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Context 1
... in Ghana and Côte d'Ivoire are regulated. The governments of Côte d'Ivoire and Ghana both guarantee a fixed annual farm-gate price for cocoa farmers and they have a stabilisation fund. The fixed farm-gate price is announced at the start of the cocoa harvesting season in October and is maintained for the period of one year. When world cocoa prices increase during the cocoa SEO AMSTERDAM ECONOMICS harvest, revenues are saved in this fund and when prices decline the fund is used to compensate farmers ( Quarmine et al., 2014;Mulangu et al., 2015;Malan, 2013). It is questionable if the funds will be large enough to stabilise prices, considering the large volumes of cocoa production, particularly in Côte d'Ivoire. Figure 5.2 illustrates that despite these stabilisation mechanisms in Ghana and Côte d'Ivoire, the share of the world market price received by farmers has been volatile. In regulated markets, the share of the world market price received by farmers has been ...
Context 2
... available statistical evidence suggests that the transmission of world market prices to farm- gate prices is slow, possibly due to inefficiencies in the system of export licenses and a lack of competition. In Ghana, the CMC maintained the monopoly on export; there is no competition. COCOBOD does not allow LBCs to become involved in the export of cocoa, despite the fact that some LBCs meet the official criteria for exporting (Laven 2010). In Côte d'Ivoire there are also inefficiencies in the system of export licenses. In Côte d'Ivoire there has been criticism on how CCC allocates export-licenses to local entrepreneurs; there are indications that the criteria for handing out export licenses are not well defined and opened the door to abuse and overbidding. Figure 5.3 illustrates how the real farm-gate price develops in Côte d'Ivoire and Ghana, and how this relates to developments in the world market price. One major benefit of a regulated price system is that it increases stability by protecting farmers against sharp price changes or sharp exchange rate fluctuations during the year in which the price is fixed. In practice, such exchange rate valuation effects can be quite significant. The Ghanaian cedi, for example, has shown a significant appreciation trend in recent years ( Figure 5.4). Côte d'Ivoire, however, is part of the CFA franc currency union which has a fixed exchange rate to the euro, therefore making exchange rate risk less of an issue in Côte ...
Context 3
... available statistical evidence suggests that the transmission of world market prices to farm- gate prices is slow, possibly due to inefficiencies in the system of export licenses and a lack of competition. In Ghana, the CMC maintained the monopoly on export; there is no competition. COCOBOD does not allow LBCs to become involved in the export of cocoa, despite the fact that some LBCs meet the official criteria for exporting (Laven 2010). In Côte d'Ivoire there are also inefficiencies in the system of export licenses. In Côte d'Ivoire there has been criticism on how CCC allocates export-licenses to local entrepreneurs; there are indications that the criteria for handing out export licenses are not well defined and opened the door to abuse and overbidding. Figure 5.3 illustrates how the real farm-gate price develops in Côte d'Ivoire and Ghana, and how this relates to developments in the world market price. One major benefit of a regulated price system is that it increases stability by protecting farmers against sharp price changes or sharp exchange rate fluctuations during the year in which the price is fixed. In practice, such exchange rate valuation effects can be quite significant. The Ghanaian cedi, for example, has shown a significant appreciation trend in recent years ( Figure 5.4). Côte d'Ivoire, however, is part of the CFA franc currency union which has a fixed exchange rate to the euro, therefore making exchange rate risk less of an issue in Côte ...
Context 4
... and Cameroon witnessed an almost complete withdrawal of the state from the sector (Gilbert 2009). In both countries, reforms were introduced rapidly and affected prices, quality, costs of inputs and the organisation of trade. Figure 5.1 summarises how Nigeria and Cameroon moved from a regulated to a liberalised market. their market and opted for a gradual approach towards liberalisation (also referred to as 'modest ...
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Citations
... The little financial value retained by farmers can be partly attributed to corporate concentration (Fountain and Hütz-Adams, 2015). However, it has been argued that farmers' poverty can be attributed to them being price takers, with no market power or alternative income sources (Oomes et al., 2016). Regardless of Chakra farmers facing different levels of poverty, the results presented here show that they have other income sources (agrotourism, timber sales and public jobs among others). ...
The Amazon Rainforest ecosystem plays a key role in regulating climate and preserving
biodiversity. Over the last several millennia, indigenous communities inhabiting Amazonia have developed traditional agroforestry practices capable of sustaining their societies while preserving the region’s biodiversity. Kichwa peoples in the Northern Ecuadorian Amazon have used agroforestry and traditional knowledge to cultivate food in Chakras; a community space, where farmers combine the cultivation of staple foods, timber trees, and medicinal plants.
Chakras are essential for maintaining Amazon’s biodiversity, ensuring food security and
sovereignty, mitigating climate change and preserving cultural heritage. Recently, Chakra farmers have incorporated the cultivation of cacao, mainly Nacional Arriba, an Ecuadorian variety that enables them to access international markets and increase their income. Currently, Chakras face multiple threats; deforestation, inadequate regulations, and the expansion of monocultures of the hybrid cacao CCN-51. This study analysed these issues through two assessments using deductive thematic analysis, Firstly, an analysis of the Nacional Arriba cacao value chain. Secondly, a quantitative assessment of farm resilience in Chakras in Napo province, alongside agroforestry systems in Esmeraldas province. This work’s findings reveal that financialisation and distance in the value chain reduce farmers’ income and that
Chakras have a comparatively higher resilience. Chakras higher farm resilience is based on knowledge systems, agroecological practices and socio-cultural dynamics that shape indigenous agriculture. However, power asymmetries and low financial value retention persist, and development models neglect indigenous food systems. This study highlights the significance of strengthening traditional agroforestry to achieve environmental and social sustainability. It proposes an alternative approach with direct trade, to increase farmers revenues and reduce asymmetries. Policies that empower Chakras and integrate indigenous knowledge into food policies could help address imbalances and preserve the Chakra systems. This study's findings evidence that a path for a more sustainable food system is possible through traditional agroforestry.
... Cocoa beans are an important source of foreign currency for Côte d'Ivoire (Oomes et al. 2016;Reay 2019). The country produces around 2.1 million metric tons (ICCO 2017), which represent 1/3 of export earnings and more than 14% of the national GDP (World Bank 2019). ...
... (Adbulai et al. 2018a;Andrieu et al. 2017;Bayala et al. 2017). Generally, producers' adoption of CSA is limited by constraints in terms of finance, land, credit, and implementation knowledge (Hirons et al. 2018;Oomes et al. 2016). Shifting from a primarily technical and operational approach to one that emphasizes social change can help address these complications (Schröth et al. 2016) as well as households' socio-economic vulnerabilities (Schroth et al. 2017). ...
Côte d'Ivoire supplies over 40% of cocoa production worldwide. Climatic variability threatens to significantly reduce the area suitable for cocoa cultivation. Cocoa farmers have already leveraged their intimate knowledge of the local climate to adapt their production systems to climate change. However, their practices have not been well documented or evaluated. In response, this study aims to assess climate-smart cocoa practices for scalability recommendations. The study was conducted across three zones of predicted climate impacts on cocoa production: low impact, high impact, and a transformational impact. Climate-smart practices were inventoried, analyzed, and synthesized in different production contexts and by household categories in terms of well-being and asset endowment. The list of practices was then validated in a national stakeholder workshop in terms of agricultural productivity, food security, income generation, climate resilience and ecosystem services, economic viability and sustainability, and adoption probability. The resulting recommended practices are presented according to climate hazard. These recommendations represent local experiential knowledge consensus and offer valuable options for sustainable cocoa management in a changing climate. Our results show that Ivorian cocoa farmers broadly believe climate change will continue to worsen and have already widely adopted several of the recommended practices, particularly agroforestry. However, nearly none of the farmers across all three impact zones anticipate that cocoa production will become unviable. Climate information services offer significant potential for addressing this information gap and further supporting farmers' decision making in the face of climate change.
... As previously mentioned, cocoa production is ingrained in West Africa due to the land's appropriateness for agricultural uses (Anim-Kwapong & Frimpong, 2010). As a result, the African continent now enjoys a natural monopoly, with Ghana and the Ivory Coast controlling over 60% of the world's bean production (Oomes et al., 2016). Processing cocoa and making chocolate are traditionally rooted in Europe and America in terms of value addition. ...
The sustainability of cocoa farmers' livelihoods is a critical concern within the academic discourse surrounding the Cocoa-chocolate value chain, aligning with SDG goal 1 of eradicating poverty. Addressing the challenges cocoa farmers face and developing sustainable solutions is paramount, as their low-income status may lead to a shift to alternative cash crops, surrendering lands for illegal mining activities (affecting the environment negatively), and a decline in the cocoa bean supply. Existing literature has explored the limited value capture of cocoa farmers. However, it needs to fully elucidate the complex interplay between local and international interests that undermine efforts to improve farmers' livelihoods. This study uses the Sustainable Livelihood Framework and the Global Production Network to assess these dynamics. The analysis uncovers significant obstacles smallholder farmers face in achieving sustainable incomes, including power imbalances and embeddedness within firm networks. Some policy recommendations, including the de-commodification of Cocoa beans, are proposed.
... Further, commitments are mostly framed around problems receiving high media attention, such as deforestation and child labor. These topics are not always aligned with the priorities identified in producing countries, such as poverty, living income, low market prices, or the need to favor domestic processing and export of processed products (such as cocoa butter and powder) instead of raw product exports (Carodenuto, 2019;Neilson, 2007;Oomes et al., 2016). ...
... Previous studies have demonstrated that cocoa processing and chocolate manufacturing are concentrated in the hands of a few transnational companies (Oomes et al., 2016). Here, we show that this concentration also extends to cocoa trading in which transnational traders handle around two-thirds of global cocoa exports. ...
... This opportunity could apply to transnational traders that are horizontally integrated into trading other agricultural commodities that face similar social and environmental challenges (e.g., Cargill, Olam, and Ecom). These companies adopt similar commitments across different commodities, which is facilitated by the lower costs of expanding commitment portfolios to commodities with similar strategic requirements (Fountain and Huetz-Adams, 2017;KPMG, 2014;Oomes et al., 2016). ...
The production and trade of agricultural commodities, such as cocoa, have important impacts on farmer livelihoods and the environment, prompting a growing number of companies to adopt public commitments to address sustainability issues in their value chains. Though trading companies, who handle the procurement and export of these commodities, are key actors in corporate sustainability efforts, cross-country data on their identity, market share, and adoption of sustainability commitments is lacking. Here, we address this gap for the cocoa sector by compiling detailed shipping data from eight countries responsible for 80% of global cocoa exports, developing a typology of trader types, and assessing their adoption of sustainability commitments. We find that cocoa trading is a highly concentrated market: seven transnational companies handled 62% of the global cocoa trade, with even larger shares in individual cocoa producing countries. The remaining 38% of exports were handled by domestic trading companies and farmer cooperatives. Overall, the adoption of public sustainability commitments is low. We estimated that just over one quarter (26%) of cocoa is traded under some form of sustainability commitment, with gaps arising from their exclusion of indirect sourcing, low adoption rates by domestic traders, and commitment blind spots, notably on forest degradation and farmer incomes. Low rates of traceability and transparency pose a further barrier to the broadscale implementation and monitoring of these commitments: one-quarter of traders report being able to trace at least some of their cocoa back to farmer cooperatives and only half of them openly disclose the identity of their suppliers. We discuss the opportunities and limitations of voluntary sustainability commitments in a highly concentrated market and argue that, to realize visions of sustainable trade, the gaps in commitment coverage must be closed by extending current efforts to smaller traders and indirect suppliers. However, companies must support, coordinate and align with government efforts so that voluntary initiatives are ultimately rendered more transparent and accountable.
... Although poverty is a multi-faceted and highly idiosyncratic phenomenon, scholars have long argued that the low price of cocoa beans is keeping farmers in poverty (Alence, 1990;Boysen et al., 2021;Oomes et al., 2016). Low price severely undermines the potential income gains from supply chain programs and creates barriers for farmers to invest in productivity and product quality https://doi.org/10.1016/j.worlddev.2023.106201 ...
... Our findings also indicate opposing stakeholder views about the criticism of cocoa price-setting efforts such as LID resulting in stimulation of production leading to over-supply (Brack, 2021;Oomes et al., 2016). For example, the high cocoa farmgate prices in 2015/2016 are thought to have stimulated the high production levels in 2017 (Aidenvironment & Sustainable Food Lab, 2018), but this likely requires a longer-term perspective, and attribution is difficult. ...
Policy responses to balance the trade-offs between nature conservation and socioeconomic development have recently come to the fore in Ghana-the world's second largest producer of cocoa. In 2019, the Government of Ghana introduced the Living Income Differential (LID), which requires buyers to pay an additional US$400 per ton of cocoa on top of the floor price. With low farmer incomes identified as a critical driver of multiple sustainability issues in Ghana's cocoa sector, this differential is meant to be directly transferred to cocoa farmers in response to the persistent challenge of poverty in cocoa farming communities. Using the Q methodology, we engaged over 50 stakeholders from various levels (international policy experts, cocoa sector stakeholders in Ghana, and cocoa farmers) to understand how the LID is perceived, including its potential to transform the rural poverty complex embedded in Ghana's cocoa supply chain. While the LID is lauded for increasing producer price across the board, our findings indicate that the lack of regard for farmer diversity (i.e., tenure rights, sharecroppers, and caretakers), farm size, and land management strategies (agroforestry versus clearing forest to establish farms) risks undermining the ability of this pricing mechanism to reduce farmer poverty. Further, the LID is siloed from ongoing sustainability governance efforts in the sector, such as zero deforestation cocoa. If the LID is delivered to farmers across the board without any quid pro quo for how cocoa is produced, the policy's unintended consequences may include increasing deforestation in the short term, while lowering the world market price of cocoa in the long term as cocoa supply increases. We conclude with policy implications on why different perspectives matter in managing sustainability trade-offs in deforestation frontiers. Crown
... The global cocoa-chocolate market is estimated to reach $140 billion by 2024. Ghana is the second leading exporter of cocoa globally (Dadzie et al., 2018;Oomes et al., 2016). The national supply market has strong interconnections to the global cocoa-chocolate market. ...
This paper highlights the dark side of power imbalance regarding its consequences in agri-food supplier-buyer relationships. We report on findings from two studies. The first study is based on a sample of 105 key informants, while study 2 is based on a sample of 444 key informants, all from the cocoa agri-food supply market of Ghana. While the first study focuses on the antecedents of power imbalance and its consequences, the second study explores the role of cooperatives/collective action in minimizing supplier exploitation. Data from these studies were analysed using the partial least squares technique (SmartPLS). Analysis of these findings shows switching costs' impact on power imbalance to be curvilinear, while power imbalance has a curvilinear relationship with opportunism. The negative consequences of power imbalance are further exacerbated by dependency and the lack of joint action. Furthermore, we found the negative impact of power imbalance on financial performance to be stronger for non-cooperative members than for cooperative members, while, counterintuitively, we found the positive impact of economic satisfaction on financial performance to be stronger for non-cooperative members than for cooperative members.
... In comparison, Ghana has around 800,000 cocoa smallholders, but the export dependence has decreased to 16% in 2020 because of gold and oil extraction since 2018 (UN Comtrade 2021). In other cocoa-producing countries in West Africa, Latin America and Asia, government intervention largely has been limited to productivity and quality improvements since the 1980s and'90s (Oomes et al. 2016). ...
... This is also the case in Cameroon and Nigeria, which have no centralised marketing institutions. Producers or producer organisations sell to local traders and licensed buyers that sell to exporters based on spot transactions, with exporters selling to or being owned by grinder-traders without any stabilisation of exports or producer prices (Oomes et al. 2016;Hütz-Adams et al. 2016). Thus, producer prices can vary substantially in the short-term and between farmers and regions, with farmers exposed to intra-and inter-seasonal price volatility (FAO and BASIC 2020;Hütz-Adams et al. 2016). ...
... While intra-seasonal price stabilisation and higher country differentials on export prices are advantages of Côte d'Ivoire and Ghana's systems, regulated systems typically are associated with lower shares of producer prices relative to world prices (see, e.g. Oomes et al. 2016). Compared with monthly ICCO prices, producer prices in Côte d'Ivoire reached a share of 57% of ICCO prices since price stabilisation in 2012-2013 and before the introduction of the LID in 2019-2020. ...
This paper calls for integrating price-setting power and related uneven exposure to price risks into the analysis of governance in global value chains (GVCs) as it adds to other power dimensions in producing unequal distributional outcomes. This is shown for the cocoa GVC, in which-unlike in today's mostly liberalised market structures-the world's top cocoa-producing countries, Côte d'Ivoire and Ghana, pursue price stabilisation measures. These measures address intra-seasonal producer price volatility, and recent collaboration has achieved a living-income differential on top of export prices, but such measures do not shield export and producer prices from inter-seasonal variations in world prices determined on commodity derivatives markets. Based on interviews with actors along the cocoa GVC, we argue that this is related to the price-setting power of 'grinder-traders' and the key role of financial hedging and trading on commodity derivatives markets in their business strategies. Financialisation processes have increased derivatives trading's complexity and short-termism, accelerating consolidation among grinder-traders and making price stabilisation more challenging. Through their price stabilisation systems, Côte d'Ivoire and Ghana have maintained some price-setting power in the cocoa GVC, but largely remain 'global price-takers', with prices determined on derivatives markets and transmitted along the cocoa GVC through grinder-traders.
Supplementary information:
The online version contains supplementary material available at 10.1057/s41287-022-00543-z.
... Such systems could generate funds to pay payments to farmers in a specified area for environmental protection or diversification, taking a conservation and landscape approach to supply management (Koning & Jongeneel, 2008). Such systems avoid the current effects of largely cocoa futures market price is generally used to set national benchmark conventional cocoa prices (Oomes et al., 2016), where there is little opportunity for farmers and processors of conventional cocoa to determine prices, other than in the niche cocoa sector, such as the speciality, fine flavour and some certified chocolate markets (Bonjean & Brun, 2016;Squicciarini & Swinnen, 2016). The international commodity agreements for coffee, cocoa and sugar are examples of such supply management measures, but they collapsed in the 1980s because of opposition from companies and organisations in consuming countries (Koning & Jongeneel, 2008). ...
Many sources indicate that smallholder tree-crop commodity farmers are poor, but there is a paucity of data on how
many of them are poor and the depth of poverty. The living income concept establishes the net annual income required
for a household in a place to afford a decent standard of living. Based on datasets on smallholder cocoa and tea farmers
in Ghana, Ivory Coast and Kenya and literature, we conclude that a large proportion of such farmers do not have
the potential to earn a living income based on their current situation. Because these farmers typically cultivate small
farm sizes and have low capacity to invest and to diversify, there are no silver bullets to move them out of poverty.
We present an assessment approach that results in insights into which interventions can be effective in improving
the livelihoods of different types of farmers. While it is morally imperative that all households living in poverty
are supported to earn a living income, the assessment approach and literature indicate that focussing on short- to
medium-term interventions for households with a low likelihood of generating a living income could be: improving
food security and health, finding off-farm and alternative employment, and social assistance programmes. In the long
term, land governance policies could address land fragmentation and secure rights. Achieving living incomes based on
smallholder commodity production requires more discussion and engagement with farmers and their household members
and within their communities, coordination between all involved stakeholders, sharing lessons learnt and data.
... Thus, measured against the gross FOB price, in recent years cocoa farmers frequently received a share of below 70%, see Bymolt, Laven and Tyszler (2018) and Oomes et al. (2016). While Ghana does not explicitly levy taxes on cocoa beans exports, the producer price fixing mechanism causes a high implicit taxation of all cocoa bean sales which also includes the selling to domestic processing companies (WTO, 2014). ...
... In Côte d'Ivoire, the cocoa board Conseil du Café-Cacao (CCC) is responsible for the sector's regulation including setting of guaranteed minimum farmgate prices, price stabilisation and allocation of export licenses (Bymolt, Laven and Tyszler, 2018). The cocoa bean price for the next season is fixed after 70% to 80% of the upcoming year's harvest has been forward sold in auctions and, in the past years, a minimum of 60% of the Cost-Insurance-Freight (CIF) price was guaranteed as the farmgate price (Oomes et al., 2016). ...
... Côte d'Ivoire levies an export tax of 14.6% and a registration fee of 0.94% on raw cocoa beans and for processed cocoa products this tax rate decreases with increasing level of processing (WTO, 2017), thereby encouraging domestic processing. The cocoa farmers typically received well below 70% of the international market price over the past years (Oomes et al., 2016). ...
Poverty continues to be a widespread issue among cocoa farmers while chocolate consumers become increasingly sensitive for the sustainability issues associated with the supply chain. The poverty issue is often attributed to the low prices of cocoa and the unequal distribution of profit margins across the chocolate value chain, at least partially. Poverty, in turn, is considered to be the root of further sustainability issues. To raise the value share and price accruing to their farmers by leveraging their collective market power, the two biggest cocoa producing countries Côte d’Ivoire and Ghana jointly announced in 2019 the cocoa Living Income Differential (LID) policy. The question is to what extent and under which circumstances could the policy reach this goal in the long run, considering the numerous unknowns around the details of the policy and market actors’ reactions, and how sustainable it is. To analyse this question, we implement a global multi-regional partial equilibrium model of the world cocoa market to simulate scenarios accounting for alternative assumptions about these unknowns. The study shows that the LID’s effects on prices and welfare of cocoa farmers in the two countries range from none to substantially positive, varying in magnitude with the scenarios. But it also highlights that the farmgate price target, which is reached in Ghana under most scenarios, is reached in Côte d’Ivoire only with additional supply management measures. The two countries’ government budgets and cocoa farmers in other countries lose out substantially in many cases, what is identified, among other issues, as potential threats to the sustainability of the policy that require attention. Evaluated in light of past attempts by governments and other actors to raise farmer welfare in the cocoa but also other agricultural sectors, one policy alternative stands out, although coming with its own challenges. [This research has been further developed in the journal article: Earn a Living? What Ghana’s and Côte d’Ivoire’s Cocoa Living Income Differential might deliver on its promise. Food Policy, 114, 102389. https://www.researchgate.net/publication/366162998_Earn_a_living_What_the_Cote_d'Ivoire-Ghana_cocoa_Living_Income_Differential_might_deliver_on_its_promise]
... Cocoa (Theobroma cacao L.) is a major source of income for about 5 million small-scale farmers (Poelmans and Swinnen 2016). Approximately 74% of the global production originates from four countries in West and Central Africa: Côte d'Ivoire, Ghana, Cameroon and Nigeria (ICCO 2020), where the cocoa plantations are among the least productive in the world (Oomes et al. 2016). A recent survey in the two countries that produce the most cocoa -Côte d'Ivoire and Ghana -set the average cocoa bean yields at 352 and 423 kg ha −1 respectively (Bymolt et al. 2018). ...
Aim
Recycling of cocoa pod husks has potential to contribute to mineral nutrition of cocoa. Yet little is known of the nutrient content and nutrient release patterns from the husks. The potassium (K) rich husks are usually left in heaps in cocoa plantations in Africa. We aimed to understand and quantify release patterns of K and other nutrients from husks under varying rainfall regimes and assessed the effects of partial decomposition and inundation on nutrient leaching rates.
Methods
We incubated chunks of cocoa pod husks to assess decomposition rates and we measured nutrient leaching rates from two sets of husk chunks: one set was placed in tubes that were submitted to simulated scheduled rainfall events while the second set was continuously inundated in beakers.
Results
Decomposition of husks followed a second-order exponential curve (k: 0.09 day ⁻¹ ; ageing constant: 0.43). Nutrient losses recorded within 25 days were larger and more variable for K (33%) than for other macronutrients released in this order: Mg > Ca ≈ P > N (less than 15%). Potassium leaching was mainly driven by rainfall frequency ( P < 0.05) and reinforced by intense rainfall, especially at lower frequency. Under water-saturated conditions, 11% of K was leached out within 48 h from fresh husks compared with 92% from partially decayed husks.
Conclusion
Some initial decomposition of cocoa pod husks is required to expose K to intense leaching. As decomposition progresses, abundant K losses are to be expected under frequent and/or intense rainfall events.
