Why Nigeria's Cocoa Boom Could Leave Its New Factories Empty

Record export earnings have enriched the cocoa trade but raised processors' working-capital burden. With new capacity coming onstream and Europe's deforestation rules approaching, control of the bean rather than ownership of the plant may determine the winners.

Nigeria's cocoa story has rarely looked stronger. Raw cocoa-bean export earnings rose from about US$670 million in 2023 to US$1.63 billion in 2024, before reaching US$1.99 billion in 2025. New processing investments are being announced, Government is distributing improved seedlings, and cocoa has become one of the clearest symbols of Nigeria's non-oil export opportunity.

But the headline numbers conceal a harder industrial question. Nigeria already has cocoa-processing assets that operate below capacity. The international price boom that lifted export receipts also made the beans dramatically more expensive for local processors. Now, Johnvents and Sunbeth are adding substantial new capacity to an industry in which access to beans, working capital, and traceability may matter more than the size of the factory itself.

The Cocoa Windfall Was Largely A Price Story

The first step is to diagnose the boom correctly. Nigeria's raw-bean export value increased by approximately 143% between 2023 and 2024, but physical export volume rose by only about 26%. The implied average export value almost doubled, from roughly US$2,757 per tonne to US$5,309 per tonne.

That distinction matters because export revenue, production growth, and industrialization are not the same thing. A country can earn far more from a commodity without producing proportionately more of it or processing more of it locally. In cocoa, that is exactly what happened. International prices, which had generally traded around $2,200 to $2,500 per tonne in 2022, surged to roughly $11,441 to $11,545 per tonne by late 2024. Nigeria's own export data reflects the same shift in that the average realized value of its raw cocoa-bean exports rose from about $2,757 per tonne in 2023 to roughly $5,309 per tonne in 2024. That helps explain why export earnings jumped so sharply even though export volumes rose much less dramatically. Nigeria's cocoa boom was therefore valuable, but it was primarily a price-cycle windfall rather than proof that the domestic value chain had already transformed.

Nigeria's Processing Paradox

The conventional explanation is that Nigeria exports raw cocoa because it lacks processing capacity. That is only partly true. The more immediate problem is that much of the capacity already installed has been idle, distressed, or economically unusable.

At the July 2026 Cocoa Value Addition Summit, the Federal Government stated that Nigeria's national grinding capacity had crossed 120,000 tonnes a year. However, the 2026-2027 National Agri-Food Systems Investment Plan, presents a more sobering picture of the industry's recent performance. The plan states that the sector declined from 15 processing plants with a combined annual nameplate capacity of approximately 250,000 tonnes to only 5 functioning plants operating at about 8% utilization by mid-2024. Assuming the original plants were broadly equal in size, the 5 surviving plants would represent about 83,333 tonnes of capacity, implying actual processing of only around 6,667 tonnes annually. While this is an estimate, it highlights the scale of underutilization; Nigeria's immediate challenge is therefore not simply to build more plants, but to secure the raw coca beans and margins needed to operate existing capacity profitably.

How High Prices Can Empty Local Factories

The same price boom can produce winners and losers within one value chain. Higher international prices increase farmer incomes and export receipts. They also raise the domestic export-parity price that processors must pay for beans.

A processor that previously required ₦2 billion to purchase a given quantity of cocoa may need several times that amount after a price shock, even though the factory's physical output has not changed. Exporters often have confirmed foreign buyers, pre-export finance, and shorter cash-conversion cycles. A local processor must buy the crop, carry inventory, grind, sell, and wait for settlement. High prices therefore do not prevent processors from buying beans, but they make it much harder to finance and justify the purchase.

Nigeria's own agricultural plan identifies farmers' preference for merchants offering premium prices as one reason domestic processors weakened. Globally, the cocoa market moved from a 492,000-tonne shortage in 2023/24 to an estimated 48,000-tonne surplus in 2024/25. This reversal reflected two developments happening at the same time: cocoa production recovered while factories processed fewer beans because exceptionally high prices made processing less attractive and more expensive to finance. The volume of beans processed into cocoa butter, powder, and liquor, known in the industry as cocoa grindings, fell by 3.8%. In other words, the market returned to surplus not only because more cocoa became available, but also because processors bought and processed less of it.

FTN Cocoa Processors PLC: What The Accounts Reveal

FTN Cocoa Processors offers the clearest public window into these economics. In FTN Cocoa Processors' 2025 audited financial statements, revenue increased from ₦1.38 billion in 2024 to ₦5.65 billion in 2025, driven largely by exported cocoa butter and the resumption of meaningful local cocoa-powder sales. That represented a more than fourfold increase in revenue. Cost of sales, however, increased much faster, from ₦536.6 million to ₦6.33 billion, or almost twelvefold. The divergence was enough to reverse the company's ₦839.2 million gross profit in 2024 into a ₦685.9 million gross loss in 2025.

Excerpts From FTN Cocoa Processors PLC 2025 Financials

Raw materials were the dominant expense, absorbing almost 94% of revenue. Given the international price environment, expensive beans were a probable source of material pressure. The accounts do not, however, disclose the tonnes purchased, average acquisition cost, output yields or selling prices per tonne. It would therefore be too strong to attribute the gross loss to international cocoa prices alone.

FTN itself identifies another important part of the explanation. In Note 19.1 of its 2025 audited financial statements, the company said it had been producing at below 5% of capacity because of "lingering working capital inadequacy." At such low utilization, a very small production base still had to absorb ₦792.2 million of depreciation and other fixed factory costs, materially weakening gross margins. FTN did not expressly attribute the working-capital shortage to the international cocoa-price surge. However, its accounts show that raw materials absorbed ₦5.29 billion in 2025, while a ₦5 billion NEXIM facility was obtained specifically to procure cocoa beans for processing and export. This suggests that financing bean purchases was central to the constraint, although the financial statements do not provide enough information to determine how much of the problem arose from higher bean prices rather than increased purchasing volumes or other working-capital demands.

The margin pressure was already visible before depreciation was recognized. Revenue exceeded raw materials and the other disclosed cash-like direct production costs by only about ₦106 million, less than 2% of revenue. Once depreciation was included, that narrow processing spread became a gross loss. In other words, expensive inputs left very little operating headroom, while severe underutilization ensured that the plant's fixed costs were spread across too little production.

New Factories Will Compete For The Same Bean Pool

Johnvents is expanding its Ile-Oluji facility to 30,000 tonnes annually through a $40.5 million British International Investment-backed programme. Together with the group's 18,000-tonne Akure operation, Johnvents reports combined processing capacity of 48,000 tonnes. The expansion is also intended to strengthen farmer sourcing, traceability and certification, including a target of 90% Rainforest Alliance-certified cocoa by 2027.

Sunbeth Global Concepts is pursuing a different route. The large exporter is constructing a 70,000-tonne processing factory in Sagamu, scheduled for commissioning in March 2027. Sunbeth is effectively attempting to convert an established procurement and export network into industrial throughput.

The two projects therefore represent different strategic experiments. Johnvents is an existing processor deepening vertical integration, traceability, and certification. Sunbeth is an exporter moving downstream into processing. Both, however, confront the same commercial test: whether they can secure enough beans at prices that still leave a viable margin after financing, energy, conversion, and logistics costs.

Johnvents' expansion and Sunbeth's new plant together represent approximately 87,000 tonnes of additional or expanded annual capacity. Unless Nigerian production increases, that capacity will have to draw beans away from existing exporters, existing processors, or both. The government's rollout of one million improved seedlings recognizes the supply-side constraint, but cocoa trees require years to mature, while factories can be commissioned much faster.

Europe Is Changing What Counts As A Valuable Bean

Even processors that secure enough cocoa face a second constraint which is that access to major export markets will increasingly depend on what can be proven about the bean. Europe is too important to Nigeria's cocoa trade for the EU Deforestation Regulation to be treated as a peripheral compliance matter. Nigeria's 2024 WITS export data indicate that more than half of raw-bean exports went to EU destinations, with the Netherlands alone accounting for roughly 42% of export value.

Under the European Commission's EUDR implementation framework, large and medium operators placing covered cocoa products on the EU market from 30 December 2026 must demonstrate that they are deforestation-free, legally produced under the laws of the country of origin, and supported by the required due-diligence information, including the geolocation of production plots. The regulation covers cocoa beans and specified products made from cocoa. Grinding an untraceable bean into butter or powder does not make its origin traceable.

Nigeria is listed as a standard-risk country in the EU's country classification, while Ghana is currently classified as low risk. That does not ban Nigerian cocoa or imply that every shipment is suspect. It means Nigerian supply generally remains subject to the full information, risk-assessment and risk-mitigation process, with a higher minimum level of official checks than low-risk origins.

The country's readiness remains incomplete. An EU-commissioned assessment of Nigeria's EUDR preparedness in 2024 cited an industry estimate that only about half of cocoa farms had been geolocated, but noted that the figure could not be confirmed by the Ministry of Agriculture. It also found that processors compete with merchants able to offer higher prices and that the proposed national traceability system remained underfunded at the time of the assessment.

Such segmentation would not necessarily reduce Nigeria's total cocoa output or eliminate demand for less verifiable beans. Supply that cannot satisfy an EU buyer may still be redirected to domestic processors or non-EU markets. The commercial consequences would depend on the price, financing, and offtake available in those alternative channels. What is likely to change is that traceability becomes part of the bean's economic value rather than a separate administrative exercise.

Control of the bean is the real industrial advantage

Nigeria's cocoa windfall has created strong conditions for investment, but not a guarantee of profitable processing. The international price rally lifted raw-bean earnings from about US$670 million in 2023 to almost US$2 billion in 2025. It also raised the procurement and financing burden faced by local processors. FTN's accounts show what can happen when high raw-material costs, low utilization, and fixed charges converge. Johnvents and Sunbeth will now test whether stronger integration, patient finance, and traceability can produce a different outcome.

The next phase of the industry will not be decided by who announces the largest factory. It will be decided by who can secure a dependable supply of cocoa, finance it through the harvest cycle, prove where it was grown, process it efficiently, and sell the resulting products into contracted markets. In Nigeria's next cocoa phase, control of the bean rather than ownership of the grinder, may be the decisive competitive advantage.