The institutional environment of the cocoa sector in Ghana and Cote

d’Ivoire, A call for greater multi-sector collaboration.

Divine Foundjem-Tita ( ICRAF-WCA)

Jason Donovan (ICRAF, Peru)

Dietmar Stoian ( Bioversity International)

Ann Degrande ( ICRAF-WCA

Introduction

Global figures FAO stat 2013:

• 4.1 million metric tons of cocoa was produced in 2012, from 50 ctries

• For an export value = 8.4 billion $US

• Only 40% of the 8.4 billion went to farmers

Introduction cont.

Major producing countries

Position Country Production 2011 % of world total

% change from 2010

1 Cote d’Ivoire 1,559,441 m/t 33.8% + 19.8%

2 Indonesia 712,200 m/t 15.4% + 15.7%

3 Ghana 700,020 m/t 15.2% + 10.7%

4 Nigeria 400,000 m/t 8.7% + 0.2%

5 Cameroon 272,000 m/t 5.9% + 3.0%

Total 79%

Source FAOSTAT data 2013, accessed January 2014

Ghana + Cote d’Ivoire = 49%

Introduction cont.

Major challenges • Major cocoa production is in sub-Saharan African countries =

poverty

Cocoa farmers remain poor because of

• Low prices

• Productivity is low: pest and diseases, low yielding varieties, aging plantations and farmers, lack of extension services

• Other issues: child labor , deforestation, pesticide use, absence or weak producer organizations etc.

These challenges have attracted a number of stakeholders in the cocoa sector in an attempt to address the problems amongst which certification bodies e.g Fairtrade

Context

• Study commissioned by Fairtrade to collect baseline information to assess the impact of certification on farmers livelihoods

Our systems approach

• Analysis of households and their membership into producer organizations specifically cooperatives

• Analysis of institutional frameworks governing: public and private sector actors, NGOs and certification bodies

Approach 4 steps for VCD impact assessment

Step 4:

Determine

outcomes

and impacts

1) Address

information

gaps and

conflicting

information

with

stakeholders

2) Attribution

Step 3: Household assessment

Identify:

1)Changes in asset endowments, vulnerability, livelihood strategies

2)Potential causes of identified changes

Step 1:

Context

analysis

1) Identify key

elements of

context

2) Adjust

enterprise and

household tools

Step 2: Enterprise assessment

Identify:

1)Changes in asset endowments, risk management, business strategies

2)Potential causes of identified changes

2. Research questions

What are the rules governing the cocoa value chains in Ghana

and Cote d’Ivoire?

What are the impacts of the different institutional frameworks

for cocoa production and marketing on the livelihoods of

smallholder cocoa producers in Ghana and Cote d’Ivoire and

their cooperatives?

What lessons can be learned from the analysis and what are their

implications for enhancing the institutional environments in GH

and CdI and beyond?

Institutional environment: Public sector

Ghana Cocobod • Main function: regulate, research,

extension, internal and external marketing and quality control.

• Works closely with others NARS e.g MOFA

• Cocoa marketing company = sole exporter of cocoa & share holder of PBC largest LBC

• Fix producer prices and insist LBCs should respect the prices

• Price 2015: 75% FOB,= 1.8USd/kg

Conseil du Café-Cacao • The Conseil du Café-Cacao: regulate,

stabilise and develop the coffee and cocoa sector in Côte d’Ivoire.

• Works closely with other NARS e.g ANADER

• Many exporters which also include cooperatives

• Fix minimum guarantee prices to producers

• Minimum guarantee price 2015 850FCFA/kg, 1USD = 500

Ghana

- Ghana Cocoa, coffee and Shea nut

farmers’ association (GCCSFA) to which

many cocoa farm-owners are

automatically registered

- Confusing reports about number of

cooperatives

- Most well-known is Kuapa koko with

approximately 87900 members

- Since 2007 upsurge of new cooperatives

- Between 2009-2014, 209 primary

cooperative have been created under

cadbury program

Cote d’Ivoire

- Cooperative movement in CDI actually

started around 1997

- There are about 3000 cocoa cooperatives ,

only 500 ( 15%) are effective

- new and all existing cooperatives need to

abide to the OHADA UA on cooperatives –

government circular

- OHADA UA makes an attempt to

disconnect the bond between

cooperatives and the state and gives the

cooperative more autonomy to operate as

private enterprises.

Institutional environment: Farmer organizations

Institutional environment: NGOs

• Focus on entrepreneurship of farmers and farmer organizations through capacity building, business skills development and decision making: Care , world vision, SOCODEVI etc

Institutional Environment Certification Bodies

4 certification schemes in Ghana, 3 in CDI – Fairtarde, UTZ-certified, Rainforest & organic

Some cooperatives are doubled or triple certified = to diversify sources of premium especially in CDI

Origin of the standards

Growing consumer awareness and concern about production processes and trade patterns

Institutional environment private sector: Buyers, processors/manufacturers, multinational companies

Ghana and the LBCs

Cocoa sector partially Liberalized

• Purchases from farmers is privatized to 27 LBCs

• Cocobod shareholder of PBC largest LBC

• Majority of LBCs are Ghanian companies , Armajaro and OLAM have branches in europe

• Kuapa Kokoo Ltd = cooperative

CDI and authorized buyers

• For 2014/2015 cocoa season, a total of 425 cocoa and coffee buyers were approved by the CCC.

• For the 2013-2014 production season, a total of 55 companies and 32 cooperatives were authorised to export cocoa

Conclusions (Ghana)

• Role of the State: stronger in Ghana with support through research, extension and marketing services, but little incentives for farmers to become organized and more self-governed

• Possible side-effect of strong presence of the State: crowding out of NGOs to other sectors

• Situation recently changing due to private sector engagement (Mondelez) , LBCs e.g Armajaro and involvement of standards organizations (FLO, Utz, Rainforest Alliance, IFOAM)

• Farmer empowerment limited due to ‘overpampering’ State, but recent diversification of the institutional environment will allow for stronger role of organized farmers (to be confirmed through impact assessment after 2-3 years)

Conclusions (Cote d’Ivoire)

• Role of the State: support also through research and extension but minimum prices rather than fixed prices

• Also direct engagement between private sector (Mondelez, Mars) and farmer organizations

• Similar role of standards organizations (FLO, Utz, Rainforest Alliance, IFOAM) as in Ghana

• Stronger role of NGOs working in direct support of farmer organizations

• Stronger role of farmer organizations, including rights of marketing and exportation

• Political-legal and overall institutional framework conducive to farmers’ organization, but farmers are yet to take full advantage for their empowerment (to be reassessed through impact assessment after 2-3 years)

Varying motives / potential conflicts of interest

– Government and associated marketing boards focused on State control and revenues, in addition to farmer empowerment

– Private sector interested in continuous supply of given quantity and quality of cocoa; farmer empowerment a potential means rather than a goal

– Certification bodies alone can hardly make the difference; claims can be made for contribution, rather than attribution in terms of impact at farmers’

Outlook

• The trend in the chocolate industry towards sustainable sourcing is likely to be conducive to social and environmental responsibility, but benefits at the level of cacao producers and their organizations are yet to be seen (need for future impact assessment)

• For credibility in terms of sustainable sourcing and larger impact at smallholder level, stronger collaboration across sectors (public, private, civil society) will be crucial

Thanks for listening &

Thanks to Fairtrade international and FairTrade Africa for funding this activity