Cocoa production in Ivory Coast and the challenge of sustainability

Cocoa production in Ivory Coast and the challenge of sustainability

In the Ivory Coast, cocoa is more valuable than gold. This isn’t just a figure of speech: OEC reports that cocoa beans and related products, such as chocolate and cocoa paste, accounted for over 40% of the country’s export values in 2015. This towers above the value generated from more conventionally sought-after commodities like petroleum, gold and rubber, and the proportion of Ivorian export value that comes from cocoa is believed to have only increased.

Clearly, cocoa production is right at the heart of Ivory Coast’s economy. It is such a crucial national industry that the reverse is also true – Ivory Coast is the nerve of the globe’s cocoa trade, supplying roughly a third of the world’s total cocoa and leading the rest of the world by more than half a million tonnes. Therefore, it’s in the best interests of not just the Ivory Coast but of those involved in the industry worldwide to keep Ivorian cocoa production healthy.

Manufacturers, retailers and investors in Western Europe and North America should pay particular attention, as countries in those regions import the lion’s share of Ivorian cocoa. The Netherlands, United States and Belgium top the list, and have used cocoa beans from the Ivory Coast and turned them into chocolate empires.

Now, it’s time for them to give back. The past several years has been highly volatile for the cocoa industry, with the international price of cocoa crashing by 30% between 2015 and 2017. As the largest cocoa producer in the world, this has been particularly harsh on Ivory Coast. Having previously forecasted a high international demand, the Ivorian government set the 2017 national price paid to cocoa farmers at a record high per kilo. After global demand was weaker than expected, the resultant overproduction and dramatic international price drop combined with higher national fees caused many cocoa buyers to pull out of their deals with farmers to avoid huge losses.

Port shutdowns in Abidjan and San Pedro during periods of military unrest and open gunfire also crippled the past season of cocoa production by stalling cocoa shipments. Cocoa being as important as it is to Ivory Coast, the falling prices, stagnating exports and security issues were impactful enough for the government to cut its 2017 budget and curb expected production figures this year.

Many have called this a ‘cocoa crisis’ – a name earned not just because of the market downturn but due to environmental costs. Cocoa farming has influenced a particularly aggressive trend of deforestation in Ivory Coast, which lost 64% of its forest cover between 1990-2015. No doubt the recent season of overproduction has worsened this – now, under 4% of the country’s forest land remains. If this pace continues, it is predicted that there will be no rainforest left by 2030, a devastating outcome for the stability of Ivory Coast’s wildlife and ability to cope with climate change.

It is also impossible to ignore the humanitarian concerns. Falling prices have only amplified the poverty many in the Ivory Coast face; the income of cocoa farmers is thought to have decreased by as much as 36% as a result, with no reliable support being offered by the government or industry profiteers to ease the shock of falling wages. Overproduction has also fuelled the industry’s troubling child labour rates – while there was a slight relative decline from the mid-2000s, Cocoa Barometer 2018 reports that the number of children labouring in the cocoa industries of Ivory Coast and Ghana alone has actually risen in absolute terms to 2.1 million. With around a quarter of the country making a living in cocoa production, one of Ivory Coast’s most potentially prosperous industries is seriously paralysed in how it can boost sustainable business and the living standards of its workers.

So far this year, governments, corporations and NGOs alike have seemed more vocal than ever about the multi-faceted issues in the cocoa industry. Perhaps it’s too optimistic to call 2018 an awakening, but noise is being made and initiatives are being theorised and implemented.

Ivory Coast and Ghana recently signed an encouraging agreement to tackle the challenges both have faced in the cocoa sector. Aiming to ‘better defend the interests of cocoa producers, as well as the economies of both countries’, both made a commitment with the Abidjan Declaration to a common sustainable strategy for improving prices for cocoa producers in both countries.

This involves a pledge to collaborate on cocoa marketing policies and to mutually decide on and announce cocoa pricing. Establishing a mutual price control seems like a smart move for both countries, as cocoa price fluctuations have led to farmers and traders smuggling to offset low incomes. It’s estimated that Ivory Coast lost 125,000 metric tons of cocoa beans due to smuggling between October 2017 and February 2018, motivated by farmers and traders being paid better prices in neighbouring Ghana, Liberia and Guinea. Likewise, we wrote previously about how Ghanaian farmers have turned to selling their cocoa beans through illegal networks in Ivory Coast in periods when domestic prices had slumped. With that in mind, this initiative is sensible, and ideally will strengthen the economies of both countries by preventing any ‘leakages’ of cocoa beans due to smuggling, all the while leaving workers better off with more stable incomes.

The two neighbours also agreed to work closer together on scientific research with the aims of improving cocoa plant production techniques, discovering more suitable plant varieties and to support one another in implementing a programme to fight against the swollen shoot disease that has affected cocoa crops in the region. Ivory Coast had in fact already begun with the latter earlier this year, as the Ivorian Coffee and Cocoa Council set the target to remove 300,000 hectares of swollen shoot during the three-year scheme. According to a CCC source, 23,000 hectares had been uprooted in just two months, the programme so far seeming effective at restoring the land’s health and reducing growth capacity. This is in line with the CCC’s target to reduce cocoa output after the crippling overproduction season.

As for the other research pledges, their potential to influence more sustainable cocoa production and to empower workers in Ivory Coast depends on how committed the government is to supporting farmers. Provided that cocoa farmers and others in the industry are educated on any newly desirable production methodologies and given the resources they may need to implement them, such as more appropriate farming tools and fertilisers, then this initiative could be a good step towards making cocoa production in the Ivory Coast more sustainable.

Trickier to evaluate is the invitation of both governments for the private sector to invest heavily in cocoa processing in Africa. The call for more investment from Africa’s private sector in particular is a logical step forward, as private entities native to Ivory Coast or others in Africa could well have existing contacts with farmers and traders to facilitate doing business. This could in turn boost the self sufficiency of Ivory Coast’s economy if domestic private companies invest in cocoa and strengthen the cooperation of Ivory Coast with other African nations if members of their private sector invest in Ivorian cocoa.

This year has saw numerous announcements of private investment into cocoa production in Ivory Coast, though this is mostly from Western corporations. Recently, Hershey Co. announced a $500 million programme to boost sustainable cocoa production in Ivory Coast and Ghana. Cocoa for Good will see the company invest in four key areas: nourishing children, empowering youth education and employment, building communities and preserving Ivory Coast’s natural ecosystems. More specifically, Hershey have pledged to tackle child labour and increasing shade-grown cocoa, which is believed to last up to 15 years longer than plants grown in full sun.

While Hershey has made gains in buying certified sustainable cocoa, which made up 75% of its cocoa purchases in 2017, there is still a way to go until the chocolate giant’s cocoa purchases are totally sustainable. It’s also worth noting that the company’s plans to introduce a nutritional programme to feed children in Ivory Coast is contingent on implementation support from local governments. While this combines well with the desired strategy of Ivory Coast’s trade minister, who stressed the importance of foreign investment into local cocoa production operations, much has been made of the difficulties farmers face in obtaining financing from local authorities, such as government grants and bank loans. For Ivory Coast’s farmers and other cocoa workers to truly see the benefits of the scheme, Hershey will need to collaborate closely with local governments and both will need to negotiate a complementary framework of financial and resource investment.

How the chocolate giant plans to achieve the rest of their aims remains to be seen, but they are not the only company that has spoken up. Mars, Nestle and Cargill are among the world’s largest chocolate makers that have joined with Ivory Coast and Ghana in an effort to curb deforestation. The will for companies and governments to collaborate on this is a good start, but, as IDH has outlined, Ivory Coast and its partners need to take care to effectively address the issue.

To better keep track of forestation efforts and land use, investing in new technologies that allow for monitoring would be a wise step. Ivory Coast is already working with corporate partners to develop a satellite-based tracking system which provides deforestation alerts. The Ivorian government and its industry partners will hopefully continue sharing relevant data and good practises, in turn enhancing technologies to the benefit of the cocoa industry.

One of the most important factors is policy. Clear and sensible policies on forest classification, land rights and the potential for farmer resettlement need to be settled on and implemented as quickly as possible. This is, of course, dependent on having a healthy policy environment where movements can be agreed upon and put into action. Chocolate makers and other companies have a responsibility to work with the Ivory Coast government, national institutions and other stakeholders in the cocoa industry to work towards and promote a rewarding environment for forest protection and sustainable cocoa production.

Finance is another area which demands a strategy. Corporate and government financing should attempt to treat deforestation by contributing towards sustainability and alleviating poverty. Finance models should aim to facilitate actions that protect and restore forests, develop sustainable production techniques that can boost farmers’ incomes, and build social inclusion. Taking advantage of funding opportunities is key to this – Ivory Coast’s receipt of $15 million this year from the World Bank Forest Investment Program, aimed to help conserve and increase forest land in the country, is a good start. But grants and funding opportunities should continue to be capitalised on. At a more grassroots level, Ivorian farmer organisations can work together with the government, companies, and development and commercial banks to drive investments that make smallholder farmers capable of branching out into land rehabilitation.

Ultimately, the success of any pledge to create more sustainable cocoa production in Ivory Coast lies with the cocoa farmers. It’s all well and good for governments, NGOs and corporations to share the common goal of sustainability, but any efforts made need to guarantee the participation of cocoa farmers with clear benefits and support.

With that in mind, there are several areas that sustainability efforts need to address. As a consequence of forest regeneration, Ivory Coast may need to expel hundreds and thousands of cocoa farmers from illegal cocoa plantations. Here lies the problem: if the government doesn’t provide these farmers with an alternative land or funding, farmers may just return after being evicted as in 2016. So, in that case, cocoa production is halted while no sustainable effort at forestation is achieved.
It’s in the best interest of funding bodies and the Ivorian government to invest more in the cocoa farmers. The consequences of not doing so are damaging to the industry. As mentioned previously, what led Ivory Coast’s farmers to smuggling during the last cocoa season was a combination of unfavourable cocoa bean prices and a lack of subsidies to offset the lower income.

Although cocoa prices have surged back up by a third this year, it’s speculated that Ivory Coast’s farmers won’t enjoy a substantial increase in the farmer price thanks to the existing price control system, which uses forward sales to determine rates. Ivory Coast and Ghana’s mutual price control scheme should certainly benefit workers in future situations like this, but farmers’ income may still suffer until its implementation. Those in a position to fund cocoa farmers should be vigilant that a supposedly prosperous time for cocoa doesn’t result in increased poverty. Such poverty is undoubtedly a fuel for the industry’s child labour problem – low income and a lack of funding for farmers may force their hands to use children as the cheapest possible labour, a situation that all working for sustainable cocoa production in Ivory Coast should avoid.

While there are many challenges to making Ivory Coast’s cocoa industry more sustainable, the solution might be a very accessible one if the right people reach it. Waystocap is a system that facilitates import-export business between African countries and the rest of the world. This system can also help improve the negative effects of the cocoa crisis and even end it. The main thing to consider is the help that Waystocap gives to foreign investors.

By accessing this system, foreign people in business can break into Ivory Coast’s market and create their farming facilities for growing cocoa locally. This is a great step towards creating more sustainable cocoa produce. Waystocap can also create the right contacts between importers and exporters to develop the market of cocoa trading and keep it moving in the right direction. All these measures can be applied to reaching both farmers and investors and finding common grounds to work on.

Waystocap will clarify the bureaucracy for foreign exporters and investors as well as the right and shortest way to get started in the cocoa business. Not to mention that the potential scams and frauds will be kept away from such import-export business and the outcome can only be in the benefit of both parties involved.

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