From Côte d’Ivoire to chocolate bar – the difficult road for sustainable cocoa
Cocoa is the biggest cash crop in Ivory Coast, yet smallholder farmers struggle to get financing as they try to earn a living satisfying the world’s sweet tooth.
Riven by cracks and pitted by potholes, the roads of the Ivory Coast provide an unlikely backbone for the heartland of one of the world’s biggest cash crops. Cocoa is a commodity that has inspired hundreds of fictional characters, a thousand marketing campaigns and ten million contracts traded on futures exchanges this year. Yet cocoa producers in Ivory Coast, mostly smallholders, face a daunting variety of challenges in a bid to satisfy the West’s sweet tooth.
Between 2002 and 2011, Ivory Coast suffered several outbreaks of conflict, mostly between southern forces loyal to President Laurent Gbagbo and rebel factions from the north. This culminated in a bitterly contested election in 2010, whose disputed outcome led to the Second Ivorian Civil War. Around 3,000 people were killed, and hundreds of thousands displaced, before a combination of northern militias and French forces were able to oust Gbagbo and bestow the presidency upon Alassane Ouattara, seen as the rightful winner of the elections.
Even after the civil war, the Ivory Coast retains an economic potential that is the envy of most of its neighbours – as well as cocoa, Ivory Coast is a major producer of rubber, cashew nuts, and palm oil. Yet the legacy of the “lost decade” is such that security remains fragile, infrastructure is crumbling or badly damaged and poverty levels remain stubbornly high. More specifically, cocoa yields are stagnant, with average tree age at 25 years; quality was affected by neglect or mismanagement during the fighting; and the impact of widespread reforms to the system of purchasing remains unclear at best. As a result the role of cooperatives is critical for providing structures that will assist smallholders.
An organisation unifying eight cooperatives in south-west Ivory Coast, Ecookim is one of the largest certified cocoa producers in the country, responsible for 8,000 tonnes of cocoa, and has been exporting Fairtrade cocoa since 2004. As well as free training, phytosanitary products and overalls, by unifying output from around 3,000 smallholder farmers, Ecookim is able to provide a far more leverage for its members, even after the recent introduction of a local minimum price. Furthermore, as a FLO-certified cooperative, Ecookim is able to assuage fears relating to child labour, worker safety and quality in the face of increasing consumer demand for sustainably produced chocolate.
Yet according to CEO Mamadou Bamba, even an organisation as large as Ecookim can struggle to obtain funding. “Access to financing is one of the principal challenges faced by cocoa cooperatives in Ivory Coast; on the rare occasions it can be obtained from local banks, it is often extremely expensive.” As a result, cooperatives often struggle to cover the gap in financing that occurs between funding members in advance and receiving payment upon delivery from buyers, not to mention the long term financing required to improve quality and renovate.
Ecookim therefore provides a perfect example of the need for a certain type of investor, willing to finance small scale agricultural producers who rarely attract the interest of commercial banks. One of Ecookim’s key partners, responsAbility Investments, has been working in the sustainable agri-business sector since 2003. Now the responsAbility Fair Trade Fund works with 80 organisations (with more than 800,000 members), financing $65.6 million (£39.9 million) in 37 countries in the developing world. The majority of this financing was similar to that provided to Ecookim: short term financing to cover working capital requirements during the harvest season. “responsAbility’s funding also allows us to put in place the funds for projects such as training, technical assistance for smallholders and the creation of revenue generating activities for women in rural areas, a group that is often particularly excluded from the workforce.”
Yet responsAbility is also increasingly providing long term asset financing to organisations looking to increase quality and volumes, as well as providing financing elsewhere in the value chain, including processors and traders that specialise in providing market access to certified cooperatives. This includes one of Ecookim’s key buyers, Cocoasource, a trader that purchases 18,000 MT of cocoa in total, mostly from West Africa. ''responsAbility fills the gap between extremely demanding European banks and very expensive banks at origin,” states Hubert Hoondert, Managing Partner of Cocoasource. “This allows small to medium sized local exporters to lift their business to the next level.''
The need for investors to provide assistance cuts throughout the chain, but addresses the same problems: financing to improve institutions, assist smallholders looking to access international markets and strengthen organisations looking to provide a fair deal for their members in the context of growing consumer activism. Such investment cannot solve all of the problems facing Ivory Coast as it emerges from ten years of conflict; however it can significantly improve conditions in the production of a commodity that is a treat in the West, but a source of survival and recovery for smallholders.