Analysis of market power in the cocoa supply chain in Ikom local government area, cross river state, Nigeria

Abstract

The cocoa subsector remains one of Nigeria’s most critical non-oil export earners and a cornerstone of rural livelihoods, particularly in southern rainforest zones. Cross River State, with Ikom Local Government Area as a flagship production and aggregation hub, contributes substantially to national output. Despite unprecedented international cocoa price surges in 2024 (peaking above $12,000 per tonne) driven by supply shocks in Côte d’Ivoire and Ghana, and continued volatility into 2025–2026, smallholder farmers in Ikom often capture a disproportionately small share of value. This study investigates the extent of market power exercised by intermediaries using primary survey data from 230 cocoa farmers and 60 market actors (licensed buying agents, village assemblers, exporters) collected in the 2025/2026 season, supplemented by secondary monthly price series from ICCO, NBS, and CBN sources. Employing descriptive statistics, market concentration indices (CR₄ and HHI), Gini coefficient, marketing margin analysis, and Multinomial Logit regression for channel choice, the findings reveal moderate-to-high buyer concentration (CR₄ = 58%, HHI = 1,850), significant marketing margins captured by intermediaries (26–35% at LBA level), asymmetric price transmission favoring downward adjustments, and socioeconomic determinants strongly influencing farmers’ marketing decisions. These imperfections undermine farm-gate prices, reduce production incentives, and limit welfare gains despite favorable global conditions and recent policy pushes for local processing and regional alliances. The study provides robust empirical evidence for targeted interventions to enhance competition, farmer organization, price transparency, and value addition in Nigeria’s cocoa value chain.