Cocoa is variably one of the prominent agricultural produce that is dominant in the trade market due to its vitality and versatility which are grown on cocoa trees and have been consumed for decades. Ultimately cocoa trees grow exclusively in areas that meet certain specific conditions.
Today, dried and fermented cocoa seeds can use in producing chocolate, while the fat of the beans or cocoa butter can also be extracted and used for a variety of purposes, from moisturizing the skin and hair to cooking.
Mostly all cocoa coming from origin countries such as Nigeria is sold through the physical market. The physical market involves the type of business that most people normally think of when talking about trading in commodities.
At one extreme of the spectrum, the marketing channel between cocoa farmers and exporters encompasses at least two middlemen small traders and wholesalers.
Small traders buy cocoa beans directly from farmers, visiting them one by one. In a second stage, small buyers sell the beans to wholesalers, who in turn will re-sell them to exporters.
At the other extreme of the spectrum, cocoa beans are sold directly to exporters by farmers’ cooperatives or even directly exported by the co-operative.
Nigeria as a Cocoa Producing Country
Cocoa farming extended through Brazil and Mexico to Central America as well as the Caribbean region, originally in the local proximity of the cocoa tree’s native environment.
In the sixteenth century, the Spanish introduced cocoa to the Indonesian archipelago and West Africa, especially in Nigeria, which now accounts for more than half of the yearly world crop. As also production has markedly increased.
Nigeria is the world’s fourth-biggest cocoa-producing nation. Though Nigeria produces over 300,000 tons of cocoa, Nigerians have yet to take full advantage of the cocoa exportation business.
Firstly, many inquire that the market trend on cash crops as cocoa is been overemphasized. Secondly, the farmers only sell to millennial local distributors, intensifying the decrease in profit-making.
Finally, some of the local farmers have cocoa beans diminishing as they have this product in abundance but are in search of available buyers who are willing to purchase this product in large quantities.
Supply and Demand of the Cocoa Trade
In the producing country like Nigeria, local traders and central sales organizations prepare cocoa for export.
Nigerian merchants, buyers, wholesalers, and agents conduct business and establish marketing parties that agree on quality, delivery time and location, and quantity.
Because supply is very susceptible to climate variations, the cost of cocoa can fluctuate dramatically throughout the year. Buyers (i.e., the cocoa processing sector and its clients) are understandably concerned about price swings.
These uncertainties are the reason for the establishment of the cocoa futures market. The need for cocoa in Nigeria and around the world has recently increased, as several suppliers have expressed reason to invest in the supply of cocoa beans to this country.
Trade as a Market Factor
Cocoa beans frequently travel thousands of miles before being processed. It’s no surprise, then, that the worldwide cocoa industry plays such an essential role in bridging time, location, and price gaps. Buyers like to acquire when the cost is low, while producers try to sell whenever the price is high.
In between these two is the trade, who is interested in buying at higher prices and selling at lower prices.
This may seem illogical, but traders cover themselves against risks by market trends. In this way, they protect themselves, their suppliers, and their buyers against price fluctuations while making money in the bargain.
Traders provide additional services to their clients, such as financial transactions in preparation in favour of its providers or buyers, or obtaining specific sorts of cocoa for their customers that they would have purchased under less favourable conditions if they had not intervened.
Entrepreneurs and strategic planners entering the global market encounter several questions on the demand side. Which nations are the main producers of cocoa beans? How much do these imports cost in dollars? How much does it cost to find a reliable cocoa supplier?
Some of these questions are the reason why we have a B2B business which is a platform for manufacturers and buyers to experience the marketplace experience by networking with the direct market of the cocoa farmers and have a handful of information on the mass production and its supply to both local and international delivery.
With ABEN, you are directed connected with a local farmer who is readily available for supplies of cocoa beans at your fingertips.
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