Thursday, 6 January 2011

Cocoa Conundrums: Ghana, cocoa and sustainability


How would you like your chocolates, sir, wrapped or wrecked?

As retailers watched their sales plummet during the recent recession, one product held its own. Chocolate, that indulgent irresistible concoction of cocoa beans, plant oil and fine-cut sugar.

Yet the world’s confectioners are looking worried. Why so? If bumper Christmas sales are anything to go by, the world has lost nothing of its sweet tooth.

The problem lies not at the tills. Rather it’s the input end that is occupying industry minds. World cocoa prices are creeping up and up. 2009/2010 saw the cost of chocolate’s raw ingredient more than double. Part of that was down to market speculation. But problems on the farm are playing a major role too.

Nowhere is the root issue more in evidence than in Ghana [See Ethical Corporation article: ‘Ghana’s glass and a half of sustainability’. The West African nation recently struck oil. That’s helped its foreign reserves. Even so, agriculture still comprises almost two-fifths of the economy and over half the jobs. And agriculture in Ghana, by and large, means cocoa. Thirty percent of national GDP derives from the crop.  

Those stats are looking shaky though. Year on year, cocoa production levels are falling. Travel out to the fields (as Ethical Corporation’s founder Toby Webb did late last year) and the reasons for the slump are clear to see. The workforce is aging, pests and crop disease are spreading, irrigation is failing and many of the tropical Theobroma cacoa trees are slowing dying.

Why the emerging crisis? Economics. Farmers don’t get paid enough. The government guarantees a minimum price, which last October increased by a third to $2,260/tonne. Much is lost to middlemen, however.

Increasing the price presents one obvious solution. The fair trade movement, which pays a premium to cooperatives for ethically-produced cocoa, is beginning to make that happen. In the Kuapa Kokoo Farmers Union, Ghana boasts the world’s largest FairTrade cooperative. Its sales got a shot in the arm when Cadbury announced the conversion of its Dairy Milk brand to 100% FairTrade. In the first eighteen months, Kuapa Kokoo’s 62,000 members collectively received over £2.3 million in additional premiums as a result. FairTrade is no silver bullet though. Only 3% of Ghana cocoa sales are certified. That means 97% still out in the cold.

Industry groups have tended to concentrate on the other side of the income-generation coin; namely, increasing productivity. Initiatives such as the World Cocoa Foundation’s Sustainable Tree Crops Programme are working to upgrade cocoa growers’ traditional low input-low output technologies. This public-private partnership has also concentrated on increasing marketing efficiency, diversifying farmer income and strengthening public policies. Ten years on, it’s time to bring scale to the approach. That’s happening, slowly. Last year, for instance, the industry-led Cocoa Livelihoods Programme committed $40 million to finance on-the-ground activities aimed at improving farmer competitiveness and productivity.

As with many sustainability challenges, experience is disproving the belief in one-size-fits-all answers. The problems besetting Ghana’s cocoa industry - youth migration, child labour, poor productivity, low incomes, etcetera – are all interlinked. A posteriori, the solutions need to be too.

The Cadbury Cocoa Partnership provides an illustrative example of just such a holistic approach. Launched in 2008, the £45 million programme rests on the principle of helping farming communities to help themselves. Among other developmental benefits, UK chocolate manufacturer Cadbury (now part of Kraft) hopes the 100 communities in the scheme will become FairTrade certified. Mars’ Partnership for African Cocoa Communities of Tomorrow programme (known as IMPACT) has a similar community-led development focus.

“You can’t just stand at one end of a big, long complex supply chain and just expect it to continue ad infinitum”, says David Croft, head of sustainable agriculture for Kraft UK, in a recent Ethical Corporation podcast. Not if you want Ghana’s cocoa industry and others like it to stay afloat that is. And not if you want a box of chocolates for Valentine’s either.



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