Ondo Cocoa Industry Plans $1m Pilot Export To Enhance Foreign Reserves.
Johnvents Industries Limited, a new cocoa processing plant in Akure, Ondo State, claims it is working to enhance Nigeria’s foreign exchange reserves through cocoa expertise, starting with a $1 million pilot cocoa export.
Mr John Alamu, Group Managing Director of CapitalSage Holdings, the parent business of Johnvents Industries Limited, made the remark during an interview, stressing that cocoa exports may create enough foreign cash for the country.
He claims that the firm is planning its first large export worth more than $1 million, which would improve the country’s foreign exchange reserves.
“Our first export is over a $1m, and we are exporting both powder and cake.
“This firm is contributing to the economy in so many ways. One is the aspect of FX generation. Nigeria needs more exports to balance our foreign exchange reserve, and this factory will be contributing majorly to that,” he noted.
According to the International Cocoa Organization, despite rising demand for the commodity, cocoa output in Nigeria has been declining over the years, reaching 210,000 metric tons in 2017. Nigeria is presently ranked fourth in the world for cocoa production.
Despite the multiple obstacles confronting the local cocoa industry, the business mogul stated that the plant is devoted to increasing cocoa output and the country’s export sector.
The Johnvents boss said, “We have to keep the factory running despite challenges. It is a 24-hour running factory. So, we have to keep it running no matter the costs.
“For the raw materials, we have no choice but to respond to what the market demands. We pay a premium but the unfortunate thing is that the price in the international market is not increasing as the raw materials are increasing.”
On how the company responds to the cocoa market, Alamu said, “What we are doing is that we are producing and storing up while monitoring the market price to see when is the best to time sell some. However, we are ready for our first export. I would like to mention that although the export price at the international market has dropped the local market price for cocoa powder has increased significantly, which is quite unusual. So, that is helping to bridge the gap for the reduction in price at the international market.”
According to the Nigeria Export Import Bank, raw cocoa exports cost the country up to $190 billion per year, despite the fact that the country’s cocoa earnings should be around $200 billion per year.
Alamu emphasized the need of the government concentrating more on refining raw commodities rather than exporting them directly.
He said, “We need to address production. Nigeria used to be a leader when it comes to the production (of cocoa) but today we are number four. We have Ivory Coast, followed by Ghana, followed by Indonesia. The gap is quite alarming. We believe that processing and value addition will spur production and export.
“It is better we handle the post-harvest in Nigeria, and add value in Nigeria. We will get more premium and the farmers will even enjoy premium for the cocoa they produce compared to just exporting raw materials, the cocoa bean, directly.”
The CEO of Johnvents also emphasized the need of rules that promote a welcoming business climate, noting that gridlock at the Lagos port makes export difficult.
He encouraged the government to step in and assist businesses who want to export their products.
Alamu added, “Also, I think policies that promote a very friendly business environment will also help Nigeria to regain its top spot when it comes to cocoa exportation.
“I will specifically talk about the port issue. Today, the traffic at the port in Lagos does not make exportation enticing or easy. Sometimes, you may end up with your goods there for two months. For our pilot exports, we have been on it for quite a while. We had to change ports.
“It is something that if the government intervenes, it would create ease of exporting, which would further enhance exportation from Nigeria.”
He spoke on how the factory would significantly benefit the national economy
“We are also enhancing the economy positively through job creations, both direct and indirect job creation. Also, guaranteeing markets for cocoa producers will also spur economic and agricultural activities in the rural communities. These are the vital contributions of the company to the Nigerian economy,” the Johnvents boss said.
However, Alamu pointed out that the cost of raw materials has risen, which is not reflected in the price of cocoa on the international market.
He used the example of electricity supply, which he said had increased the cocoa firm’s manufacturing costs.
He explained, “The challenges range from the high cost of raw materials (that is, cocoa beans), and that is because the season is over; so there is panic buying, with everyone trying to buy and stock up for the main crop season. That is one.
“Another is that the industry is faced with power challenges. The cost of running the factory, especially as it relates to energy is very, very high. Those are the two main challenges.”
The Ondo State Governor, Rotimi Akeredolu, announced at the opening of the cocoa processing facility on December 7, 2021, that the factory will produce roughly 300 direct employment and around 17,000 indirect jobs.