A new project by the African Development Bank (AfDB) and the International Agroforestry Agency [ICRAF] I seeking to increase cocoa yields in the commodity’s producing countries.
Starting with the West African nation of Côte d’Ivoire, the initiative is expected to bring relief to two Ivorian smallholder cocoa farmers’ communities in Soubre and Vavoua currently grappling with declining yields caused by climate change and worsened by the Covid-19 pandemic.
Without help, some 800,000 Ivorian smallholder farmers, who produce the largest share of the world’s cocoa supply, could suffer heavy production losses due to production and supply chain disruption.
“Our experience has proven that agroforestry practices, knowledge, and skills transfer enhance the sustainability of cocoa plantations and improve the resilience of smallholder farmers’ communities, particularly of women and youth,” said Christophe Kouame, ICRAF’s Director for Central and West Africa.
Côte d’Ivoire is the world’s largest cocoa producer, followed by Ghana.
Together, the two West African neighbours account for more than two-thirds of the global supply. Cocoa plantations, which are the backbone of the world’s chocolate supply, are highly vulnerable to climate hazards, such as heatwaves, droughts, seasonal shifts, and erratic rainfall.
Under the Bank’s new initiative, the two smallholder farmer communities will receive climate-resilient and sustainable agroforestry assistance in 2021. The scheme will be implemented by the ICRAF and its partners – Mars Confectionaries, and the Rainforest Alliance.
“Agroforestry and climate-smart landscapes can generate nature-based solutions that reduce climate risks, as well as losses and damages caused by climate change,” Kouame said.
The Adaptation Benefits Mechanism (ABM) – a first-of-a-kind results-based non-market mechanism for financing adaptation, piloted by the African Development Bank in the period 2019-2023, will be used to mobilize new finance to replicate the successful practices in other Ivorian cocoa farmer communities and in at least three other cocoa-growing countries in the region.
“The current levels of climate finance for Africa are only a fraction of what is needed to ensure a smooth transition to a sustainable, low carbon and resilient continent,” said Anthony Nyong, Director for Climate Change and Green Growth at the African Development Bank. “The African Development Bank aims to mobilize at least $50 million by 2023 to pilot the ABM and operationalize it for global use.”
Under the ABM, adaptation project developers can sign off-take agreements with a variety of public, private and non-profit actors for payments upon delivery of certified adaptation benefits and use those agreements as collateral for achieving equity and raising finance. This additional revenue stream will make adaptation projects that will not be implemented otherwise feasible.
Unlike mitigation projects, the vast majority of adaptation initiatives struggle to raise finance because they deliver public good and rarely generate cash flows. Without an incentive to address this issue, such as through the ABM, many vulnerable communities will become even more exposed to the devastating impacts of climate change.
“The ABM promises to be a game-changer in better engaging the private sector, non-profit organizations and local governments to address the huge adaptation deficit,” Nyong said.
Up to 50 million people around the world, including around five million smallholder farmers, depend on cocoa which is essential to their livelihoods.
Africa is the world’s major cocoa producer with West African nations—Côte d’Ivoire, Ghana, Nigeria, Cameroon and Togo—producing an estimated 70 per cent of the world’s cocoa on 1.5 million farms. The majority of the crop comes from small farms of between three to five hectares.
Producing cocoa is backbreaking for the cocoa farmers yet they do not earn enough from the product that is a global on-demand ingredient. Most farmers are unable to cover their basic needs despite the fact that the worldwide chocolate market is valued at US$103 billion.
From the multi-billion value of cocoa globally, farmers earn only about 6 per cent of the chocolate industry’s total revenues on average. The sad reality is that many cocoa-producing communities in West Africa lack access to education, clean drinking water and other basic social amenities.
In July 2019, West Africa’s two largest cocoa producers decided that every tonne of cocoa beans would be sold at a fixed premium price of US$400. The price was for every sale by either country for the 2020/21 season.
The announcement effectively made Ghana and Côte d’Ivoire, which account for almost two-thirds of the world’s cocoa, have massive control similar to the association of oil-producing countries. When implemented, the move by the two countries meant that the two countries could dictate cocoa prices worldwide.
Africa’s cocoa-producing countries get only a negligible share of the global chocolate industry revenue. The International Cocoa Organization (ICCO) notes that in 2017, Côte d’Ivoire produced 2.1 million tonnes of cocoa accounting for 44 per cent of the global output but the country made just US$3.3billion (€2.9bn) from the trade. This was in comparison to the US$22 billion US chocolate majors netted from the product.
This is the reason why a cocoa revolution in West Africa is welcome since for years the farmers who have been raking billions for cocoa moguls have in return been receiving trifling amounts for their hard labour.
Valued at more than US$80 billion a year, the chocolate industry has seen several cocoa farmers in parts of West Africa become poorer now than they were in the 1970s and the 1980s.
The fear of chocolate withdrawal is becoming a reality every passing day and with this, the most affected are the brokers who have ridden on the backs of cocoa farmers for decades.
Higher prices for chocolate are better than if there was no chocolate which could become a reality if the move does not bear fruit.
During the cocoa crisis of the 1970s in Ghana, cereal output increased as diversification took root. The output of cereal grew from 388,000 tonnes in 1964/1965 to over one million tonnes in 1983. Cereal production only decreased when cocoa production was “rejuvenated”.
Since then, cocoa prices have been on a downward trend and the farmers face a threat from stakeholders — including multinationals — that want cocoa production to continue.
In a move to keep farmers in the cycle, the multinationals dependent on cocoa as a raw material have openly opposed diversification saying it is a risk to their business. These multinationals keep spending on cocoa farming inputs holding farmers in their grip.
Ivorian cocoa industry increased by almost 400,000 between 2008 and 2013.