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Towards a Sustainable Cocoa Economy:Rural transformation of West African cocoa communities – how?
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Transcript of Towards a Sustainable Cocoa Economy:Rural transformation of West African cocoa communities – how?
Towards a Sustainable Cocoa Economy:
Rural transformation of West African cocoa communities –
how?S. Weise
Sustainable Tree Crops ProgramInternational Institute of Tropical Agriculture
September 15, 2008Ibadan
0
0.5
1
1.5
2
2.5
coco
acit
rus
oil palm
coco
nuts
mangoco
ffee
papaya tea
cash
ewru
bber
shea
nut
avocado
kolanut
Commodity
Billions USD $
Relative size of tree crop sectors in SSA
(FAOSTAT 2004)
Economics of Cocoa
• Annual global production = 3.5 million tons
• Annual increase in demand = avg. 3% per year
• W. Africa supplies ca. 70% of world production worth US$ 3.5 billion
• Ca. 2 million farms in W. Africa on ca. 5 million ha of land
• Smallholder crop based on household labour and with a size of 3 to 7 ha
• 50-70% of household income from cocoa
The Backdrop
Productivity Stagnation
Indonesia
4.3% Yield
growth
0
200
400
600
800
1000
1200
1400
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
YEAR
yie
ld (
kg
/ha)
West Africa
1.0% Yield
growth
0
100
200
300
400
500
600
700
800
900
1000
Cameroon Ghana Nigeria Cote d'Ivoire All
country
yie
ld (
kg
/ha
)
1st quartile
2nd quartile
3rd quartile
4th quartile
Cocoa Yields by Production Quartiles
Larger producers
have higher yields
Source 2000/2001 STCP Baseline Survey
0
50
100
150
200
250
300
350
400
450
less
than
130
0
(-10
50,-1
000]
(-75
0,-7
00]
(-45
0,-4
00]
(-15
0,-1
00]
(150
,200
]
(450
,500
]
(750
,800
]
(105
0,11
00]
(135
0,14
00]
(165
0,17
00]
(195
0,20
00]
(225
0,23
00]
(255
0,26
00]
(285
0,29
00]
(315
0,32
00]
(345
0,35
00]
(375
0,38
00]
(405
0,41
00]
(435
0,44
00]
(465
0,47
00]
(495
0,50
00]
(525
0,53
00]
net returns to investment & mgt (2001 USD$)
fre
qu
en
cy
Mean = $233 per household
Median = $33 per household
Proportion with negative returns= 44%
Profitability of Cocoa Farming in West Africa
Source 2000/2001 STCP Baseline Survey
What is the greatest threat to the cocoa supply?
Low income of cocoa farmers
Summary facts:
• Productivity has stagnated (1% over 10yrs)
• 50% of farmers with yields less than 300 kg/ha
• Majority of farmers sell a few bags of cocoa 3 to 4 times a year
• Largest 25% of farmers produce 2/3 of total revenues
• Ca. 1/3 of farmers have a net negative return to their investments in cocoa
• Youth want to get out (all of over 125 interviewed)
The Development Context
So what is the fundamental research question?
What is required to efficiently and effectively increase the income of cocoa farmers and cocoa communities?
And how can this be done in an environmentally and socially responsible manner, and ensuring the competitiveness of the sector?
The R4D Context
Need to prioritize research accordingly
Need to ensure research is development driven
Need to introduce innovations at different levels
Sustainable Tree CropsDevelopment Alliance
Supported a 3-year Regional Action Plan in 5 West African countries (2003-2006): Ghana, Cameroon, Cote d‟Ivoire, Nigeria, (Guinea)
With the intention to expand the original
Alliance to government agencies, development
groups and industry to increase the number of
beneficiaries and enhance future development
Radiates from the core alliance formed in 1998
between Global Cocoa & Chocolate Industry /
Trade and USAID
INNOVATION PLATFORM that brings together public and private partners with a common interest:
Promoting production and marketing of quality tree crops
Improving market access and income for smallholder producers
Creating systems that are environmentally friendly, socially responsible and economically sustainable
Sustainable Tree Crops Program
Tree crops as an engine of rural development
Synergies of the Partnership
Public Sector
Country and regional understanding, deep knowledge of development and networks of
expertise, financing capacity
Private Sector
Market discipline, integrated technologies, specific knowledge of industry, skills and experience to
better design market focused activities
Farmer Organizations
Ensure that priority needs of the farmers are addressed, willing to contribute directly as
benefits become evident
Pilot Phase 2003-2006:
“making knowledge and technologies work”
Introduced Innovations
• Regional approach to cocoa production, marketing and research
• National networks and strategic alliances allowing for communication between regional and national partners and across stakeholders
• Farmer organizations linking production with the supply chain, and providing a conduit for the transfer of knowledge and technologies
• Linking social messages with technical ones (child labour and HIV/AIDS)
• Participatory approaches building the skills of farmers, e.g. Field Schools and Field Research
Farmer Field Schools „03-‟05
• Farmer training curriculum on cocoa integrated crop, pest & quality management, child labour sensitization
• Trainers from extension services and farmer organizations together
• >150 trainers in 4 countries, >13,000 farmers in FFS, >26,000 farmers associated
FFS 2003 Graduates
• Cameroon: 41% greater yields; 20% lower fungicide use
• Nigeria: 17% greater yields and 12% lower fungicide use when farmers transmit knowledge to sharecroppers; younger farmers also perform better
• Ghana: 15% greater yields
• Cote d‟Ivoire: 25% greater yields
Change in Revenue
US$ 317
US$ 440
US$ 36
US$ 92
(area, price, yield, labour, agrochem)
Decision-making Skills:
• 59% of graduates make observations before making management decisions
Social Capital:
• 77% transfer skills
Empowerment:
• 41% appreciate benefits of group learning/work
Change in Attitude:
• “Before I used to neglect my work, now I take it seriously”
FFS 2004 Graduates
Farmer Organizations
• Systematic approach to strengthening farmer organizations (SOCODEVI)
• 15 large farmer coops linked to over 31,000 farmers in 4 countries
• Improved market access, information, confidence, and transparency
• Farmers receiving 5-15% better prices and improving quality
Group Learning & Sales
Cameroon Cote d‟Ivoire
Yield increase (kg/ha) 72 40
Price individual ($/kg) 1.03 0.60
Price collective ($/kg) 1.18 0.63
Gross revenues control ($) 654 511
Gross revenues less costs w/
FFS & group sales ($) 1,015 631
Increase in cocoa income ($) 361 120
55% 23%
Social Issues: Child Labour
• Family household main labour source, including children
• Ca. 1% of HH employ adolescent migrants
• Child slavery and trafficking in cocoa are uncommon
• Children can be exposed to hazardous tasks on farms
• The more children work, the less likely they go to school
FFS 2003 Graduates
For every 1000 farmers sensitized on child labor in FFS will result in the voluntary removal of 210 children from hazardous work on cocoa farms (Ghana)
Identifying Opportunities
Market systems:
Market power exerted by exporters in RCI leading to 9-20% lower farmgate prices
A guaranteed minimum „Fair Trade‟ price applied across the sector would result in market imbalances and wasted resources.
Decoupled payments in the form of communal goods least distorting vs. price supports
Regulated weights and standards (ca. 10% loss)
Responsiveness to quality and pricing
Identifying Opportunities
Rural Credit Markets:
In Cameroon & Nigeria, access to credits resulted in >20% purchased inputs leading to >5% output
In Cameroon, the benefit to cost ratio is between 5-6 for fungicide application
In Cote d‟Ivoire, the benefit to cost ratio is between 5-6 for fertilizer application
Financing of cocoa sales by cooperatives
Identifying Opportunities
Production Research:
IPM of black pod disease using biocontrol agents
Use of pheromones to manage capsids
Rational pesticide use – farmer field research
Integrated soil fertility management
Genetic characterization and diversity of cocoa germplasm collections, breeding material, and plantings in farmers‟ fields
Identifying Opportunities
Diversification:
Cocoa agroforests: Biodiversity, environmental services, local and scientific knowledge, management
In Cameroon and Nigeria, on avg. non-timber forest products contributed 15-20% of gross revenue of a cocoa farm
Access to market a significant limiting factor
Lack of timber rights: timber being cut and sold at a fraction of the value
Limited technical knowledge of complex systems
Looking Forward
• Scale up the successful innovations
• Develop necessary tools and institutional linkages
• Align with national and regional development efforts
• Fill innovation gaps, e.g. intensification,diversificationfinancing systems, institutional arrangements
Phase II 2007-2011:
“contributing to rural income and structural transformation
in cocoa communities”
Agricultural transformation is the process by which individual farms shift from highly diversified, subsistence-oriented production towards more specialized production, oriented towards the market.
The process involves a greater reliance on input and output delivery (marketing) systems and increased integration of agriculture with other sectors of the domestic, regional and international economies.
Rural Transformation
Productivity Growth (intensification):
• Integration of production innovations
(improved planting material, IPM, soil fertility mgt, replanting-regeneration, quality management, labour saving, service providers, financing)
• Lowers costs of production
• Maintains/increases competitiveness and market share
Prices decline
Sector revenues usually decline (inelastic)
Early adopters innovate, increase income, & get bigger
Strategic Element 1
Market Efficiency:
• Integration of marketing innovations
(competitive markets, market information, collective marketing, organized farmers, quality management and responsiveness, value-addition, financing)
• Lowers costs of marketing
Increases farmer prices (if market is freely competitive)
Lowers consumer prices
Strategic Element 2
Non-Adopters:
• Non-competitive producers exit sector
• Meet the needs of these farmers through diversification
(alternative income generation options: cocoa agroforests, other crops, rural enterprises)
Pro-active policies to facilitate transition
Strategic Element 3
Relative share of Cocoa and Non-Cocoa Value in
the $13 billion Cocoa Belt Rural Agricultural
Economy of West Africa
staple crops,
$8.5
fruits, $1.8
vegetables,
$0.9
other
industrial
crops, $0.3
cocoa, $1.5
Cocoa accounts for
approximately 12%
of the farm gate
value in the cocoa
belt of West Africa
(versus 65% for
staple crops).
Cocoa accounts for
2/3rds of the cocoa
household income.
Policy Environment:• Policies & institutions to ensure competitiveness
and allow efficient producers to grow (public & private services, e.g. extension, credit, inputs; knowledge and skills development; incentive systems, e.g. land tenure)
• Policy & institutions to increase marketing efficiency (regulatory framework, e.g. standards; infra-structure)
• Policies & institutions to find alternative income options
Policies to facilitate transformational process
Strategic Element 4
R4D: Research is required along the full stretch of the research and development continuum
Innovation packages: Need to develop, validate and scale up innovation packages that integrate: technical-institutional-financial aspects (FIT-solutions)
Policy reform: Innovation packages need to be accompanied by institutional and policy reform
Local capacity: Strengthening of capacity along the full value chain critical for success
Innovation platform: Public or private sector alone can not make this happen Public-private partnerships
Modus Operandi
Agent of change: STCP/IITA are playing a criticial role by contributing to and fostering a process of change
to contribute to the agricultural transformation of the cocoa belt leading to rural income growth and a sustainable cocoa economy that is environmentally & socially responsible
Modus Operandi
THANK YOU
STCP team:Blaise, Chris, Denis, Isaac, Jim, Jonas, Mac, Mario, Mike, Richard, Sonii, Yapo
Core support by:World Cocoa Foundation and the global
cocoa industryUnited States Agency for International
DevelopmentGovernments/Agencies of Cameroon, Cote d’Ivoire, Ghana, Nigeria, Liberia