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West African Chocolate Success Story

Tuesday, June 23, 2015 at 8:22AM

A Ghanaian chocolate company has become a big success in the United Kingdom and shown how it is possible to develop and market a high-quality product grown in West Africa. While the chocolate bars are manufactured in the Netherlands, the cooperative that owns the company initiated the push into producing a mass-market chocolate brand – and shares in the profits.

The Divine chocolate brand is available in shops and supermarkets across Britain and is the product of the Kuapa Kokoo (http://www.kuapakokoo.com/) cocoa farmers cooperative. The Divine brand was launched in the U.K. in 1998 as the first Fairtrade (http://www.fairtrade.org.uk) chocolate bar aimed at the mass market. Previously, most Fairtrade chocolate was made for high-end customers.

Apart from the chocolate bars, the co-op also sells its cocoa butter to The Body Shop (http://www.thebodyshop.co.uk/_en/_gb/index.aspx), a chain of natural beauty retailers.

In 1997, at the co-op’s annual general meeting, members decided to create a mass-market chocolate bar of their own. Ambitiously, they did not want to just be a small, niche-market chocolate bar. They wanted to take on the big brands. They set up The Day Chocolate Company in 1998 and received support from a collection of international charities, aid agencies and businesses.

The Chocolate Company is structured to have two members of the co-op on its board of directors, with one out of four yearly board meetings held in Ghana. As shareholders, the farmers also receive a share of the profits of chocolate sales. Britain’s chocolate market is worth £4 billion a year (US $6 billion) and the country has hundreds of chocolate brands, making competition for customers fierce. The Divine range of chocolate has been designed to match U.K. market tastes.

Ghana has an excellent reputation for the quality of its cocoa beans and has been growing cocoa since it was first brought to the country from Equatorial Guinea in 1878 by Tetteh Quarshie (http://www.ghanaweb.com/GhanaHomePage/people/pop-up.php?ID=128).

Kuapa Kokoo’s success story has its origins in responding to the structural adjustment programmes (http://en.wikipedia.org/wiki/Structural_adjustment) which started liberalizing Ghana’s cocoa market in 1993.

The lock the government had on selling cocoa to the Cocoa Marketing Company had been lifted. Now the opportunity was there for others to sell to the Marketing Company and some farmers decided to form a cooperative, Kuapa Kokoo – “the best of the best”. They wanted to get a better price for the cocoa and to improve working conditions and lives of the pickers.

The cooperative does all the processing of the cocoa and delivers it to market. One of the great advantages for the farmers is the honest weighing of the beans – something previous buying agents would cheat doing. By creating a more efficient and fair process, greater savings are made on the price paid for the beans and this is passed on to the co-op’s members.

The farmers are also trained to do tasks like weighing and bagging the cocoa, removing the need for outside help. Every year the farmers receive cash bonuses based on the co-op’s profits and any efficiencies made.

With this success, Kuapa Kokoo grew and now has more than 40,000 members spread over 1,300 villages.

The co-op offers various services to the farmers including a credit union to help with finances. There are also 33 Research and Development Officers employed by the co-op to oversee training and election.

The number of women farmers has grown over the years, from 13 percent to 30 percent.

Extra income-generating skills are encouraged for the women farmers as well. One project is to make soap from the potash produced from burnt cocoa husks. Women have also been given machines to crack palm kernels for cooking oil.

Comfort Kumeah, a 62-year-old co-op farmer, lives in the village of Mim in the Ashanti region. A former teacher for 39 years, she inherited 20 acres of land from her husband’s family.

“Each farmer has a passbook to record weight and payment. In the whole of Ghana, only Kuapa Kokoo … is certified Fairtrade,” she told the Sunday Times.

“I was voted chair of the farmers’ trust and national secretary for the union; once a year I attend a conference to vote on how the Fairtrade premium is spent. Last year we bought a palm-nut crusher and we sell the red oil on the market.”

“Before, I was always cheated. Purchasing clerks would come and weigh the beans and you never knew if their scales were correct, as no one checked them. Some embezzled the money instead of paying it to the farmers.”

“Owning this company has given cocoa farmers a voice for the first time.”

Kuapa Kokoo sells around 1,000 tonnes of cocoa every year to the European Fairtrade market (http://www.etfam.com/index2.php). This has many advantages for sellers if they meet certain conditions. These conditions include health and safety requirements and democratic decision making. If they are met, the producers receive a guaranteed price for their goods and long-term trading contracts. This means a stable price despite market fluctuations. With a stable price, it is easier to plan and save money.

Ghanaian cocoa has a good international reputation and trades at a higher price because of this. Cocoa once made up 66 percent of Ghana’s foreign exchange, but is now down to 35-40 percent as the economy has diversified into areas like information technology.

Cocoa is usually grown on small family farms in Ghana. Farmers also grow crops like plantain to provide food for the family. Around 1.6 million people are involved in growing cocoa and its business in Ghana. Cocoa trees grow to 15 metres in height and take three to four years to start producing a crop. An entire year’s worth of a tree’s crop can make three large chocolate bars.

A tree can produce two crops a year. Each cocoa pod produces around 40 seeds.

“A cocoa farmer’s life is hard,” admits Comfort. “In the lean season, we have no income. Also, cocoa is controlled by climate. Drought followed by too much rain causes fungus and rot, and then every farmer is poor.”

“I have saved money for my children’s education but my own needs are few: clothes, soap and toothpaste. Generally, you know, women are strong. Last year more women than men were voted onto the Kuapa Kokoo national executive and now hold some of the most senior positions.”

By David South, Development Challenges, South-South Solutions

Published: April 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.

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Connoisseur Chocolate from the South Gets a Higher Price

Friday, June 19, 2015 at 7:34AM

Like coffee beans, cocoa beans are grown around the world and are a major commodity, highly prized in wealthy countries. West Africa accounts for 70 percent of the world’s output, with the rest grown either in Indonesia and Brazil (20 percent), or on a smaller scale in countries across the South, from Belize to Madagascar.

Global sales of cocoa beans have grown by an average of 3.7 percent a year since 2001, and the World Cocoa Foundation estimates 40-50 million people depend on cocoa for their livelihood.

But harvesting cocoa comes at a price to the farmers and those who work on the farms. It is estimated that 284,000 children in West Africa work under abusive conditions to harvest the beans. Cocoa farmers usually only benefit from the price of cocoa in the harvest season between October and February. In Ghana, the second largest producer of beans, child slavery allegations have plagued the cocoa plantations, along with too-low prices paid to farmers. Fluctuating global market prices constantly put small-scale farmers at risk of losing everything they have worked for.

But consumers are developing ever-more sophisticated tastes for chocolate, paying more attention to the quality and origin of the beans. Savvy cocoa producers are using this greater awareness to increase prices for farmers and improve conditions for those who work on the farms.

Maturing consumers’ palates are now picking chocolate and other food products from the South in much the same way as connoisseurs pick wines. In the United Kingdom alone, sales of Fairtrade-branded goods (www.fairtrade.org.uk)- a scheme that offers guaranteed prices and better trading conditions to farmers – have reached £560 million (US$1.1 billion) a year. A survey of consumers in six countries found awareness of fairly traded chocolate was highest in the UK, with 43 percent of people having tried it (http://www.barry-callebaut.com).

British consumers willing to pay more for ethical products are at the forefront of a global surge in fair trade. Hans Vriens, chief innovation officer with Belgian chocolate makers Barry Callebaut, told The Independent newspaper: “Nowadays, chocolate consumption is coming to resemble the way we enjoy wine: we sample and compare different tastes.”

The world’s appetite for chocolate is voracious: For example by 2007, volume sales of chocolate confectionery increased from 1998 by 30 percent in Eastern Europe, and by 40 percent in the Asia Pacific region. Europeans devour 35 percent of the world’s cocoa.

In order to be classed as Fair Trade, a producer must meet a strict set of criteria governing how people and the environment are treated. The Fair Trade scheme pays farmers a higher price for cocoa beans, calculated on the basis of world market prices, plus fair trade premiums. The Fair Trade premium for standard quality cocoa is US$150 per tonne. The minimum price for Fair Trade standard quality cocoa, including the premium, is US$1,750 per tonne. Fair Trade ensures a minimum price of 80 US cents a pound under long-term contracts, with access to credit, and prohibits abusive child labour and forced labour.

At the Chuao Plantation in Venezuela, the local Chuao Empresa Campesina cooperative, representing 100 farmers, is reaping the benefits of developing an exclusive relationship with an Italian chocolate company. Chocolatier Alessio Tessieri was willing to pay a lot more for the beans if high standards were maintained. His sister Cecilia was struck by the aroma of the rare Criollo bean grown by the farmers: it is the least productive in terms of output, but prized for its flavour.

“We found an aroma that was greatly reminiscent of ripe red fruit and plum preserves, with an extremely delicate aftertaste,” she said. “A highly complex and sophisticated aroma lacking any trace of acidity.”

Located in Parque Nacional Henri Pittier, a road and sea trip from the capital Caracas, the town of Chuao, population 1,500, has ideal growing conditions because of its high humidity. In the village, the women take care of the drying process. Throughout the town the cocoa beans lay out in the open on verandas. In the warehouses the enormous “masorche” – the fruit of the cocoa trees, looking like big red melons – are split in half and the pulp is removed, revealing the super-sweet white-coated beans inside.

Alessio struck a good deal with the farmers in recognition of the exclusivity of the beans. He pays US$4 per kilogram against the US$1.30 per kilo paid by the local merchants. He also took on the farmers’ debts with the merchants. But most importantly, he ensured that one of his agronomists would stay behind and supervise the plantation and increase its production, from the current level of 120-130 kilos per hectare to a projected 250-300 kilos.

The Toledo Hills Cacao Cooperative in Belize, South America has developed a relationship with one of the UK’s pioneers in fair trade chocolate, Green & Blacks. The Mayan Indians who farm the cocoa live a traditional life more or less as they have done for centuries. They also live in one of the poorest areas of Belize. The profits made are ploughed back into buying machetes, or rubber boots to protect against snake bites. The cocoa harvest helps supplement their traditional way of life.

Green & Blacks has been buying organic cocoa from the farmers’ co-operative since 1994 and paying a guaranteed price above the world cocoa price. In 2003, they extended their activities with the cocoa farmers and started the Belize Programme to provide even more support. With an investment of £225,000 (US$443,350) over three years, the investment was used to help improve management and farming practices, rehabilitate hurricane-damaged crops, plant more cocoa trees, and train farmers in better growing methods. Green & Blacks continues to provide technical advice and support to the farmers. The business relationship with Green & Blacks has been so successful that other farmers in Belize are now interested in cocoa farming.

The pattern is being repeated elsewhere in Latin America. In San Martin, Peru, rice farmers have moved into cocoa to reap the rewards of the higher prices. Alvis Valles Sajami and Alberto Inou Amasifuen are both graduates of the Peru Farmer Field School. Sajami uses a plant nursery as an extra source of income by selling cocoa plants to other farmers. “I already have 4,000 plants, he said. “This (the nursery) will be so important to increase my cocoa area. I can sell planting material to other farmers in order to have a new source of income for my family.”

Amasifuen has already increased his own cocoa production from two hectares to five, and has also established a nursery to produce cocoa and timber tree seedlings to sell to area farmers.

“We have an increase in demand for cocoa plants in San Martín,” he said. “We expect to provide seedlings not only to our farm, but also to other farmers in expanding their production area.”