Nigeria is not among the top 10 producers of coffee in Africa, which includes Burundi, Cameroon, Côte d’Ivoire, the Democratic Republic of Congo, Ethiopia, Guinea, Kenya, Madagascar, Rwanda, Tanzania, Togo, and Uganda.
But the overlooked coffee industry in Nigeria has the potential to generate more than $2bn yearly, according to industry insiders who spoke with The PUNCH.
At the moment, the Africa’s largest economy is scrambling for revenue to finance its budget, having recorded a decline in revenue over the years.
Since President Bola Tinubu’s administration assumed office on May 29, there has been a notable decline in foreign reserves, amounting to $1.91bn.
As of the close of the third quarter in 2023, Nigeria’s foreign exchange reserves dwindled to $33.23bn, according to data sourced from the Central Bank of Nigeria.
This signifies a year-on-year reduction of $5.01bn, compared to the $38.25bn recorded after September 2022.
Industry players said the need for strategic investments, modernised farming practices and value-added processing to harness the full economic benefits of the coffee industry are sacrosanct.
Unlocking the potential of Nigeria’s coffee sector not only promised substantial financial gains but also opens avenues for job creation and sustainable agricultural development.
With the right initiatives, Nigeria could position itself as a key player in the global coffee trade, contributing to economic growth and diversification, experts said.
Coffee export
The Chairman, National Coffee and Tea Association of Nigeria, Oyo State, Salihu Imam, told The PUNCH, “Coffee is the second most traded/valuable of all commodities and first in Agricultural commodities in the world. Tea is also a sought-after crop in the World.”
Nigeria’s coffee exports remain modest, with an annual output of under one million bags. In contrast, Ethiopia, the largest coffee exporter in Africa, is projected to produce a substantial 8.25 million, 60-kilogram bags, according to the United States Department of Agriculture.
“In terms of demand for coffee in Nigeria, last year, I think everything including tea, meat, and coffee, we had was about $36m which is very poor,” the President of the West Africa Specialty Coffee Association, Segun Lary-Lean told The PUNCH.
“The type of coffee we produce in Nigeria is what the rest of the world is looking for. We should be doing $2bn annually. It should be more than that but I don’t just want to overestimate,” he said.
Lary-Lean posited that in many countries, mostly the Western countries, “coffee is like water, so you can imagine if you are talking about the demand for coffee, you’re talking about the water demand.”
He said, ‘’Some companies and brands generate between $20 to $30bn from coffee.
“If you check out the American and Indonesian brands, they are doing so much on coffee. The demand is always there.”
In 2016, Brazil, boasting a population comparable to Nigeria’s 220 million, achieved a substantial $5.6bn in earnings. Similarly, Colombia and Vietnam recorded $2.6bn and $2.4bn, respectively, during the same period.
Contrastingly, Kenya experienced a 17 per cent increase in coffee earnings to reach $254.2m in the 2013/14 crop season.
According to the WASCA Boss, “The United States imports coffee from Africa. The demand is always there. And Uganda is making a lot from coffee. Kenya too is making a lot from coffee. We can also do the same.”
Bottlenecks
A recent study conducted by researchers at the Cocoa Research Institute of Nigeria, indicated that there was an overall decline in both coffee production and exports across the African continent.
Instead of exporting in huge quantities – between 2010 and 2015, about N1.5bn worth of coffee products were imported into Nigeria, according to the Raw Materials Research and Development Council.
Researchers attributed the decline to multiple factors, including a lack of capacity to generate technical knowledge on high-yielding- disease-resistant varieties, challenges posed by drought and climate change, ageing coffee trees, inadequate agronomic practices due to weak extension services, and a drop in the global coffee market, among other issues.
Experts admonished that Nigeria should immediately look inwards and properly fund agriculture – an ancient and reliable industry.
Imam advised, “The Federal Government should declare a state of emergency in agriculture and especially direct CBN to ensure commercial Banks give out soft loans of not more than 2 per cent annual interest to farmers to boost agricultural commodities production.
“Real farmers need effective and sustained funding of their activities through cheap funds from the Financial Institutions.”
While funding remains an issue for the farmers, there is a need for the government to get involved in coffee production, coffee cropping, and coffee cultivation.
The President of WASCA said, “The government has to get involved and support the farmers in their respective states. Land should be given to them and cleared because sometimes it’s just too expensive to clear farmlands. I think they are ready to work. They’re ready to go into the forest.
“They need help, they need funding. We also talk to financial institutions to create export commodity desk for coffee cultivation,” he said.
Fuel subsidy removal and fluctuations in exchange are factors that affect farmers cultivating coffee. ‘’With the skyrocketing fuel price, transporting agricultural produce has been impacted.,’’ he said.
Larry-Lean stated, “The removal of subsidies further elevates transportation costs, compounding the challenges faced by farm transporters.
“Poor road conditions have doubled or tripled transportation expenses over the last few months, negatively impacting production.
“Subsidy removal, while intended to address economic concerns, has unfortunately led to reduced purchasing capacity, affecting both producers and consumers.”
He stated that financial hardships loom, would affect the entire farming ecosystem and compromise overall standards of living.
Prospects
Imam revealed that Oyo State was poised to go into massive production of coffee from the next planting season. “We are poised to churn out and plant 2 million seeds/seedlings in the next 2-3 seasons.”
‘’The state is in collaboration with the Cocoa Research Institute, the Nigeria Export Promotion Council, and the West African Speciality Coffee Association.’’
He urged banks to significantly sponsor coffee production, ensuring an ample supply for both local industries and export trade.
“With numerous farmers engaged as out-growers, collaborative efforts with the Nigerian Export Promotion Council have been initiated to incorporate coffee into its supported commodities.”
Nigeria covers an area of 923,769 square kilometres (356,669 sqm) and with a population of over 230 million. The country boasts of fertile land to cultivate coffee.
According to Lary-Lean, in terms of prospects, the government seemed interested in coffee cropping and production.
“During the Coffee Expo we had in October, we had representatives from government institutions. We had representatives from the Lagos State Ministry of Agriculture and the Ministry of Trade and Investment from Abuja.
“So, I think the government is aware but the capacity to push coffee cropping is probably the problem. And, we came to engage with the government because it’s for revenue for the country. It is time we just focused on coffee and other crops,” he said.
Way forward
Former Zenith Bank Chief Economist, Marcel Okeke, emphasised the importance of implementing policies to stimulate the economy and decrease dependence on imported goods in a conversation with The Punch.
Okeke particularly highlighted the need to enhance the security of farmers as a crucial step in improving the agricultural sector.
Calling for a shift from small-scale farming to mechanised farming, Okeke underscored the necessity for the government to address insecurity issues and offer essential support to farmers.
He questioned the current state of farm activities and emphasised that, for economic stimulation, it was imperative to enable people to engage in farming by ensuring adequate security measures
Imam advocated for a comprehensive approach to address economic challenges in Nigeria, focusing on reducing governance costs and channelling savings into agriculture.
The Chairman emphasised funding for Agricultural Research Institutes, low-interest funds for farmers, and government support in land clearing to minimise production costs.
Furthermore, Imam called for widespread tractor availability through local governments and cooperative associations, with repayment options spread over several years.
The establishment of Commodities Boards to stabilise prices and support youth entrepreneurs in adding value to agricultural produce was also central to the proposed strategy.
He called on state governments to start to see coffee as a cash crop that can help boost the country’s revenue.
“They should promote it like they promoted cocoa. At some point, it was one of our major exports. Coffee is more sustainable than cocoa. I mean, it is more climate resilient. But it’s a pity that we are missing out on coffee.
He further proposed that the Federal Ministry of Agriculture should have a policy on coffee that would help coffee farmers. ‘’And then give them grants because funding is critical for them to participate in the global market.’’
SOURCE: PUNCHNG
