”I worked for four months in my cocoa plantation, earning $300. With that, I’ll have to live for four months, until my cocoa trees have produced another two batches of beans.”
This is Bamba Ibrahim, a 35-year-old cocoa farmer in Agboville in the Ivory Coast. He grew up in a family of cocoa farmers, helping his family with the farm while going to school. But when he was 15, he started farming full-time. In the picture below, he is drying cocoa beans that will net him $150. A few years ago, he would have earned more, but the price of cocoa has dropped. “Of course, I wish I had more land so I could plant more cocoa and make more income,” he says.
The Failure of Current Models of Cocoa Production
The chocolate business is one of the largest in the world. In 2015, the global market for cocoa amounted to approximately $100 billion (US). West Africa accounts for 70% of global cocoa production, supplied by smallholder farmers like Ibrahim. Côte d’Ivoire and Ghana are the largest producers. In Côte d’Ivoire, cocoa production and trade represent 40% of export revenues and employs 8 million people, almost one third of the country’s population.
The main issue with cocoa production in West Africa is the quality and quantity of cocoa yields has been systematically failing over the years. Extensive cultivation practices have meant ever-increasing expansion of cocoa areas, deterioration of soil quality and decreasing crop yields. This has led to large-scale deforestation and deterioration of soil quality in Côte d’Ivoire. Over 80% of the country’s forests have disappeared since 1960. Côte d’Ivoire used to be a world biodiversity hotspot of great biological richness and species diversity. But today, deforestation has put that at risk as animals are rapidly losing their last habitat- including elephants, pygmy hippos, flying squirrels, pangolins, leopards and crocodiles.
The Need for Finance to Produce Greener Chocolate
From the perspective of smallholder farmers, West African governments and the cocoa industry, it has become obvious that increases in production will have to come from the intensification of production. There are many options that could ensure sustainability and climate resilience while increasing yields, namely climate-smart agriculture, soil conservation practices, promotion of agroforestry at scale to ensure shade-grown cocoa production and soil rehabilitation. How to streamline these solutions is intimately linked to knowledge dissemination and the availability of finance.
The Financial Challenges of Smallholder Farmers
The distribution of cocoa’s value is strongly skewed towards traders and manufacturers instead of farmers. The numbers are shocking:
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10% of the cost of a chocolate bar goes to marketing
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3% to retail and supermarket margins
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3.5% to 6.4% to growers in West Africa
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most cocoa farmers in Côte d’Ivoire earn roughly $0.54/day
Things have gotten even worse for smallholder farmers in the last year. From July, 2016 to March, 2017, global cocoa prices fell by more than a third. Most smallholder cocoa farmers in Côte d’Ivoire are trapped in poverty, haunted by food insecurity and have no access to finance or knowledge to ensure productivity gains.
“UN Environment is helping build sustainable cocoa production by engaging the private sector and technical partners and encouraging farmers to use high quality seedlings and the right agroforestry techniques to take care of their plantations. But the seedlings and plantation upkeep cost money and the small famers do not have the means, so we need the help of the private sector and the chocolate industry to help them access funds. UN Environment has helped us bring the different partners together to set up mechanisms that will enable the small farmer to access finance” says colonel Kouamé Ahoulou Ernest, coordinator of the national REDD+ secretariat.
Sustainable Financing Solutions for Zero Deforestation Cocoa
“Right now, we have introduced agroforestry in some pilot projects, but if we want to scale up, we need to help farmers working outside cooperatives with access to finance in order for them to be able to convert to agroforestry and buy seeds and to bridge the gap of loss of revenue while waiting for the new plants to bear cocoa fruits. That’s what we’re working on,” says Jean Paul Aka, national sustainable land use finance specialist and REDD+ expert. “We have started organizing platforms where we bring together the cooperatives, cocoa producers, cocoa supply chain, traders, companies, the forestry sector, the fruit sector and the national and international banks. Because one of the big, remaining challenges is that in order for smallholders to access finance, they need to possess a land title to qualify for a bank loan. But to get land title costs about $1,400 per hectare, a sum not many farmers have. So we hope that by bringing the financial actors and the chocolate industry together, they can develop a mechanism to help the farmers get access to finance. I am optimistic because the government has promised to improve forest cover to 20% by 2040.”
As for Ibrahim, he has never bought or tasted chocolate. “For the money I would have to spend on a bar of chocolate, I can buy a bag of rice to feed a family of seven people,” he says.
