African neighbours - Cote D’Ivoire and Ghana - Indonesia, Ecuador and Brazil, accounting for only 6% of the global production.
In May 2025, the Federal Government of Nigeria proposed a draft bill to establish the National Cocoa Management Board (NCMB). This signifies a policy shift aimed at reversing the losses the country has had in the cocoa sector and the decline in production. According to the Minister of Agriculture and Food Security, Abubakar Kyari, in a statement released on May 5, 2025, the proposed board will coordinate production, regulate the quality of cocoa produced, provide access to credit facilities to farmers, and boost local processing and exports.
This paper studies the policy rationale behind the proposed NCMB, linking it to the broader context of Nigeria’s cocoa history, value chain efficiencies and dynamics in the global cocoa market. It also explores the experiences of similar boards in Cote D’Ivoire and Ghana, examining their successes, pitfalls and making strategic recommendations that can help Nigeria learn from the experiences of both countries.
Central to these discussions is the role of value chain management. For Nigeria to extract full economic benefit from cocoa using this policy shift, the policy should go beyond production, pricing and exportation as it was witnessed in the past, and should also cover all value chains in the cocoa sector. The policy must coordinate land use act, farm practices, logistics, quality standards, processing infrastructure, global market access and digital traceability as only an integrated value chain can convert raw commodity wealth into sustainable national income and farmers’ welfare.
Historical Context of Cocoa Production in Nigeria
Cocoa was a major export earner for Nigeria from the 1940s and 1970s contributing ~ 50% to the nation’s export. Back then, cocoa production was largely driven by smallholder farmers and coordinated by the regional marketing boards. The Western Nigeria Cocoa Marketing Board was the most notable regional marketing board and they provided support to farmers through research, extension services and guaranteed minimum prices. However, the oil boom of the 1970s coupled with centralisation of the cocoa board by the military government led to reduced investment in the cocoa sector, inefficiencies, corruption and eventual collapse of cocoa production. The Commodity Boards Act of 1977 abolished regional boards, transferring their assets and mandates to 6 national commodity boards which included the Nigeria Cocoa Board.
The centralisation of the cocoa board introduced more layers of bureaucratic red tapes which ended up slowing down decision-making and resource allocation. Although the new board inherited the structure of the regional boards, the administrators lacked the localised knowledge of each region where cocoa is cultivated leading to policy mismatch. These mismatched policies were most evident in the fixed pricing mechanisms which were designed to stabilise the farmer’s income. The fixed pricing mechanism however did not account for regional variations in production costs or quality, hence negatively imparting incomes of farmers in regions where there are high production costs or regions focused on producing quality cocoa beans and this disincentivised the farmers.
Other challenges faced due to the centralisation of the cocoa board include: delay in payments to farmers as result of fund diversion by administrators of the board, poor allocation of budgetary funds to infrastructure and research leading to resurge of swollen shoot virus and black pod diseases that destroyed about 20% of Nigeria’s cocoa trees by 1980 and deterioration of storage facilities leading to increase in post-harvest losses. Poor quality of cocoa beans exported during this period also tarnished Nigeria’s reputation in the international market significantly reducing the bargaining powers of Nigerian farmers in international markets and this led to a surge in cocoa smuggling to Ghana by farmers to improve their earnings.
The final blow to the sector happened in 1986 when the national cocoa board was dissolved under the recommendation of the structural adjustment programme reforms created by the IBB-led military government and it created a liberalised market that lacked coordination and relied solely on market forces to help with pricing strategies and development.
Nigeria’s cocoa production level in the 1960s was about 280,000 metric tonnes and it moved to about 300,000 metric tonnes in the 1970s. However, Nigeria’s cocoa production declined due to a mix of policy failures and structural neglect. The oil boom of the 1970s shifted focus from agriculture and diverted investment away from the sector. This was followed by the centralisation of the commodity board, which became riddled with corruption and inefficiencies. Market liberalisation in 1986, driven by the Structural Adjustment Programme (SAP) policies, further weakened the industry.
Today, cocoa production hovers between 200,000 and 300,000 metric tonnes annually (compared to about 700,000 metric tonnes from Ghana and about 1.8 million metric tonnes from Cote d’Ivoire) with limited processing capacity and weak institutional support. Farmers now face challenges like aging cocoa trees and plantations, low yields, poor investment, poor access to credit and inconsistent pricing. Unlike Ghana and Cote D’Ivoire, Nigeria lacks a regulatory board to help resolve the challenges faced by farmers leading to non-standardisation of quality production, poor sustainability and inability to defend farmers’ income during price volatility.
Scope and Objectives of the Proposed National Cocoa Management Board
The proposed NCMB, according to Kyari, will include stakeholders from the private and public sectors, including research institutions and state governments involved in cocoa production. The proposed board will have the authority to:
- Regulate production and marketing across the cocoa value chain
- Offer accessible and cheap credit to smallholder farmers in the cocoa value chain
- Improve quality standards for export and local consumption
- Promote domestic processing and consumption
- Coordinate with Cote D’Iviore and Ghana for regional cocoa governance
- Encourage youth participation and climate-smart agriculture.
However, the bill is still under review and not publicly available, limiting detailed scrutiny and knowledge of the full scope of the board. Nevertheless, from early indications and public commentary, the board’s goals align with long-standing demand of the industry players for stronger coordination, input supply, access to credit and research.rs.
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Global Cocoa Market Trends
The global cocoa market is currently undergoing a structural shift. On one hand, the demand for cocoa is rising globally, especially from Asia markets, with a market size projection of $15 billion by 2027 (Statista, 2023). On another hand, there is increasing pressure for climate change and sustainability. Cocoa buyers now demand traceable and sustainably sourced cocoa beans from producers with countries like Cote D’Ivoire and Ghana enforcing standards through their cocoa boards.
In 2023, the European Union enacted the European Union Deforestation Regulation in an ambitious attempt to align global agricultural trade with environmental sustainability by mandating that all agricultural produce imported to the EU markets must be produced in compliance to local laws and not be linked to deforestation in the country of production. This new regulation affecting cocoa and other agro-commodities has triggered a structural shift in supply chain governance, farmer livelihoods and market dynamics as it demands that producers submit geolocation data of the farms where commodities were produced and prove that their products do not contribute to deforestation and it complies with local environmental and social laws of the country of production.
Whilst the EUDR is a remarkable legislation promoting environmental sustainability and ethical production practices, it poses a significant challenge to smallholder farmers, which contributes significantly to global cocoa production as most of them lack the financial empowerment, capacity and digital infrastructure to comply with the geolocation mandate of the EUDR. Some of the challenges posed to the smallholder farmers include:
- GPS mapping cost leading to poor compliance with the traceability and geolocation mandate of the EUDR
- Lack of formal employment contract as most of the rural farmers are uneducated leading to poor compliance with the local labour laws mandate of the EUDR
- Most farmlands used by smallholder farmers are inherited ancestral land and this informal inheritance practice which is usually undocumented and difficult to align with the various land use laws in most of the producer nations in West African and Latin America.
These challenges are prompting fear of market exclusion and financial fines by the EU thereby driving market volatility as a result of production decline in West Africa leading to a surge in prices of cocoa beans to as high as $10,710.35 per metric tonnes as at January 2025. However, producer countries are already adopting divergent strategies to address the mandates of the EUDR. Example of such countries and the strategies adopted are:
- Vietnam: is currently leveraging on EU technical assistance to revive cocoa production through a circular economy model, integrating organic fertilizers and agroforestry. This has currently yielded reduction of cocoa-related deforestation by 72% through satellite-monitored “no-go zones” and intercropping
- Ghana: The country’s cocoa board has deployed 12,000 handheld GPS devices to map 1.2 million farms
- Ecuador: Ecuador’s Tsatsayaku Association currently uses blockchain-enabled QR codes to trace beans from farm to port.
- Peru: Peru through its Agricultural Innovation Program has trained over 45,000 farmers in digital record-keeping
- Indonesia: Indonesia’s 2024 Agrarian Reform Law has accelerated smallholder farmers land titling certification covering 560,000 cocoa farms as at April 2025.
- Cote d’Ivoire: Cote d’Ivoire has merged the UTZ and Rainforest Alliance standards into a single EUDR-compliant framework, reducing audit duplication.
There is a growing competitive threat from Latin American countries with Ecuador and Brazil now among the top 5 biggest producers of cocoa globally. These Latin American countries, particularly Brazil, Ecuador and Peru, are aggressively positioning themselves to capture more economic value from cocoa production. Unlike many African producers that remain dependent on just exporting raw cocoa beans, the Latin American countries have adopted strategic policies to move up the value chain. For example, Ecuador has rapidly increased its share in premium fine-flavour cocoa market and is actively branding itself as a top source of high-quality and sustainable cocoa globally by investing in certification systems, farmer cooperatives, and research aimed at improving bean quality and traceability, thereby enabling it to penetrate lucrative markets in Europe and North America that demand ethical and traceable sourcing.
Similarly, Peru has linked its cocoa industry with environmental sustainability and indigenous livelihoods, gaining traction in organic and fair-trade segments. These policy directions have attracted development financing, foreign investment, and favourable trade terms. Brazil, on its part, is leveraging its strong domestic consumption base and industrial infrastructure to build a robust local chocolate manufacturing sector. The government and private sector have co-invested in processing facilities, market development, and innovation hubs focused on cocoa-based products.
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This trend signifies a clear shift in global cocoa trade: the new competition is not just about volumes but about value capture, branding, and compliance with emerging global standards. Latin American producers are proactively aligning with regulations such as the EU Deforestation Regulation (EUDR) and other traceability frameworks, giving them first-mover advantage in markets that increasingly demand sustainability credentials. If Nigeria continues to focus on exporting unprocessed beans without parallel investments in processing, certification, traceability, and marketing, it risks being left behind. The economic consequences include reduced earnings, limited industrial development, and a missed opportunity to generate decent employment along the cocoa value chain.
However, the global market is still dominated by multinational buyers, and producer nations capture a disproportionately small size of the final chocolate value due to limited investment in that gap on the value chain. Nigeria, for instance, exports mostly raw cocoa beans, missing out on the value-added products like chocolate, cocoa drinks or even cosmetics. According to a report by the United Nations Conference on Trade and Development in 2020, Nigeria processes less than 10% of its cocoa locally and earns about $750 per tonne in export of raw cocoa beans while Europe earns over $4,000 per tonne on finished products. A strong value chain is needed to correct this imbalance in the market.
Without a clear strategy to match or exceed the efforts of Latin American countries, Nigeria’s ambition to become a global cocoa powerhouse will remain aspirational. The National Cocoa Management Board must be designed with this global competitive landscape in mind. It must go beyond regulation and address value addition, market access, branding, and international compliance to reposition Nigeria in the future cocoa economy.
Policymakers should foster the digitalization of agricultural commodity markets. The market channels for many commodities rely on middlemen who collect the raw produce in small quantities from fragmented smallholder farmers and perform quality enhancements (such as sorting, cleaning, and drying), before selling in aggregated volumes and at marked-up prices to the final exporters or processors. While middlemen play a critical role in connecting farmers to exporters, they can increase exporters’ transaction costs and time. Additionally, malpractices by middlemen and weak contract enforcement also expose farmers and exporters to increased financial risk. Digitalizing commodity markets can help reduce these barriers, by allowing exporters to interact directly with farmers on price, quantity and quality specifications, as well as logistic arrangements.
Lessons from Cote D’Ivoire and Ghana
Nigeria's Plan to replicate the success model of Cote D’Ivoire and Ghana is logical and well applauded. However, it must be approached critically so that the country will not fall into the same pitfall faced by both countries. Both countries have long-standing cocoa marketing boards: Ghana Cocoa Board (COCOBOD) and Conseil du Café-Cacao (CCC) in Côte d’Ivoire. These boards have achieved price stability, farmer extension services, and international market coordination.
However, there have been several criticisms about both boards and their models in the public domain. One major criticism is that the fixed pricing mechanism adopted by both boards often lags the global prices, affecting farmers’ income during a market boom. Another criticism has been centered on how bureaucracy and allegations of inefficiency and corruption have plagued the boards. For instance, Ghana’s COCOBOD faced a $1.5 billion syndicated loan default in 2022, raising questions about its financial sustainability (Bloomberg, 2022). Similarly, cocoa farmers in Cote D’Ivoire have protested low income under the CCC’s price control regime.
Therefore, it can be seen that despite the ability of central coordination to boost production and quality, excessive control may distort markets and reduce farmer flexibility. Nigeria must avoid copying the boards wholesomely without addressing their structural weaknesses and adapting to our context.
Potential Benefits of NCMB
If well designed and all the structural weaknesses of similar boards in Côte d’Ivoire and Ghana are addressed, the proposed NCMB could unlock several benefits, including but not limited to the following:
- Price Stability: Introduction of a floor price and future contracts can protect farmers’ earnings from price volatility. Facilitation of access to cheap credit: Use of verified farmers’ registry to provide access to cheap credit facilities to smallholder farmers.
- Quality Standardisation: Enforcing grading, fermentation and storage protocols to meet international quality.
- Promotion of Local Processing: Creation of incentives for local value addition through tax holidays, subsidies or shared facilities.
- Coordination of Data and Research: Use of research institutions and universities to drive climate resilience, yield improvement and disease control.
Challenges and Risk
The biggest risk that can disrupt the operations of the proposed NCMB is bureaucratic inefficiencies. Without legal safeguards put in place by the government, NCMB could turn out to be another rent-seeking institution vulnerable to political capture or private commercial interest. There is also the risk of marginalisation of farmers if they are not involved in decision-making at the board level. Moreover, regional coordination might be weak without a clear federal-state separation of powers and demarcation.
Another challenge that could be faced is market distortion. Overregulation, as observed in Côte d’Ivoire’s CCC or rigid price control, may undermine private sector participation in innovation, financing and trading. There might also be a challenge of overpromising by the board, which is common in Nigeria, where agencies sometimes single-handedly want to resolve all structural issues around a certain policy.
Recommendations for a Functional NCMB
At the time of this writing, the full content of the draft bill establishing the NCMB has not been made public. This limits detailed policy evaluation. However, some preemptive recommendations can be made to improve the board’s design and implementation based on public statements, commentaries and comparative models.
First, the country should adopt a hybrid governance model, balancing state oversight with private sector participation and farmers’ representation. The central regulator should be lean and should coordinate with the decentralised state-level bodies to avoid overcentralisation and promote accountability.
The board should focus on ecosystem coordination, aligning efforts across farming, processing, financing, export and regulations, rather than the strict pricing control mechanism adopted by similar boards in Cote d’Ivoire and Ghana. Instead of seasonal price fixing, Nigeria could use a more flexible minimum price system. This system would move with global cocoa prices, so farmers earn more when prices rise but still have protection when prices fall.
Beyond pricing, the board’s primary function should be to improve Nigeria’s global competitiveness in cocoa production. This requires focusing on what farmers need to produce more, produce efficiently, and export at higher value. These needs include better access to research and extension services, quality inputs, mechanisation, affordable credit, and improved farming practices that increase yields and lower costs.
To operationalise this shift, the board should prioritise partnerships with research institutions to support crop innovation and pest control solutions tailored to Nigerian agroecological conditions. It should also facilitate extension support through digital and community-based channels to address knowledge gaps among smallholder farmers, especially in post-harvest handling and sustainability practices.
Infrastructural deficits such as inadequate storage, poor rural logistics, and limited processing capacity must be addressed as core mandates of the board. These bottlenecks raise the cost of doing business and limit Nigeria’s ability to compete in higher value cocoa markets. The board should work with subnational governments and the private sector to provide warehousing, quality control infrastructure, and local processing hubs close to production clusters.
To promote competitiveness in global markets, the board must also work proactively to align Nigeria’s cocoa value chain with international regulatory standards such as the EU Deforestation Regulation (EUDR). This involves developing national compliance frameworks, setting traceability requirements, and supporting farmers and exporters to meet documentation and sustainability thresholds required by European and other premium markets.
Technology must be embedded in the core of the policy. Digital traceability, remote monitoring of farms and mobile-based and AI-powered credit systems can increase transparency and efficiency while enabling compliance with global sustainability standards.
Finally, performance audits must be mandated in the legal framework establishing the board, with oversight mechanisms reporting directly to the National Assembly instead of the minister. This will help reduce regulatory capture risk and ensure the board remains focused on its mandate to ensure value chain development.
Conclusion
The NCMB is a welcome step, but its success will depend on how it is designed, governed, and monitored. Nigeria must learn from its history and its West African neighbours by not copying their models blindly but by adapting them to local realities. A strong cocoa economy requires more than a board. It demands coordinated infrastructure, credit, research, data, market access, and regulation. If these elements are aligned, Nigeria can restore its leadership in global cocoa trade and deliver sustainable incomes for its rural producers.
References
- Bloomberg. (2022). Ghana’s cocoa board in crisis over $1.5 billion loan. Retrieved from https://www.bloomberg.com
- Kyari, A. (2024, April). Press briefing after FEC meeting on National Cocoa Management Board. Federal Ministry of Agriculture and Food Security.
- Statista. (2023). Cocoa market revenue worldwide. Retrieved from https://www.statista.com
- UNCTAD. (2020). Commodities at a glance: Special issue on cocoa. United Nations Conference on Trade and Development. Retrieved from https://unctad.org/publication/commodities-glance-special-issue-cocoa
- International Trade Center (ITC). (2024). Trademap. Retrieved from https://www.trademap.org/Country_SelProduct_TS.aspx
- Akiyama, T., & Duncan, R. C. (1984). Analysis of the world cocoa market (World Bank Staff Commodity Working Paper No. 8). World Bank. https://documents1.worldbank.org/curated/en/222531468767071855/pdf/multi-page.pdf?utm_source=perplexity
- Global Change in Data Lab (2025). Cocoa Bean Production. Retrieved from https://ourworldindata.org/grapher/cocoa-bean-productionAgriculture et géopolitique
