Around the world in eight commodities, episode one: Cocoa

Around the World in Eight Commodities delves into some of the planet’s most critical commodities, exploring the complex challenges they face and the innovative solutions being implemented around the globe.

In this episode, we take a closer look at cocoa, one of the top 10 most traded commodities in the world. It’s most famously consumed as chocolate, but it’s also used in everything from cosmetics to alternative medicine, and it plays a vital role in many spiritual rituals in South and Central America.

Featuring:

• Mawuli Coffie, country director, World Cocoa Foundation, Ghana
• Robert Yapo, agricultural economist, Côte d’Ivoire
• Hannah Ward, director of environment, World Cocoa Foundation
• Solomon Charles Kalon, monitoring, evaluation, and learning manager, GEF/FOLUR, Liberia
• Isaac Charles Acquah, Environmental Protection Agency, Ghana

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“Cocoa is an important and symbolic raw material for the food industry, particularly for the chocolate industry, in developing countries. In Côte d’Ivoire, we say ‘when cocoa goes well, everything goes well’.”

– Dr Robert Yapo

Transcript

Welcome to around the world in 8 commodities, a podcast series by the Global Landscapes Forum in collaboration with the Food Systems, Land use and Restoration Impact Program. This series delves into eight of the world’s most critical commodities, exploring the complex challenges they face and the innovative solutions being implemented around the globe. 

In this episode, we take a closer look at cocoa, one of the top 10 most traded commodities in the world. It’s most famously consumed as chocolate but is used in everything from cosmetics to alternative medicine and plays a vital role in many spiritual rituals in South and Central America. It’s from this region that the plant originally comes, but it’s now grown around the world with the majority being produced in West Africa.  

Mawuli Coffie, country director for the World Cocoa Foundation in Ghana explains. 

Mawuli Coffie 

Coco is one of the primary agricultural crops in the world, largely produced by Côte d’Ivoire and Ghana. The two countries together produce approximately 60% of the global output and that is what feeds into the entire chocolate and confessional industry. If you take into account the fact that the chocolate and confectionary industry is approximately 130 billion dollar per annum output, then you can appreciate the significance of the crop to the countires that produce the raw material. 

Eden Flaherty 

And that importance really can’t be understated. 

Dr Robert Yapo 

Cocoa is the Backbone of Côte d’Ivoire’s economy. 

Cocoa provides for more than 6 million people in Côte d’Ivoire and for many rural communities, cocoa farming is a primary source of income. Cocoa is also a substantial contributor to the national GDP, estimated at 15%. 

Eden Flaherty 

And it’s a similar story in Ghana.  

Dr Mawuli Coffie 

For Ghana, this is a major problem because it employs approximately 1.2 million people and generates annual revenue of more than $3 billion. Households and family that depend on it are in excess of 3 million. 

Eden Flaherty 

But that reliance comes with significant risk, especially a time when cocoa is facing numerous threats. 

Dr Mawuli Coffie 

In 2021, Ghana was exporting approximately 1,000,000 metric tons. If you consider that against what is expected now, if we are very lucky, we might get to half a million metric tons, about 700,000 tons if they very lucky. So that decline is expected to continue into the next season. 

Eden Flaherty 

And this decline is being driven by the same factors across West Africa. First, simply the age of cocoa farms, like any other tree crop, cocoa has a limited productive lifetime – around 20 to 50 years, and many of the farms of Africa’s West Coast have been operating for well over half a century. 

Dr Mawuli Coffie 

Has been cocoa production for more than six decades, so trees have become old and cocoa farmers, too, have become older. So the combination of that means that the productivity that you expect is not optimal. 

Eden Flaherty 

And while farmers are aging, very few young people are choosing to take their place, which could in part be down to some of the economic challenges cocoa farmers face. 

Dr Robert Yapo 

Today and globally, 35% of cocoa producer live below poverty line and one of the key issues concerns the necessity for a fair share of the global value of wealth generated by the cocoa value chain. Indeed, today, cocoa producing countries such as Côte d’Ivoire , Ghana and others receive no more than 6% of the one $140 billion mentioned of the cocoa value chain.  

So the situation is not likely to maintain and encourage cocoa producer to continue to produce cocoa. 

Eden Flaherty 

But this is by number means the only threat to current cocoa production. Another significant factor is disease. 

Dr Mawuli Coffie 

Currently the biggest threat cocoa is Ghana and Côte d’Ivoire to some extent is what is called the cocoa swollen chute virus disease, or CSSV as it is called. And this has no remedy such so, and it is devastating farms and plantations. 

Eden Flaherty 

And of course, there’s the threat of climate change, which is impacting cocoa production through shifting weather patterns. 

Dr Mawuli Coffie 

Either we have extreme dry seasons or extreme rain seasons. You need optimal weather for the crop to do well. 

Hannah Ward 

Cocoa is a tropical tree crop, is highly susceptible to climate change and changing weather patterns can have a huge impact on yields. 

Eden Flaherty 

Hannah Ward, director of environment at the World Cocoa Foundation. 

Hannah Ward 

They are generally in West Africa, two main cocoa harvests per year, and even really small changes in rainfall or length pfdry seasons can have a huge impact on yields and therefore also because of the significance of Ghana and Cote d’Ivoire to the global supply of cocoa can also result in a big, big change in market prices, which are reliant on supply and demand. 

Eden Flaherty 

And this price volatility can in turn impact cocoa production even further. 

Solomon Charles Kalon 

You know, cocoa prices can be so volatile due to changes in the in the supply and demand. 

Eden Flaherty 

Solomon Charles Kalon, the monitoring, evaluation and Learning manager on the GEF/ FOLUR project in Liberia. 

Solomon Charles Kalon 

So this fluctuation in the prices can make it difficult for farmers to be able to plan and sustain their livelihoods because they don’t know exactly when cocoa price going to increase or what cocoa price going to decrease. These challenges is very, very and this is very serious issue for them. 

Dr Mawuli Coffie 

There are not enough incentives farmers to invest in farms. 

Eden Flaherty 

Mawuli Coffie again. 

Dr Mawuli Coffie 

This is either due to the fact that farmers don’t feel compensated enough to reinvest in the crop and so that lack of investment also means that the production of cocoa has not seen much innovation. Innovation in terms of introduction of technology, good agriculture practices and optimization of natural conditions such as water, soil nutrition and all of that. 

Eden Flaherty 

Which again impacts possible yields with knock on effects for the environment. 

Hannah Ward 

We know in West Africa in particular that potential yields per tree are really low. So it’s thought that only be around 25% on average in West Africa. So productivity per  hectare is very low. And again, historically, a response to this has often been to encroach into forested areas. Hence, cocoa historically has been associated very closely with deforestation. But it also means because we know productivity per tree and per farm is quite low, we also know that there’s huge potential to increase that productivity. 

Dr Robert Yapo 

In Côte d’Ivoire and globally several initiatives are being implemented to tackle these challenges. Basically, if you tackle three dimensions of sustainability,  starting with economic sustainability, for me the first thing to do is to improve productivity. 

Hannah Ward 

And there’s a number of really promising methodologies, technologies, best practices that companies, NGOs and others are testing and piloting, which we know can have a sustainable and positive impact on increasing productivity. So for example, climate smart agricultural practices, good agriculture practices, agroforestry, of which there are many different forms. Good agricultural practices, often referred to as GAP, have been around for some time, and there are very known best practices within GAP which can help increase productivity, which can reduce the need for input costs, decrease cocoa trees resilience to pests and diseases. In more recent years, there’s also been a transition to climate smart cocoa production, which is also about supporting farmers to be resilient to weather shocks and weather patterns and is quite a holistic package of low-cost interventions that farmers can make. For example, better pruning is an example that’s often used and trying to use limited external inputs. You know, not turning the soil but slashing weeds instead of digging them up. Really keeping the soil intact is critical to maintain soil health, so a number of different techniques. And then also there’s been a real uptick in recent years, in terms of the implementation of agroforestry programs. 

Isaac Charles Acquah 

Cocoa needs certain microclimatic conditions.  

Eden Flaherty 

Isaac Charles Acquah, working with the Environmental Protection Agency in Ghana. 

Isaac Charles Acquah 

There are certain tree species that serve as tree cover for the cocoa. So if that number of tree species that serves as tree cover is not enough in that cocoa farm, it exposes their cocoa to the direct heat and reduces yeild. So as part of the rehabilitation, farmers are being sustained and educated, and also being given this cover crop, cover trees, to plant within their cocoa farms. To improve the microclimatic conditions and also improve their yeild. 

Eden Flaherty 

And these trees can not only help the cocoa, but offer an alternative source of income as well. 

Dr Mawuli Coffie 

Our nation’s people need to actually work on what we call off farm activities. Farmers not dependent just entirely on cocoa. But because they are farming communities, there are quite a lot of other farming opportunities with other crops that bring good revenue. One of them is agroforestry, where we are combining forestry with agriculture and these are all intended to improve the farmer income and stabilise the farmer’s ability to generate income and make the farmer less vulnerable when cocoa prices fluctuate. 

Solomon Charles Kalon 

What we are intending to do when it comes to innovations for us to be involved more with agroforestry, right? 

Eden Flaherty 

Solomon Kalon again. 

Solomon Charles Kalon 

You plant the cocoa along with other cash crops, other trees. And in that you got more yeild than if you plant the cocoa without the cover. 

Hannah Ward 

So we’re seeing promising results from many of these interventions in terms of increasing productivity, but the challenge is often scale. These require a lot of very hands on support, intensive human resources, intensive financial resources, to scale these. 

Eden Flaherty 

And so the question is, where can we get these financial resources? 

Dr Mawuli Coffie 

The value build up increases multiple fold as you go closer to the markets. In the latest report I’ve seen, the primary production has about 7% of the total. But the moment you go to secondary processing, then the value doubles, and then when you go to tertiary, that is where the big money is. The big money is in the final products that come to the consumer, consumer products such as chocolates and confectionary. So, the reason why some of the countries are advocating for more local processing is so that they can also pick some of that value that is along the chain. 

Eden Flaherty 

Unfortunately, it’s not quite as simple as just shifting the value chain towards producers. Large amounts of the crop will likely already be earmarked from future markets. 

Dr Mawuli Coffie 

And the government of my country, Ghana, is encouraging adding value but because commodities are largely traded, sometimes in futures markets, with contracts that are already determined before the crop is harvested, you don’t have a lot of control over the beans, so you cannot say, “OK, all my beans this year, I’m processing all into cake and butter and you come and buy cake and butter to make money.” 

Eden Flaherty 

What’s more, many producers and producer regions lack the infrastructure needed to expand their share of the value chain, and without already having the money to invest, the infrastructure can’t be built. 

Solomon Charles Kalon 

Because the poor infrastructure you, you see that most of the farmers in the rural areas, they do the fermentation and the drying locally. 

So if they will take the cocoa beans, take the cocoa out of the shell, and then the beans, they will have to spread it on a mat or on a tarpaulin or something like that then put it in an open space where the sun is shining, that is how they go about to dry that. And the process can take a very long time and it’s kind of challenging and costs time and you might not even have the quality of cocoa beans that you need to be able to get good money out of it. 

Eden Flaherty 

So how can this be addressed? 

Solomon Charles Kalon 

I think gradually we are on path with that putting these people into cooperatives and if they are in a cooperative, you can be able to provide kind of infrastructure for them, for handling and you know that post-harvest. If you are required to build infrastructure where the different members are part of a cooperative and are able to get their cocoa beans or whatever to do the processing. I think this will be so good.  

And also providing training, education and essential services can also help to address some of those things. The right education, provided with the right skill set and financial resources could also help to address some of those things. Because if I’m a cocoa farmer and I have the necessary resources, I can be able to have better structure to be able to do my cocoa drying. I will add some value to it. 

Once they are in cooperatives, there can be ways to provide training for them and you can instantly be able to bring materials and the yeild at production will be higher than if you have individual farmers in the production.  

So there are a lot of initiatives and even the GEF/FOLUR project that they are currently working on. We are also supporting local cocoa farmers trying to form them into cooperatives and also training for them and provide them with the materials for production. 

Eden Flaherty 

Beyond cooperatives, there’s also a suggestion that focus should be put on producing goods outside of confectionery, which will have a greater market and producer countries, and reinvigorate interest in production. 

Dr Robert Yapo 

The key is really to develop and strengthen the processing of cocoa beans in local area. Not only to produce chocolate, in Africa many people don’t eat chocolate because of market power, but we need to make the process to develop all the byproducts of cocoa that the market here can absorb and add value. 

Hannah Ward 

A major issue in cocoa as mentioned is an ageing farmer population and driving interest from the next generation of young people growing up in cocoa communities in cocoa farming and some of the work done by exciting SMEs and the startups around alternative business opportunities from cocoa byproducts have shown to definitely attract and generate interest from young people, so it’s definitely it’s currently still a quite a small segment of the sector or of the market, but an important one and I think a growing one. 

Dr Robert Yapo 

Cocoa support between 40 and 50 million people around the world. Cocoa is a major cop for several developing country like Cote d’ivoire and Ghana, and more particularly in West Africa, Latin America and Southeast Asia. 

Cocoa is an important and symbolic raw material for the food industry, particularly for the chocolate industry, in developing countries. So in Côte d’Ivoire here, we usually say when cocoa goes well, everything goes well, everything is fine when the cocoa economy is good.