Development of a Sustainable Cocoa Supply Chain

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Development of a Sustainable Cocoa Supply Chain

• John Lunde David Stuart
• Representing
• The Global Chocolate Group
• January 15, 2003
• AGOA Meeting--Mauritius

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Sustainable CocoaThe Beginnings

• Smithsonian Sustainable Cocoa Conference 1998-
  ConclusionCocoa -- An economic engine and
  conservation tool for the rural tropics

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Sustainable Cocoa Team

• Sustainable Tree Crops Program begins in 1998 -
  shortly after Smithsonian conference.
• Initial team African partners, USAID, USDA,
  NGOs, UNDP, International Institute of Tropical
  Agriculture (IITA) and Chocolate Industry.
• Modest beginnings, positive contributions from
  partners and much learning on industry side.

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Sustainable Cocoa Team

• Break through goals developed Sustainability
  through improving well being of small holders,
  their families, communities protecting the
  tropical environment.
• Working partnership expanded and today, includes
  DOL, ILO, GTZ.

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Strength through Partnership

• STCP organized into national networks of
  government, NGOs, researchers, and farmer
  organizations
• Networks Ghana, Cameroon, Guinea, Nigeria, and
  Guinea and they work together regionally!
• Managed through IITA
• Resources, knowledge shared and leveraged for
  HOLISTIC APPROACH

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The Economics of Cocoa

• 3 million T annual production
• Current market value of US 6 billion
• 3 per year annualized increase in demand over
  last 100 years
• 68 to 70 of world cocoa from W. Africa

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Cocoa Production Shifts

• 1900 - Top three
• South America 47
• Caribbean 30
• Africa 15
• 2000 - Top three
• Africa 66
• SE Asia 18
• South America 11

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World Cocoa Production, 1900/01-1999/00

• LMC COCOA demand chart

2000
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World cocoaproduction
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Approximate Volume of Cocoa
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Cocoa -- A Small Holder Crop

• 1.2 to 1.5 MM farms in W. Africa -- 3 to 7 ha
  average
• 10 MM people on cocoa farms
• Supplies up to 56 of the household cash in
  Ivory Coast
• Households growing cocoa are better off.

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Cocoa is Critical for Trade

• As much as 45 of countrys foreign trade can
  come from tree crops, including cocoa.
• Tree crops supply 19 of foreign exchange for
  Africa.
• Africa has a comparative advantage with cocoa

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Cocoa Economics in the U.S.

• US averaged around 750,000 T consumption over
  last 3 years.
• 58 of US cocoa comes from W. Africa.

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Cocoa Economics in the U.S.

• For every 1 of cocoa imported--- 1 to 2 of
  other ingredients used
• For yearly chocolate manufacture
• 1.5 million T of sugar
• 650 million pounds of milk
• 25 of all US peanuts
• Cocoa Farmers and US Farmers are truly
  INTERDEPENDENT

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Areas of Focus in STCP

• Promote farmer groups
• Improve market trade systems
• Research technology transfer
• Work with communities
• Cocoa farm diversification

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Farmer Groups -- Results

• Group marketing of products
• EXAMPLE. Group selling increases co-op price by
  10 to 25 -- 470,000 in Cameroon in 2000/01
• Co-op management
• Availability of inputs

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Market and Trade--Results

• Shift greater share of world price to farmer
• EXAMPLE Sale timing improves truckload profit
  by 5,000
• Establish tighter quality specs

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Research Tech Transfer

• Identify and increase high yield plant materials
• Example 50,000 plants distributed in Guinea
• Biological control of Black Pod

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Working with Communities

• Co-operative labor sensitization
• Example 15 co-ops sensitized to youth protection
• Improve access to education
• Traditional
• Vocational
• Labor Monitoring

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Farm Diversification

• Identify new shade systems for cocoa
• Example Cameroon multi-crop system shows both
  high profit high biodiversity
• Develop new shade species
• Systems for land rehabilitation

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The Challenges Ahead

• Streamline the supply chain
• Policy changes
• Investments in rural sector
• Improve social services
• Telecommunications/computers
• Farm/co-op credit
• Cocoa as a reforestation crop