What Ondo Cocoa Factory Plans to do To Boost Foreign Reserves
A new cocoa processing factory in Akure, Ondo State, Johnvents Industries Limited, says it is seeking to boost Nigeria’s foreign exchange reserve through cocoa experts, beginning with its pilot cocoa export of $1m.
The Group Managing Director, CapitalSage Holdings, the parent company of Johnvents Industries Limited, Mr. John Alamu, disclosed during an interview, stressed that adequate foreign exchange could be generated for the country through cocoa exports.
According to him, the company is planning its first major export which is worth over $1m, saying this will help boost the country’s foreign exchange reserves.
“Our first export is over a $1m, and we are exporting both powder and cake.
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“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.
Reports from the International Cocoa Organisation show that over the years, cocoa production in Nigeria has been on the decline, hitting 210,000 metric tons in 2017 despite the increasing demand for the product. Nigeria is now said to be fourth among cocoa-producing countries globally.
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.”
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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 are responsible for Nigeria losing up to $190bn annually, estimating that Nigeria’s cocoa revenue should be about $200bn a year.
Alamu stressed the need for the country to focus more on refining raw materials instead of 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.”
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. 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.
Alamu, however, pointed out there was an increase in the cost of raw materials, which is not reflected in the price of cocoa at the international market.
He cited the example of power supply which he said had heightened the cost of production for the cocoa firm.
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.”
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