(Corrects list of Africa's top growers in paragraph 9)
* Nigeria used to be world's number two cocoa producer
* Crude oil industry killed farming as investment left
* Now state must diversify to address poverty, joblessness
* Government programmes providing seeds, agro-chemicals
* But yields at the mercy of weather
* Work starting to expand processing, manufacturing
By Chijioke Ohuocha
AKURE, Nigeria, Sept 4 College graduate Omatayo
Adeniyi stands in a humid tropical forest of southwest Nigeria
and explains why he chose cocoa farming over a white collar job
in the city.
"There is money in the ground. The future is bright. I hope
to make one tonne of cocoa by next year," he says from his farm
in Ondo State.
Such optimism has for decades been rare among Nigeria's
cocoa farmers: Many abandoned their fields and moved to cities
in search of alternative work after commodity prices collapsed
in the mid-1980s and the country's booming oil industry siphoned
investment away from agriculture.
But years of focus on oil revenues has left Nigeria with a
lack of industrial diversity and made it over-dependent on
energy, which uses a lot of costly equipment but employs few
people. So while the economy has been growing at an average of 7
percent for the past five years, it has failed to create jobs
for many of Nigeria's 170 million people.
High unemployment and poverty levels have prompted the
government to look again at cocoa with the aim of getting more
people to grow a product for which prices have been rising.
Adeniyi's trees have been supplied by the government, which
is also distributing plant pods and disease resistant seeds at
subsidised rates, alongside cheap fertilisers, agricultural
chemicals and training to improve practices.
Agriculture Minister Akinwumi Adesina aims to boost
production to 1 million tonnes a year by 2018 - on a par with
current number two global producer Ghana and approaching top
grower Ivory Coast's projected 1.8 million tonnes for this year.
Nigeria says it's already on track to produce 500,000 tonnes
of cocoa next year, double what it grew in 2012, and though
analysts say that target may be optimistic, it is clear that no
other cocoa growing country is boosting production as fast.
Output from Africa's top growers - Ivory Coast, Ghana and
Nigeria - plus Indonesia make up over 70 percent of global
production, which is projected to rise in 2013/14 after staying
flat for two years, according to Africa's Ecobank.
"Nigeria has been underperforming for many years because of
a lack of investment and the discovery of oil. But in the last
two years, there's been genuine commitment ... to develop
agriculture," said Edward George, Ecobank head of research.
BIGGER, BETTER, MORE
Nigeria currently grows cocoa on less than a quarter of the
3 million hectares of land suitable to produce the beans, and
the government is encouraging farmers to expand to the
uncultivated savannah grassland.
With the materials the state provides, crops are
flourishing. Adeniyi received his high-yield disease-resistant
seeds from government two years ago and planted 800 seedlings of
which 700 survived - much more than usual. The new trees flower
within 18-24 months instead of 3-5 years.
"The materials will increase output more than three times
from what farmers had before," said Leila Dongo, director at
Cocoa Research Institute of Nigeria.
However infrastructure still poses a problem - bad roads
hamper the transport of beans to market - and many producers are
at the mercy of the weather because of their rudimentary
In a leafy plantation where rows of cocoa trees sit three
inches apart to let in air and sunshine, farmer Rafiu Saliu
demonstrates the problem. Picking up a pod from a just-harvested
heap he shows how most of it has gone black with fungal disease.
Farmers like Saliu rely on the whims of weather for growing
and drying their crops. This year Saliu faced a dilemma: leave
pods on trees until the rains pass, and risk them over ripening,
or harvest them and risk mould levels exceeding the maximum 5
percent allowed on the market.
"If not for the rains we should be harvesting. All the pods
are ripe," said 65-year-old Saliu, as more dark clouds spread
over his four hectare farm.
To tackle this vulnerability, the government is training
farmers to set up warehousing and storage, including creating
shared drying spaces covered with plastic sheets that let sun in
but keep rain out.
FROM TREES TO FACTORIES
When Nigeria's government turned its back on the cocoa
industry, it also scrapped the cocoa marketing board, a farmers'
cooperative that regulated farming practices, guaranteed prices
to farmers, and provided subsidies through the cocoa board.
Farmers now bear the price risk themselves but have seen
cocoa prices swing from a low of less than $1,000 per tonne in
1986 to a peak of $3,500 per tonne in 2011. This month cocoa is
trading around $3,252 per tonne.
In Nigeria this year farmgate prices - the amount Saliu and
Adeniyi will make on their beans before they go to the wider
market - are around 450,000 naira ($2,779) per tonne - up 50
percent on last year. But that could fall quickly if as
predicted a bumper West African crop depresses global prices.
So in an attempt to avoid a cycle of boom and bust, Nigeria
is encouraging local processing and manufacturing enterprises.
Samuel Oyebade, head of the government's cocoa reform plan
in its main growing region Ondo State, told Reuters talks were
afoot with U.S. chocolate manufacturer SPAGnVOLA to set up a
chocolate factory in which the state would invest around 5
billion naira ($31 million) to build, while SPAGnVOLA would
manage the production for export and some local consumption.
Nigeria's beans have been deemed by the global market
unsuitable for chocolate because of their high moisture content
and so tend to be used more in cake, butter and soaps.
But with expert input from a U.S. chocolate expert their
beans could yet make it to premium buyers, for premium prices.
"The industry says cocoa beans from Africa are inferior to
those from South America and the Caribbean ... (but) it's how
you treat that beans that renders the flavour ... every single
tree has the potential for producing fine flavour," SPAGnVOLA
Chief Executive Eric Reid told Reuters.
(1 US dollar = 162.1 naira)
(Additional reporting by Marcy Nicholson in New York; Editing
by Sophie Walker)