Partnerships can transform Africa’s cocoa industry

FedCo support local Ghanaian cocoa farmers. Image credit: Federal Commodities Limited.

13 December 2020 – Recent studies criticising the global chocolate industry for exploitative practices have concerned ethical consumers and there are calls to transform the African cocoa industry.

Cocoa farmers only earn about 6% of the chocolate industry’s total revenues. Leading chocolate companies have since 2001 made pledges to end widespread abusive labour practices but continue to fall short. However, it has been recognised that partnerships can transform Africa’s cocoa industry.

In Ghana, for example, local firm Federated Commodities ((FedCo) has shown it is only by improving the cocoa supply chain, with experienced local oversight, that ethical, sustainable, and profitable cocoa and chocolate industries can exist. According to FedCo CEO Hajia Maria Adamu-Zibo, the company is ready to form international partnerships to take the Ghanaian cocoa sector forwards.

50 million depend on cocoa

Cocoa is essential to the livelihoods of up to 50 million people around the world, including around five million smallholder farmers. West Africa, mainly Ghana and Ivory Coast, produces about 70% of the world’s cocoa on 1.5 million farms, with most of the crop coming from small farms (3-5 hectares of land).

Cocoa farmers work very hard, often under strenuous conditions, yet don’t earn enough to cover their basic needs. Although the worldwide chocolate market is valued at USD103-billion, on average, farmers earn only about 6% of the chocolate industry’s total revenues. Many cocoa farming communities in West Africa lack access to education, potable water, and basic social amenities.

Labour practices a concern

Furthermore, labour practices on cocoa farms are problematic. In a bid to reduce production costs, farmers are inclined to use child labour. An estimated 1.56 million children work on cocoa farms in Ghana and Ivory Coast. About 43% of children aged 5-17 in these two countries are engaged in hazardous work, including exposure to agrochemicals without protective equipment, the use of dangerous tools and working at night.

Despite years of pledges from chocolate manufacturers to end abusive employment practices in their supply chains, there has been a 14% increase in the number of children working in cocoa farms over the past 10 years, accompanied by a 62% rise in production.

The Director of Impact at the Fairtrade Foundation, Louisa Cox, suggests that “long-term finance, training and technical services, and helping farmers diversify beyond cocoa’ is needed to help address child labour in the cocoa industry. These are all measures that FedCo—an indigenous licensed buying company (LBC) founded in 1996 in Ghana—has a sustained track record of taking.

“As an affiliate company of Global Haulage, FedCo engages in the supply of traceable and certified cocoa beans to help promote sustainability in cocoa production through community development and capacity building of farmers. Under this programme, farmers are trained on adult literacy and good agricultural, business, and social practices, which empowers them economically,” says Adamu-Zibo.

“The wellbeing of the farmer is of high priority to us. We strive to have a relationship beyond just transactions with the over 50 000 farmers who make up our supply base. We were amongst the first indigenous privately owned firms to go into sustainability. FedCo has achieved several milestones since then. We have 300 employees, 1700 purchasing clerks, a larger fleet of vehicles, as well as an affiliate company that does not only cocoa haulage, but also other endeavours related to the industry.”

“We have also touched the lives of countless farmers and communities across Ghana through social interventions. The FedCo Cocoa Farmers Association consisting of about 15 000 farmers provides social benefits, including funeral benefits, and loan facilities to set up farms, to buy agricultural inputs, and to send their children to school. A total of 3000 farmers have benefited from various forms of financial support in excess of USD500 000 towards their farming activities. Together with our partners, FedCo has since 2012 supplied over 44000 million tonnes (Mt) of sustainable cocoa beans and invested about USD7-million in sustainability, through training, cash premium payments, and various projects,” says Adamu-Zibo

Adamu-Zibo adds: “Access to financing has always been a problem for the farmers. Farmers’ lives are improved when we facilitate access to inputs and credit facilities so that they effectively carry out their pre-and post-harvest work. We are big on helping farmers by assisting them add value their livelihoods. Going forward, we intend to help more farmers improve their living income by helping them get sustainability programs that will see them get paid more.”

On diversification beyond cocoa, Hajia Adamu-Zibo says, “We have diversified into the cashew market which gives us a great alternative during the lean period of the cocoa season. Part of our community engagement drive is getting into farm service agreements with individual farmers. Deals like that will see us take care of their yield in exchange for the commodity after harvest. Diversification helps farmers earn more because they are not banking their livelihoods on just one crop. Processing is part of our long-term plan as well.”

Empowering farmers through education, skills and partnerships

Federated Commodities has big dreams for farmers in Ghana. “We go beyond just buying. We really try to do more for the farmers and communities,” says Adamu-Zibo. The LBC believes that partnering with academic institutions to impart technical skills holds promise for improving farmers’ lives and the cocoa industry.

“We have put in place programmes to help improve the quality of life of our farmers. For instance, we have worked with local educational authorities to build schools that will help give youth relevant skills to work in the industry. So far, we have constructed seven schools and intend to build more,” she says.

“Training programmes for farmers are also part of our agenda so that they can learn how to diversify crops and make use of crop by-products. We are also teaching them financial literacy skills to empower them to better manage their finances. Since October 2018, about 2032 farmers have enrolled in FedCo’s Village Savings and Loan Programme, run in partnership with Solidaridad West Africa, which is enabling farmers to save for their futures and fund their ventures. We have had interactions with the Kumasi Technical School about the possibility of their students making tools that can help farmers break the cocoa. Discussions are also ongoing on how we can mechanise more processes.”

With more partnerships and funding, FedCo aims to be able to do more, for more communities. “Our activities have really enhanced communities. We have also built libraries, computer centres, community halls and over 100 boreholes. It makes me so happy to see FedCo’s impact in the lives of farmers and in communities, and how appreciative they are.”

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