Another roadmap to sustainable cocoa production

There is no doubt that cocoa is currently blazing a trail. Now regarded as one of the market’s best performing commodities, it has defied the current global meltdown that is sending shivers down the spines of economic policy makers. The price of the commodity that is also known as the ‘Tree of Life’, in fact, hit a 23-year high last December.

Coming at a time when the price of crude oil is sliding in the international market, the average price of cocoa keeps appreciating, with London and New York March deliveries standing at $2,581.6 per tonnes as at early January. Expectations are high that the price may peak at $3,000.

This is surely a good development for West and Central African countries which accounts for 70 per cent of the world’s cocoa output. From Nigeria through Ghana, and down to Cote’d’Ivoire and Gabon, cocoa is currently enjoying a boom. In South West Nigeria, which is regarded as the cocoa belt of the country, accounting for 70 per cent of Nigeria’s annual production of 242,000 metric tonnes, cocoa merchants are reaping a bumper harvest, with the price going as high as $2,148 per tonnes.

In the Ashanti region of Ghana, commercial activities in the cocoa sector are currently at the peak. While output for last year stood at about 650,000metric tonnes in Ghana, with a projection of about 700,000 tonnes for the cocoa season, Nigeria put up a not-too encouraging 242,000 metric tonnes as at the end of last year.

In Nigeria, for instance, the free fall of the naira against the dollar is also giving cocoa a boost as the commodity is valued in dollar at the international market. The story is not different in Ghana and Cote d’Ivoire as increasing demand, buoyed by increasing value addition, is pushing up the price of the commodity.

Market watchers, in fact, believe that the price may go up further as the shortfall in Cote d’Ivoire’s output of 396,000 metric tonnes from the previous season’s 721,413 tonnes is bound to affect supply as the country alone accounts for between 35 and 40 per cent of the world output. Bush fires in Ghana, low rainfall in the West African region and the unsustainable methods of production had resulted in the low production recorded despite increasing demand.

Placing the development in proper perspective, Michael Owusu-Manu, Head of the Economics Department at the Cocoa Producers’ Alliance (COPAL), an intergovernmental organisation with headquarters in Lagos, Nigeria told THISDAY that what is pushing up the price is because “consumption is increasing and output is decreasing.”

Owusu-Manu stated that “more value addition is also taking place in Ghana, Nigeria and Cote d’Ivoire,” adding “the dollar is getting stronger, thus making the real rate of cocoa higher, when compared to what we had about six months ago.”

While all of these, ordinarily, should offer a ray of hope and be seen as a good development for a region in dire need of full control of its produce at the international market, analysts are worried as to how long the boom will last, with concerns being raised over declining productivity in the face of increasing demand.

Owusu-Manu confirmed this fear; saying despite the current boom, cocoa production in West and Central Africa is not done in a sustainable manner. According to the COPAL official, African farmers are still cultivating larger expanse of land for fewer yields as against what obtains in other regions where smaller farmlands are producing higher yields.

The total area under cultivation worldwide in 2007, he disclosed, was 7,415,081 hectares with production standing at 4,043,784 metric tonnes. Out of this, Owusu-Manu said, Africa which cultivated 4,738,232 hectares produced 2,614,749 metric tonnes whereas America with 1,486,004 hectares produced 108,398 metric tonnes.

The COPAL official further stated that Asia and Oceania with only 731,345 hectares produced 1,140,963 metric tonnes during the period.

Explaining further, he said Asia and Oceania showed a good potential of overtaking Africa as its yield per hectare stood at 772 metric tonnes whereas in Africa, the yield per hectare was 539 tonnes with America recording 327 tonne per hectare in 2007.

This scenario, Owusu-Manu said, poses a great challenge as Africa may eventually lose its prime position to other regions with sustainable methods of production, with Asia and Oceania strongly showing great potential.

It is important to note that the World Commission on Environment and Development (WCED) has defined sustainable development as “development that meets the needs of the present without compromising the needs of future generations to meet their own needs.”

Given this premise, Owusu-Manu, therefore, affirmed that cocoa production can only be said to be economically sustainable “when it is at all times sufficiently attractive for small holder farmers to properly maintain their farms, rejuvenate their farms as required and to buy the necessary production tools and inputs to achieve optimal yields.”

Maintaining that cocoa farming “should be seen as a business and not a destination,” he said with farm size in most West and Central African cocoa-producing countries averaging one-and-a-half to two hectares, the farm family cannot earn enough to get out of poverty. What is therefore needed, he affirmed, is “a system that allows cocoa to play a strategic role in improving the livelihood of cocoa farmers, their families, communities and the country concerned.”

Stakeholders, it must be noted, had also expressed concerns at the gloom starring the sector in the face, despite the apparent potential that could be derived. Only last October, about 250 delegates from the COPAL member countries converged on Kumasi in the cocoa-producing region of Ghana for the ‘African Academies Cocoa Symposium 2008’.

The aims, among others, were to come up with a vision for cocoa in West and Central Africa in the next 30 years; to develop the logic to get there; and to secure commitment to a partnership for the future of cocoa in the region.

Sponsored by MARS Incorporated in collaboration with COPAL, and co-sponsored by the Governments of Cameroon, Cote d’Ivoire, Ghana, Nigeria, Liberia and Togo, the Kumasi gathering, which had as its theme, ‘Theobroma cacao: the Tree of Change’, was a follow-up to the 2006 cocoa symposium that was held in Washington DC, United States of America.

Bringing to the fore the role of science in ensuring sustainable production, delegates at the symposium agreed that socio-economic development could also be achieved through remunerative incomes for farmers even as they stressed the need for ensuring that the environment precursors to meet future’s demand are put in place.

Realising the absence of, and the urgent need to create a “Cocoa Partnership for the Future,” the overarching objective of the Kumasi meeting was to determine the status, trends and future scenarios for cocoa production in the region and how they relate to the increasing global demand.

Delegates at the conference took a cursory look at the development in the African cocoa industry and listed the problems in the sector to include “multiple constraints both in policies as well as social, economic and environmental limitations.”

According to the delegates, these limitations had to do with lack of new sources of agricultural land and ambiguous land tenure; low soil fertility and high land degradation; lack of new and improved planting materials; low education and employment opportunities, poor road and communication infrastructure; inadequate nutrition and health in working population, especially in women and their children.

The limitations identified also include an aging population as well as dwindling interest in cocoa farming among many of the youths; high incidence of poverty and few opportunities to climb out of poverty; high risk of pests and disease as well as weak extension services and poor knowledge dissemination.

Before coming up with what is now known as the Kumasi Cocoa Agreement, representing the views of policy, industry, donors, scientists, farmers and others, the delegates brought to the fore the critical implications of a scenario where “productivity achieved (in the region) is below that achieved in other regions” just as they affirmed that gains made so far had “occurred at the expense of massive losses to biodiverse forests.”

They lamented that “the sector has lost competitiveness and risks losing its leadership position on the global market at a time when increase in demand for cocoa exists due to its health/nutritional benefits as well as greater purchasing power in emerging markets.”

While noting that the future of the African cocoa industry is fragile and unsustainable, they called for “an urgent need to address the many challenges faced by cocoa farmers in order to expand production and returns within a revitalised multifunctional, agricultural sector – making cocoa an engine of change of the rural economy.”

COPAL Secretary-General, Sona Ebai, in his presentation: “Making it Happen, Production Possibilities,” focused on how the cocoa sector in West and Central Africa can continue to play a pivotal role in socio-economic development while at the same time become a dependable source of supply to the world market and contribute to a sustainable world cocoa economy.

Providing an overview of the world cocoa economy, indicating strengths and weaknesses of cocoa production in the region, Ebai noted that the greatest weakness was low productivity and inefficiency, resulting from several challenges in the sector.

He said for West and Central Africa to be competitive in the global scene, farmers need to improve productivity, become more efficient and improve the quality of produce. These, according to him, can be achieved with the necessary support from government and industry in addressing all the identified challenges to ensure a brighter future.

Erstwhile world number one cocoa-producing country, Cote d’Ivoire, presented a pathetic picture at the meeting. In a paper entitled ‘Agro-forestry and Durable Cocoa Farming in the Context of Forest Shortage’, Alex Asiri of the Abidjan-based Centre National de Recherche Agronomique (CNRA) said that more than 2,000,000 hectares of land was under cultivation , with a production volume of more than 1,200,000 tonnes, which, of course, translates into 38 per cent of world product.

Asiri disclosed that this was leading to the exhaustion of forest reserve due to aging of the existing area under cultivation. Ironically, as espoused earlier by Dr. Daniel Sellen of the World Bank, Cote d’Ivoire, in his presentation, “The Ivorian Sector: Recent Developments,” the country had the lowest farm gate prices and the taxation on cocoa in the region.

The World Bank, according to Sellen, is therefore recommending a profound restructuring of the Ivorian sector to ensure future development through improved competitiveness and equitable distribution of value addition. Good governance, a cocoa development strategy, as well as a reduction in sector taxation, Sellen disclosed, were therefore fundamental to the World Bank’s agenda in Cote d’Ivoire.

Alan Fredericq of the Archer Daniels Midlands Co., (ADM), in a paper titled “African Cocoa: (on) Sustainable Leadership?’ which focused on the strength and weakness of African cocoa as a world leader, disclosed that the world cocoa consumption was growing in relationship to the world Gross Domestic Product (GDP).

According to him, “cocoa is one of the three most preferred flavours worldwide with a wide range of uses, and consumption enhanced by the recent findings on the health and nutritional benefits.” He contended that even though Africa accounts for about 71 per cent of world cocoa production, and 15 per cent of grindings, cocoa production in the region still has to be sustainable.

Fredericq insisted that for Africa to retain its position as world leader it has to take advantage of its strengths and opportunities, while at the same time improve its image, regarding production and quality by building a positive consumer image.

With the price of the commodity on the ascendancy and the worrisome drop in production despite increasing demand, farmers in West and Central Africa need to take drastic steps for the region to retain its leadership position. Only by doing this, and very fast too, with the support and collaboration of all stakeholders, can cocoa production be seen to be a sustainable venture, with farmers reaping bountifully from their toil.

Until this is done, only time will tell if whether partnership for the future, could be formed for cocoa in producers in West and Central Africa.

Credit: Olaolu Olusina

Source: This Day