How to create systemic change across the cocoa sector in Côte d’Ivoire

The cocoa sector in Côte d’Ivoire faces many issues, from poverty to child labor to deforestation. An essential aspect of solving these issues is increasing professionalism among cocoa farmers. More professional agribusinesses can improve production, increase processing capacity, and diversify income.

Since 2016, SCOPEinsight has been – with its partners – assessing cocoa cooperatives. In fact, we have more data about cocoa cooperatives in the country than anyone else as we have assessed over 1000 cooperatives in the country. This article will address some of the major issues we see with cooperatives in the country.

Vulnerabilities due to mono-crop farming

Approximately 39% of the world’s cocoa is farmed in Côte d’Ivoire, primarily by smallholder farmers. However, farmers only receive 6.6% of the profits of cocoa sales, with the vast majority of profits going to retailers and manufacturers. 85% of farmers in Côte d’Ivoire do not earn a living income, and 56% of farmers are living under the poverty line. This sober reality is shared by many mono-crop farmers worldwide.

Increasing the price of cocoa may seem like an obvious solution, but unfortunately, the issue is not that simple. The cocoa market is highly volatile. Many factors can significantly influence the price of cocoa. For example, cocoa future prices were cut approximately in half between 2015 and mid-2017, partly because of uncertainty in the market due to Brexit. The Ivorian government has attempted to set a farm-gate price to combat this volatility, but this is also subject to change; the price dropped by 25% earlier this year because of issues related to the current COVID-19 crisis. Despite attempts to change the cocoa market, the fact remains that farmers who cannot process their cocoa will not be able to receive a high price for it.

Many Ivorian agribusinesses are not professional

Stronger agribusinesses are more able to weather challenges like those faced by Ivorian cocoa farmers, and they are also more likely to be able to process their own cocoa. Unfortunately, most agribusinesses in Côte d’Ivoire are not professional. Since 2016, we have conducted more than 1000 assessments in Côte d’Ivoire. Of the agribusinesses we have assessed, less than a quarter are professional. Over half of them are maturing, which means they still require support.

Maturing agribusinesses are characterized by specific challenges, including weak financial planning and little to no strategic planning. They also tend to be vulnerable to external shocks and environmentally unsustainable. These challenges exist in Côte d’Ivoire, and they can lead to the issues mentioned above. Professional agribusinesses, on the other hand, tend to be much more sustainable in their practices, both environmentally and socially. Professional agribusinesses also tend to have higher incomes, reducing the rate of poverty.

Low productivity creates challenges in the cocoa sector

The cocoa sector in Côte d’Ivoire faces many challenges that must be solved. Among the most prevalent is the rate of child labor. A study by NORC found that, in cocoa-growing areas of Côte d’Ivoire, 43% of children engage in cocoa-related child labor, and nearly all these children engage in labor deemed hazardous. Another related issue is that of deforestation. Nearly 90% of Côte d’Ivoire’s forests have disappeared in the past sixty years, mostly due to agriculture. At the current rate of deforestation, Côte d’Ivoire could lose all its forest cover by 2034. This includes protected areas, which still see deforestation due to agriculture.

Current attempts at preventing problems like child labor and deforestation do not appear to be effective. The prevalence of child labor increased by 14 percentage points between 2008-9 and 2018-19, according to the NORC report. Deforestation also seems unaffected, as Côte d’Ivoire lost over 68,000 hectares of forest between 2019 and 2020. To fix these problems, is important to look at the root cause behind them: the low income earned by most cocoa farmers. When farmers live below the poverty line, they will do their best to improve their productivity and thus have more supply to sell. Unfortunately, this can lead to child labor, as farmers look for inexpensive laborers to work on their farms. In addition, it can lead to deforestation, as farmers move into forested areas in search of more fertile land. If this is the root of the problem, then fixing it must be the root of the solution. To help the Ivorian cocoa sector, it is imperative to discover and promote alternative, sustainable routes to increased production.

Increasing productivity is possible through professionalism

Luckily, there is a way to increase the productivity of Ivorian agribusinesses: by increasing agribusiness professionalism. As agribusinesses become more professional, they also see increases in productivity and efficiency. This results in an increase in income. In addition, when professional agribusinesses begin earning higher incomes, they can invest in their futures through things like new equipment or new inputs. As agribusinesses make these investments, they increase their productivity and income even more. Within the cocoa sector in Côte d’Ivoire, there are various ways to make these improvements.

One option is through the diversification of income and crops. While cocoa is an important crop in Côte d’Ivoire, it is far from the only crop, and for the majority of people, it is not profitable to farm cocoa alone. An income study commissioned by Fairtrade International found a significant positive correlation between household income and product diversification, and diversification is one of the strategies suggested to improve income further.

Another way to improve productivity and income is by adopting more technologies, particularly ones related to the processing of cocoa. If agribusinesses invest in post-harvest production equipment, they can sell their processed produce at a higher rate. Based on current estimates on the distribution of chocolate earnings, cocoa farmers could more than double their share if they can process the cocoa and grow it. Implementing new technology can be expensive, but more professional agribusinesses are more able to access loans, which can be used to invest in processing.

The next steps towards a more professional cocoa sector

The first step towards increasing the professionalism of any agribusiness is understanding its current standing. This can best be done through a SCOPEinsight assessment. Our data-driven assessment tools are standardized and aligned with the IWA29, and they have already been used in Côte d’Ivoire to significant effect.

We worked with the global NGO TechnoServe on the Pro-Planteurs project, where every single assessed agribusiness saw significant improvement. The number of professional agribusinesses tripled, and incomes increased by 28%. The average SCOPE score of the agribusinesses in the project exceeded the average performance of other agribusinesses we’ve assessed in both Côte d’Ivoire and the entire region. The Pro-Planteurs project was so successful overall that the project timeline was extended by an additional five years so that the project could have greater impact.

We have also worked with the food corporation Cargill in creating and implementing their highly successful Coop Academy. The Academy consists of four weeks of training for cooperative managers, which both begin and end with a SCOPE assessment. The Coop Academy has trained over 850 cooperative managers, which has allowed them to reach over 5000 farmers. Our assessments show that the average cooperative increased its professionalism by 20%, which leads to various improvements like access to finance and increased production.

We further strengthened our commitment to Côte d’Ivoire through the formalization of our relationship with Velior Développement. As a member of our Local Expert Network, Velior Dévelopment complements our global expertise with the local knowledge needed to advance agribusiness professionalism in the country.

These projects and the many more that we’ve done in Côte d’Ivoire have all successfully changed the lives of the cocoa farmers involved. However, we need more than a project-to-project solution to make systemic change in the Ivorian cocoa sector. Change must be made on a grander scale to reach a significant number of cocoa farmers. Instead of simply solving problems on the surface, we must dig deeper and solve the root problems underneath. Only then can the cocoa sector genuinely thrive.

This month we are diving even deeper on our data for Côte d’Ivoire. To receive this country analysis, sign up for our BIIG newsletter.

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