Poor production knocks Nigeria off $88bn lucrative coffee market 

Coffee is one of the most widely consumed beverages in the world and one of the most traded commodities globally that is yet to gain significant recognition in Nigeria’s agricultural sector despite its huge economic potential.

Data by Statista showed that revenue in the coffee market is worth $88.35 billion in 2023, with the market expected to grow annually at a compound annual growth rate (CAGR) of 4.61 per cent between 2023 to 2028.

Grown commercially in more than 50 countries, the coffee industry is estimated to provide over 25 million jobs globally. The largest coffee producing countries are Brazil, Vietnam and Colombia, who play a dominant role in the growing export  market due in part to increasing consumption in emerging economies and a stronger interest in specialty coffee and product innovations in developed countries.

Though there are over 100 coffee species globally, the major varieties that are widely produced and marketed are Coffea Arabica and Coffea Robusta, which produce the coffee brands that go into almost all of the 400 billion cups of coffee consumed  annually.

Agronomists who studied the impact of rising temperatures and altered rainfall patterns on coffee production for Arabica and robusta in top producing countries have warned of declining production in top producing countries. Most experts predict major problems with many accepting that if global temperatures rise at current levels,more than 50 per cent of the land where coffee is currently produced will soon be unsuitable for production.

They,however, pointed out that this challenge presents an opportunity for smaller producers like Nigeria and others to rev up production and generate significant revenue in the lucrative, yet competitive coffee market and its resultant value chain.

On 30 November 30 2021, Nigeria finalised its membership in the International Coffee Organization (ICO) following its ratification to the International Coffee Agreement (ICA) 2007, joining 75 other countries which accounted for 97 per cent of world coffee production and exports and over two-thirds of coffee imports.

With the ratification, it  is expected that Nigeria coffee farmers will have opportunities to improve the yield of coffee that they grow and will have access to objective and comprehensive information on the world coffee market, with regular reports on market situation and economic studies to inform decision making. It was also noted that both Nigeria and the ICO will benefit through the sharing of best practices to produce, trade and increase consumption of coffee.

Adeniyi Adebayo, the minister of industry, trade and investment, who announced the development, said that the over one million coffee farmers in Nigeria are also expected to have access to comprehensive statistical data of the world coffee trade and economy and the privilege of being effective in the organisation’s meetings and activities.

In his words, “We believe that the membership of this organisation will increase the coffee yield and the number of people that will go into the coffee growing process and the coffee trade.

” Furthermore, we’ll have access to finance for our farmers, and all these things, we feel, are the things that will assist to improve the yield of coffee in Nigeria.”

However, over a year since joining the International Coffee Organiation Nigeria’s coffee output has remained poor,contrary to expectations of significant productivity.

Market data presented by  ReportLinker,a professional tech company that uses artificial intelligence to deliver market data and forecasts,said Nigeria’s coffee production is projected to decline by 0.4 per cent year-on-year and estimated to reach 40.3 thousand bags of 60 kg by 2026, down from 41.2 thousand bags in 2021.

On the other hand, Nigeria’s coffee consumption is expected to rise slightly within the reviewed period, with  demand projected to reach 8.8 thousand metric tonnes by 2026, up from eight thousand metric tonnes in 2021.

Commenting on Nigeria’s poor coffee output, Usman Hassan Kakara,the secretary-general of the National Coffee and Tea Association of Nigeria,said the production of coffee (both lowland and highland) in Nigeria is less than one million tonnes per annum due to lack of government’s intervention.

Kakara said that the government is not taking the front seat in training, bringing improved varieties and soft loans to support production. He pointed out that this has led to a lack of focus on the coffee industry,with many local farmers discouraged from increased production.

“Presently, Nestle is taking a lead in coffee importation because there are no farmers. It has to import coffee from other countries,” Kakara added.

According to the Taraba State based farmer, Nigeria has suitable land for coffee production. He added that the crop can do extremely well in the whole of South-South, eastern, as well as the Western regions of the country.

“If the government wants to focus on agriculture for diversification, then coffee, tea and cocoa must take the lead because they are cash crops,” he said.

Adeyinka Tekenah, the CEO of Happy Coffee, a company that creates coffee centered solutions in Lagos, lamented that locally produced coffee is not  well appreciated in the Nigeria market as over 90 per cent  of the coffee consumed in the country is imported. The implication of this, she explained, is that the majority of the coffee being grown locally is going to waste due to insufficient off-takers.

Tekenah also noted that Nigeria does not have coffee production/processing companies that are creating sustainable brands for the local consumers and the local palate. She further noted that there isn’t much ingenuity around the value chain as a whole, no national policy that protects coffee,while the private sector is yet to embrace financing projects to support coffee production in the country.

“Looking at what has happened to the agricultural sector as a whole, it’s still the same thing that has been going on. We have these raw materials but we don’t create products and services from it. We export our raw materials and then they take it and sell it back to us at a certain price,” she said.

Speaking on ways to promote local coffee production and marketing, Tekenah called on the government and financial institutions to provide financing to support production of locally grown coffee, distribution, local processing, and innovative solutions  for the coffee value chain in order to reduce importation and strengthen Nigeria’s  competitiveness in the global market.

According to the World Journal of Advanced Research and Reviews (WJARR), coffee is grown commercially in fourteen of Nigerian states, covering over 5000 hectares of land. The producing states are Kogi, Ondo, Taraba, Abia, Ogun, Ekiti, Kwara, Oyo, Cross River, Bauchi, Edo, Akwa Ibom, Delta and Plateau.

The journal, in a review article titled“Production trend of coffee in Nigeria”, noted that robusta is the primary coffee specie grown in Nigeria and accounts for 94 per cent, arabica accounts for four per cent ,and Liberica accounts for two per cent of Nigeria’s coffee production.

Despite coffee’s importance for economic growth and poverty reduction, the study disclosed that the coffee production trend in Nigeria has shown a highly significant level of decline over time. It stated that poor pricing and marketing channels particularly at the international level, aging coffee trees, lack of training on good agricultural practices, lack of government support,lack of government support and investments in the coffee sector in terms of capital and access to credit,have  locked coffee production into low performance trap,leading to poor productivity and abandoned farmlands.

To avert the downward trend in Nigeria coffee production, the study emphasised the importance of fundings to address the limitations imposed by a lack of credit.

“Farmers should be well oriented on the procedure to follow in accessing credit and also increase their level of awareness on the existing policy through radio, television and newspaper allowing farmers to take advantage of the opportunity,” it said.

The study also highlighted some recommendations  towards boosting coffee production to a significant rate across the country. These include:

-Adequate sensitization for altitudinal changes and development of farmers’ knowledge and skills on how to improve their agricultural practices and adopt improved cultivars by extension agents.

-Sufficient resources for the effective implementation of improved technology.

-Encouraging farmers  to practice rehabilitation techniques like coppicing to rejuvenate their farmlands.

-Improving processing practices to enhance coffee quality which is one of the determinant factors to increase the market price of coffee.

-Extension agents should assist farmers on how to adapt to climate change using appropriate strategy techniques.