HOW TO BEND THE CURVE IN THE WEST AFRICAN COCOA SECTOR
It was all over the news: catastrophic harvests in cocoa powerhouses Ghana and Côte d’Ivoire. Key players and stakeholders came together to share their perspectives, recognizing that strengthening cocoa farmers' resilience is essential, though the challenge lies in determining how to achieve it.
WHAT HAPPENED TO THE COCOA CROP?
An exceptionally wet year in these two countries, which produce about two-thirds of the world's cocoa, was followed by a persistent drought. Under these conditions, the ‘cocoa swollen shoot virus’ thrived, causing crops to fail for the third year in a row. These failed harvests led to price increases, which were driven to unprecedented heights this year due to financial speculation, sending cocoa prices on a roller coaster that has yet to (b)end. In June of this year, FMO, in collaboration with Wageningen University & Research, convened key players and stakeholders in the cocoa industry to address the current crisis, explore its root causes, and discuss potential solutions.
In the session, FMO’s Coen van Genderen outlined the challenges facing the sector and their far-reaching impact on the entire cocoa industry. He was followed by Yuca Waarts from Wageningen University & Research, who shared insights from 15 years of research, highlighting the underlying problems contributing to the current situation and emphasizing the need to build a more resilient cocoa sector. You can watch their presentations below.
Coen van Genderen, Senior Investment Manager at FMO
Cocoa production in Côte d'Ivoire and Ghana faces a structural supply problem that is expected to pressure global supply in the short to medium term. This issue stems from a vicious cycle of poor farm economics, exacerbated by diseases, climate change, and regulatory challenges. While the entire industry is affected, farmers and the local industry are bearing the brunt.
Yuca Waarts, Senior Researcher at Wageningen University & Research
Current high cocoa prices do not address the underlying structural challenges; more comprehensive solutions are needed. To enhance household resilience, we must redesign our strategies. Building a resilient and inclusive cocoa sector requires collaboration and collective learning among all stakeholders.
KEY ACTORS IN THE COCOA VALUE CHAIN
Tinka Koster, Senior Researcher at Wageningen University & Research, and Hans Bogaard, Director Agribusiness, Food & Water a.i. at FMO, led the panel discussion, emphasizing that no company can solve the issues plaguing the West African cocoa industry on its own. The focus was on the need for collective action and what form that should take. The key question was how we can pool resources across the supply chain and direct them effectively to support cocoa farmers. Although the farmers, as key stakeholders, were not present, the panelists were fully aware of this and acknowledged that their views were not directly included but could only be discussed indirectly. Watch the lively panel discussion in the clips below.
How can we build farmer resilience?
One of the reasons El Niño had such a severe impact, as Yuca mentioned in her presentation, is that farmers are still far from resilient. They are unable to cope with the challenges they face or to invest in their farms. This concern was echoed in the panel's opening statement, which suggested that the private sector should pay a living income reference price instead of running sustainability programs. Rianne van Doeveren, General Manager of Tony’s Open Chain and one of the panelists, agreed that companies must pay a living income reference price and ensure it reaches the farmers—but stressed that this alone is far from sufficient.
Transparency is key for collaboration
When asked if the living income price is part of any regulations, panelist Jeroen Verheul, Dutch Ambassador to Ghana, outlined the impact of regulations on three levels: international, European, and national. He emphasized that regulations should lead to greater transparency. If we aim to improve collaboration between producing and consuming countries, transparency—especially around financial operations—becomes crucial.
Should we still invest in local processing or not?
Ismaël EL Khalil, President and CEO of Ivory Cocoa Products, acknowledged that both local processing and processing in Europe have pros and cons. Local processing benefits from proximity to supply but is more expensive. Hubert Hoondert, Founder and Chairman of Cocoasource stressed that all the issues discussed would disappear if African countries could develop economically, urging that investment in Africa would benefit us all in the end.
A FUTURE WE CAN FORESEE IS A FUTURE THAT WE CAN CREATE TOGETHER
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