Cocoa is one of the most profitable cash crops in Nigeria. The crop is a very popular export commodity, and the business is a multi-billion naira industry in Nigeria.
The cocoa business is a popular one that has been in existence even before the oil and gas boom in Nigeria. The business is very profitable, as cocoa beans are in high demand in the global market.
Cocoa is mainly used for the production of beverages, so, the demand for the commodity is mainly from big companies. This made the business highly lucrative, as people in the business usually work on contracts either with big companies, or exporters.
Starting the business is very easy, and it can be approached in many ways. However, without prior and in-depth knowledge of how the business works, starting and succeeding could be difficult.
That is why we’ve come up with this post to show you exactly how to start a cocoa business in Nigeria. Not just that, but you’ll also discover different ways to get started, the cost of starting, how profitable the business is, and lots more.
So, if you’re ready to know all that, let’s get started then!
Starting a Cocoa Business in Nigeria
The cocoa business involves the selling of cocoa within Nigeria, to exporters or exporting them by yourself. The demand for cocoa is strong globally, as it is a vital ingredient for the production of beverages.
The business is very easy to start in Nigeria, as cocoa grows well in many parts of the country (the western part especially). The business is becoming popular day by day, and it can be approached in many ways.
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Opportunities in Cocoa Business in Nigeria
Cocoa Farming
The cocoa farming business is one of the most popular and oldest ways of approaching the cocoa business in Nigeria. It involves getting farmland, planting cocoa, and waiting for years before making money off your cocoa farm by selling the beans to companies within the country, to exporters, or perhaps exporting them by yourself if you have the means.
Cocoa Sourcing
Cocoa sourcing is another popular way of approaching the cocoa business in Nigeria. It involves finding cocoa farmers, buying cocoa in huge quantities from them, and then selling to manufacturing companies or exporters. In other words, it involves being a middleman between cocoa farmers and exporters or companies.
Doing the business this way, you’ll need to visit rural areas where cocoa is farmed the most to succeed. You also need reasonable capital to start sourcing cocoa for companies and exporters.
Cocoa Exportation
If you would ask, what cocoa is well known for in Nigeria is the opportunity of exporting it abroad. As an exporter, you can own your cocoa farm where you source cocoa beans, work with agents that source cocoa, or source the cocoa from farmers by yourself and export them abroad for sale.
This is the most lucrative way of operating this business, although it requires a huge startup capital. If you get everything right as an exporter, you could make millions of naira in profits per bulk export.
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Cocoa Trading
Trading cocoa is another way of starting the business. It involves buying cocoa in bulk while they are cheap, store them, and resell when the price appreciates. Usually in Nigeria, there are some times when cocoa is very available, and sometimes very scarce.
All you just need to do is to identify these two times and use them to your advantage by buying low and selling high. As a trader, you can source cocoa to store from farmers especially, if you want to make the most profits.
How Profitable is Cocoa Business in Nigeria?
Usually, from people looking to venture into the business, one common question asked is – Is cocoa business profitable In Nigeria?
Yes, the cocoa business is very profitable in Nigeria. This is mainly because it is an export commodity, and as that, the money to be made would be in foreign currencies which when converted into naira, would be a lot.
Also, the business is very profitable due to the daily increase in demand for cocoa both locally and internationally. One other thing that drives the profitability of this business is seasonality.
During the cocoa harvest, the price tends to be low, making just some profits. However, in off seasons, the scarcity of cocoa causes a massive increase in price. This time is when the most money could be made from the business, especially within Nigeria.
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How Much Does it Cost to Start a Cocoa Business in Nigeria
Just like the profitability of the business, people also usually ask – what is the capital required to start a cocoa business in Nigeria?
Well, the answer is not certain, as the cost of starting a cocoa business varies depending on the type of cocoa business you want to start. Regardless, if you want to start a cocoa business in Nigeria, a good budget would be anything from 700,000 Naira and above.
That is, on a small scale, you can start with 700,000 naira, while as a sourcing agent or an exporter, you would need millions of naira to start a cocoa business in Nigeria.
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How to Start a Cocoa Business in Nigeria
1. Decide on the Type of cocoa Business to Start
Since the cocoa business offers numerous opportunities to entrepreneurs, the first step to getting started is to pick the best type for you. Here, you’ll need to carry out a simple market survey across all the types of cocoa businesses before settling for one.
Usually, it is best to go with the one that best suits your budget. With a small capital, it would be a great idea to go with the one that doesn’t require huge money to start (e.g farming, or trading cocoa). Also, make sure you go with the one that works well in your area. If you’re in a rural area, becoming a sourcing agent would be great.
2. Do Your Research
Based on the type of cocoa business you wish to start, carry out market research to get to understand the business. By doing this, you’ll know the in and out of the business, how it works, how profitable it is, and so on.
Also, you need to find out about the registration required to run the business. To get the best result, it would be ideal to meet with someone already in the business and ask those questions, and some others including:
- Where is cocoa grown in Nigeria
- Current price of cocoa in Nigeria
- Companies that buy cocoa in Nigeria
- Cocoa buyers in Europe
- Cocoa buyers in Nigeria
- Cocoa buyers in the U.S.A
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3. Arrange for Capital
Once you know well and in-depth about the type of cocoa business you want to start, the next thing is to source funds to get started.
While sourcing your capital, make sure you raise funds that will be able to account for every operation of the business from the purchase of goods, to the means of transportation, and equipment needed to run the business.
There are many ways to raise capital to start a cocoa business in Nigeria. Since starting on a small scale doesn’t require much capital, you can source your capital from your personal savings. However while dealing with a large quantity of cocoa or starting as an exporter, if you don’t already have capital, you can seek financial assistance from friends and family through partnerships or loans.
4. Register Your Business (Mainly for Exporters)
While no registration is required to start a cocoa farming business and even buying and stocking the cocoa, you must register your company with some legal organizations to start the cocoa exportation business in Nigeria.
The necessary registrations include but are not limited to acquiring a CAC certificate. You’ll find out more about all the required registrations if you do your market research well.
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5. Source Buyers
Unlike other businesses where you can start by having your goods at hand before finding buyers, with the cocoa business in Nigeria, the first thing is to make sure that there are buyers before sourcing for the goods. Since the business is capital intensive, you don’t want to stock cocoa for way too long, especially during the hike season before selling.
Sourcing buyers for your cocoa depends on the type you wish to start. Starting as an exporter, you’ll need to find international buyers to sell to. You can start with websites like Alibaba.com, or exporterindia.com to find buyers. Perhaps, you can look for international company representatives to work with.
As a cocoa sourcing agent, you can visit cocoa depots (they are available in many cocoa-producing states in Nigeria), and source exporters to work with. While as a framer, you’ll always get sourcing agents and even exporters, and companies all across the country to work with.
In this step, make sure you do some research about pricing and go with buyers that fit your criteria.
6. Source cocoa
Sourcing cocoa is one of the easiest parts of starting a cocoa business in Nigeria. If you wish to start as a cocoa farmer, you can source cocoa to sell from your farm during harvest.
On the other hand (an agent or exporter), since Nigeria is one of the largest producers of cocoa, you can find sellers to work with in many parts of the country. Some of the states to find the best cocoa sellers include:
- Ondo
- Cross River
- Ogun
- Akwa Ibom
- Ekiti, Delta
- Osun and Oyo State
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7. Get Started and Get Working
Once you find a good supplier to work with, the next thing is to get started. If you’re a cocoa sourcing agent, now, you’ll have to go to areas where cocoa is grown to buy the nuts in bulk. As an exporter, your job now is to find a sourcing agent to work with, while as a farmer this is the time to start cultivating your cocoa farm.
Also, if you’re looking to start a cocoa trading business, you just need to identify the best time to buy and get started. With enough work and persistence, you should be able to make the business a success within a short period of time.
Conclusion
The cocoa business in Nigeria is a very lucrative and easy-to-start business in Nigeria. Although it is capital intensive, anybody can start the business if you know how it works. With this post on how to start a cocoa business in Nigeria, I believe you’ve understood the business, and how to get it off the ground.
Cheers!
