About 30% of Ghana’s gross domestic product derives from cocoa. As production levels plateau, companies are being forced to think hard about the industry’s sustainability

Cocoa runs in Osa’s blood. His ancestors were among Ghana’s first cocoa farmers. More than a century later, the fact he is still producing the raw commodity for chocolate provides him with a great source of pride.

How long Osa’s cocoa-growing lineage will continue is doubtful, however. Youngsters from his village of Adjeikrom, about 100km north of Accra, are reluctant to take on the job. Employment in the big cities inevitably holds more attraction.

“Farmers spend more than they earn in their cocoa-growing activities. That doesn’t encourage young people to stay,” the middle-aged farmer explains.

Youth migration carries with it a related downside: an ageing workforce. The average Ghanaian cocoa farmer is now about 50 years old.

Like its workforce, Ghana’s cocoa plantations are getting older too. Coupled with poor irrigation, pests and crop disease, production levels are inevitably dropping. In 2008, for instance, Ghanaian farmers produced only two-fifths of the country’s potential cocoa yield.

The risk has not yet reached “critical” levels, according to David Croft, head of sustainable agriculture for Kraft UK. But as productivity slows and demand for cocoa-based products increase, “that’s a gap straight away”.

“You can’t just stand at one end of a big, long complex supply chain and just expect it to continue ad infinitum,” he adds.

Understandably, therefore, the concept of sustainability has become a priority issue in recent years for all those with a stake in Ghana’s cocoa industry. “[Sustainability] is very important because we rely on these communities for the supply of our raw materials,” says Nick Bunker, president of Kraft UK.

The term is not confined to issues of quantity and quality. Ethical issues surrounding the health and safety of workers also dog the sector. Child labour and forced labour are also prevalent.

Industry response

To their credit (and their long-term interest), major cocoa buyers have not turned a blind eye to the problem. Both chocolate manufacturers and commodity brokers have launched a flurry of initiatives over recent years.

Setting the direction for much of the early work was the Harkin-Engel protocol, also known as the cocoa protocol. Dating back to 2001, the voluntary initiative set the goal of eradicating child labour in Ghana and neighbouring Ivory Coast.

Progress has been commendable. First and foremost, the protocol brought the issue into focus at both an international and national level. The Ghanaian government, for one, has made combating child labour a priority.

Key industry groups have also got on board. Notable are the World Cocoa Foundation and the Chocolate Council of the National Confectioners Association. Together, they have developed a statistical survey to properly understand the extent of the problem. The first official report was published in 2008.

Among those taking the lead on the ground is the International Cocoa Initiative (ICI), a non-profit foundation with participating members across the whole sector. Fully operational in the field since 2004, ICI works with farm groups to sensitise cocoa growers about abusive labour practices and develop practical alternatives.

The approach is making inroads. In the 157 Ghanaian communities where ICI is active, children mostly no longer spray cocoa farms, carry heavy loads, remove parasitic plants or weed large areas of land.

Much remains to be done, admits Muriel Guigue, programme officer at ICI. Almost half of children participated in at least one hazardous activity during the 2008 cocoa harvest, official government figures show.

“Child labour cannot be considered as an isolated issue … You need to consider it as a consequence of many other factors,” Guigue explains.

Companies are taking the message on board. Lack of access to education, for example, is a critical causal factor behind child labour. Over one-third of primary-aged children in Ghana do not attend school.

Some solutions are small scale. Switzerland-based chocolate manufacturer Barry Callebaut, for instance, is working with the ministry of education to support five rural schools in Ghana. (It supports a more extensive programme in Ivory Coast.) In addition, the company backs a scholarship programme to fund school costs as well as entrepreneurial activities by pupils’ mothers.

Other corporate programmes are broader in scope. Cocoa trader (and international agriculture giant) Cargill, for instance, has also initiated a rural education project in Ghana in 70 different communities. Progress is gradual. School attendance has increased by 4% year on year as a direct result.

Higher incomes

The battle against child labour is important, but it is only part of the sustainability challenge for Ghanaian cocoa. “The elimination of child labour and the future of sustainable cocoa growing must be built upon thriving cocoa‐growing communities,” Guigue says.

For the industry to thrive, cocoa growing must first and foremost be economically viable for its dependent communities.

Farmers are the first to agree. Osa says: “Cocoa farmers have to understand that cocoa farming is a business, and not just something we inherited.”

Cocoa-buyers get this too. Improvements to farm productivity and product quality are one obvious way to increase farmers’ incomes. Ghana’s cocoa industry is based on low-input, low-output technologies. Programmes that tackle these shortcomings through training in best agricultural practices and technology transfer are increasingly in evidence.

One of the most effective to date is the World Cocoa Foundation’s sustainable tree crops programme. Running now for a decade under the management of the International Institute of Tropical Agriculture, this public-private partnership has directed its efforts in a variety of areas:

  • introducing innovations to enhance productivity;
  • increasing marketing efficiency;
  • diversifying farmer income and identifying income alternatives for equitable growth;
  • strengthening the institutional and policy environment.

Scaling up the approach is now the priority. Collective initiatives such as the cocoa livelihoods programme are working to that end. Launched last year, the five-year, $40m programme commits to finance on-the-ground activities aimed at improving farmer competitiveness and productivity.

The list of corporate partners of the multi-sectoral initiative, which operates in four other west African countries as well as Ghana, makes impressive reading. It includes chocolate manufacturers Hershey, Kraft and Mars; cocoa processors Archer Daniels Midland, Barry Callebaut, Blommer Chocolate Company and Cargill; and supply chain managers such as Armajaro, Ecom-Agrocacao and Olam International.

In many cases, the initiative adds to sustainability programmes that companies already have in place. For the past five years, for instance, ADM’s Serap (socially and environmentally responsible agricultural practices) programme has been helping farmers improve areas such as financial transparency, product-quality management, safe farming practices and forest protection.

Cargill, on the other hand, recently announced a $5m programme to extend its farmer field schools programme in Ghana and neighbouring Ivory Coast. Run in conjunction with development charity Care, the programme is currently training more than 10,000 farmers in 70 communities in Ghana. That is set to expand to 130 communities over the coming years.

“Thousands of farmers and their families will receive the tools and training necessary to improve agricultural practices to ensure that cocoa is produced in the most sustainable way,” says Steve Hollingworth, chief operating officer at Care.

Boosting productivity is one side of the economic viability coin. Paying more for what is already being produced is another.

Fairtrade represents the most persuasive example of premium pricing. Under the approach, farmers certified under the Fairtrade Foundation’s ethical criteria are granted a guaranteed price plus an additional bonus.

Previous price levels saw Fairtrade farmers receiving a minimum of $1,600/tonne, plus a $150/tonne premium. These are set to increase to $2,000/tonne and $200/tonne respectively in January 2011. This compares with an historic wholesale market price in Ghana of about $1,700/tonne.

In October, Ghana’s Cocoa Board increased the government-controlled price to $2,260/tonne. The rules of Fairtrade oblige buyers to meet the market price when higher than the Fairtrade minimum.

Sales of Fairtrade cocoa in Ghana got a shot in the arm last year when Cadbury announced the conversion of its Dairy Milk brand to 100% certified. In the first 18 months, Ghanaian farmers received more than $3.7m in additional premiums as a result.

“The more cocoa they [Cadbury] source, the more premium they bring,” spells out Emmanuel Arthur, executive director of Kuapa Kokoo Farmers Union, the world’s largest Fairtrade cooperative with 62,000 members.

“With that, we are able to start new programmes,” he adds, referring to farmer training, child education and development projects such as water systems, schools and health centres.

The impact in terms of revenue that Fairtrade offers is undeniable. Kuapa Kokoo’s Fairtrade sales have quadrupled to 20,000 tonnes a year. But the overall impact is limited. Even for certified cooperatives, sales of Fairtrade in general do not exceed 5% of total output – Kuapa Kokoo averaged only 3.5% before the Dairy Milk switch.

Total cocoa purchases by Ghana’s Cocoa Board stood at 700,000 tonnes in 2009-10. Given that Kuapa Kokoo is currently Ghana’s only Fairtrade certified cocoa grower, the bulk (about 97%) of the country’s cocoa sales are non-certified.

Harriet Lamb, executive director of the Fairtrade Foundation, rejects the charge that Fairtrade lacks the clout to bring about change. “Fairtrade might work with small-scale farmers, but that doesn’t mean it is not scalable,” she says.

Even if consumer demand for ethical cocoa were to increase rapidly, the ability of Ghana’s cocoa growers to shift to Fairtrade would not be immediate. “It might mean a five- or 10-year plan by a company – working gradually with the farmers and workers in their supply chains to help them meet Fairtrade standards,” Lamb concedes.

Ghana’s Fairtrade market faces other issues too. For a start, Fairtrade is not the only game in town. Rainforest Alliance and other ethical marques mean there could be a threat of farmers facing multiple audits and certification requirements.

In addition, as more companies begin to source Fairtrade, there is a danger that the scheme’s original pro-poor principles could come under threat.

“As the bigger players come on board, they are less willing to listen to needs of the cooperative and are much more focused on such a quality, by such a date at such a volume,” warns Samantha Lacey, researcher at the UK-based Co-operative College.

Tough standards

Evidently, Fairtrade producers need to meet exacting international standards if they are to supply the global market. But buying companies need to concede that many cooperatives find themselves in a “developmental process”, Lacey says.

In Ghana, the evidence to date is positive. Kraft, by far the biggest buyer of Fairtrade cocoa, provides extensive training for cooperative members to ensure their capacity to meet international demands.

Under the rubric of the Cadbury Cocoa Partnership, the company is also working with non-certified cocoa communities to building their readiness to supply the Fairtrade market in the future.

The Cadbury Cocoa Partnership gives an indication of the direction in which the sustainability agenda in Ghana’s cocoa communities is heading, namely holistic, participative community development.

It is now well understood that the problems besetting Ghana’s cocoa industry – including youth migration, child labour, poor productivity and low incomes – are all interlinked. To tackle them requires joined-up solutions involving all interested parties.

Experience of sustainability programmes over the past decade in Ghana shows that any such solution must start with the communities themselves. That requires the construction of community infrastructure, both physical and organisational.

“Farmers understand the problems and hurdles, but because of the lack of community infrastructure … getting over those hurdles is really difficult,” says Kraft’s David Croft.

US confectionery manufacturer Mars has taken that message on board. Between 2007 and 2009, the company worked with multiple partners to implement an integrated community development programme in 26 Ghanaian communities.

The $4.5m Mars Partnership for African Cocoa Communities of Tomorrow programme (known as Impact) tackles not just agricultural problems, but also environmental, educational and health needs too. All the activities are dictated by the communities’ own action plans.

The results of such integrated approaches will not be seen overnight. The sustainability of Ghana’s cocoa-growing communities remains far from certain. But if companies and their partners stick with it, then the chances of Osa’s offspring joining him as cocoa farmers will become a whole lot better.

Cadbury Cocoa Partnership

No cocoa beans, no chocolate bars. That has been the stark threat facing the confectionary giant Kraft.

It is also the compelling logic behind a pioneering initiative to turn 100 Ghanaian villages into “thriving rural cocoa communities”.

Kraft inherited the £45m, 10-year programme from UK confectionery company Cadbury, which it acquired in 2010. The Chicago-based firm is investing £3m a year in the Ghana programme. Pilots are also underway in India, southeast Asia and the Caribbean.

Originally launched in 2008, the Cadbury Cocoa Partnership rests on helping communities to help themselves. The cornerstone is villages working together to devise their own community action plans.

The emphasis is on self-governance, collaborative action and long-term planning, says Daniel Sante, regional coordinator for the charity and cocoa partnership member World Vision.

“We want them to come up with their solutions … [Community action] plans clarify the most important needs and show them how to address these themselves,” he says.

The programme also boasts a trade element. Following the switch of Cadbury Dairy Milk bar to Fairtrade certified in March 2009, each of the 100 participating villages is receiving training and capacity-building around Fairtrade standards.

The intention is for each community to become Fairtrade-certified and benefit from consequent premiums. Farmers are already accruing benefits, however, even before certification. Working collectively as a community is serving to increase social cohesion as well as saving on farming costs, Sante says.

The push towards certification dovetails with existing work being done under the partnership to improve social and environmental conditions in the selected cocoa-growing areas. Particular attention has been given to eradicating child labour, a priority issue for Ghana’s government.

Increased production and revenue is key to community development in Ghana’s cocoa growing regions. But it is not the whole story.

The Cadbury Cocoa Partnership aspires to a shift in mindset as well as in agricultural practices. The key stepping stone there, Sante maintains, is community cooperation. He says: “Coming together as a community [they will] depend on one another for their development and not on the government.”

Alongside World Vision, implementation partners in Ghana include UK charities Care International and VSO. Expert input is also provided from the UN Development Programme, the government of Ghana and local trade union representatives.

On the board of the partnership sit representatives from the International Cocoa Initiative, the UNDP, Anti-Slavery International and Cadbury.

International Cocoa Initiative: results in Ghana

  • 94% reduction in the number of children using machetes.
  • 97% reduction in the number of children involved in spraying activities.
  • 88% reduction in the number of children carrying heavy loads.
  • 7% increase in school enrolment in 31 target villages.
  • 157 communities with active ICI programmes in place.
  • 5,498 community meetings held to sensitise the community and plan for change.
  • 226,000 community members impacted by ICI programmes, 38.6% of whom are children.
  • 353 local initiatives completed or under way to address education provision, sanitation, water and electrification.
  • 205 initiatives by local authorities to support community action plans.

Results of an independent survey, December 2009

Ethical Corporation’s Toby Webb spent several days with Kraft in Ghana during the summer. In the course of his research he interviewed several Kraft executives and local suppliers. Click on podcasts for more.

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