How will West Africa and the world respond to cocoa’s latest crisis?

This week has seen deeply concerning reports emerge from West Africa concerning the state of cocoa production in Ghana, where reports of farmers not being paid properly for months have emerged, which has prompted the very direct question – are conventional supply chains now broken?

Having edited this title over the past eight years, I’ve become used to witnessing a fairly frequent cycle of ebbs and flows that would naturally surround many commodities-based industries.

But somehow, the latest major crisis engulfing Ghana, in which local reports have uncovered a troubling situation of farmers being left without payment from the government-linked Cocobod organisation in recent months,  feels a little different in terms of the sheer severity of the problem.

As Confectionery Production has documented many times before, farmers in Ghana and neighbouring Ivory Coast have toiled for below poverty line wages for an extended period of time, which has been caused by multiple factors including disease impacting crop yields, climate change, and illegal gold mining operations impacting forest land that has traditionally been used for farming.

Farmer pay has been on the agenda for years now, and in truth, the governments of both the two key West African nations that account for two thirds of the cocoa for the chocolate trade, have attempted to raise farm gate prices to a level that moves towards that required to earn a living wage – but the wider cost of living crisis that has affected many regions around the world meant that those increases agreed last year have not in fact managed to keep pace with the general outgoings that families have faced.

There is also the matter of just how much companies are willing to pay as well – unless the top five or six major chocolate firms operating in Africa are prepared to sign up to paying notably more for their cocoa, the cycle of poverty for many farmers in the sector will continue to play out. There’s just no escaping this as a basic reality. 

Thankfully, consumers are now increasingly aware of the plight of those farmers on the frontline, and younger generations in particular are prepared to make purchasing decisions based on those who are actively paying more to source cocoa to ensure the sustainability of those communities that deserve a better deal. As it stands, farmers gain well under 15% of the value of the product they labour hard to produce – so this model fundamentally has to change in order for that cycle to be broken.

Nothing short of urgent systemic change is required, but will companies and governments have the boldness of thought and deed to completely re-evaluate how cocoa is traded and see that the rewards of the sector are redistributed on a far more equitable basis?

Perhaps the first steps in this hugely concerning puzzle came in a response from Ghana’s government just the other day, with promises of ‘a quantum leap in the way that cocoa is produced’ along with pledges of not only delivering higher volumes of this key crop, but actually processing it to a far higher degree at source in West Africa to ensure more of the overall value of the product is retained at source, including in neighbouring Ivory Coast, which is subject to precisely the same issues. 

Notably, a holding statement was put out by Ghana’s government yesterday, as it scrambled to react to a crisis of non payment of cocoa farmers that resulted in an emergency session of government that stated it would move to ensure farmers are now paid.

This is commendable, but are such measures just a sticking plaster on an industry that has been hard-hit for years? Is the sector even capable of change in its present format, which is based on often opaque colonial era practices that are somewhat out of step with other markets around the world. There lies a significant aspect of the industry’s dilemma – how to adapt to a digital world and support the entire value chain.

As Cocoa Radar noted today, studies have shown that presently, as cocoa values drop well below $5,000 a tonne, there’s an alarming disconnect in the system resulting in infrastructure waste to the tune of $4,400 a tonne of cocoa through lost yield potential from ageing cocoa stock, extremely limited access to finance for farmers to improve their tools and fertilisers, myriad buying chains that erode margins further, as well as up to 30% of cocoa rendered unusable through poor cocoa drying conditions and storage prior to shipping, which all add up to farmers missing out significantly.

Can all of these factors be resolved? Will ‘Big chocolate’ ever be willing to raise the ceiling at which it is willing to pay for the key commodity that continues to be essential to the confectionery trade? These are the pressing questions that demand answers, and will surely form the hot topics for debate at this year’s WCF and Chocoa events in Amsterdam next week.

As I’ve found myself covering Chocoa in recent years, it’s a hugely informative event that can most definitely inspire its audience – but we are now at a point, if not already past it, that such dialogue has to be rapidly translated into action on the ground. Will enough be done to make a long-term systemic impact? The coming weeks and months will tell, but we can only hope for agricultural communities’ sake, that this is the case.

Neill Barston, editor, Confectionery Production

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