Cocoa remains Ghana`s most important export crop representing nearly 40 percent of total exports. Due to its significant foreign exchange earnings, the Government of Ghana has set up the Ghana Cocoa Board under the Ministry of Finance and Economic Planning to regulate the sector with the hope of ensuring productivity and long term supply of the crop.
Cocoa farming in Ghana is cultivated by smallholder family farms usually with average farm size of 2 – 3 acres. It is largely rain fed and rather dominated by adult farmers with an average age of 55 years whereas life expectancy in Ghana is set between 61 – 64 years according to the World Health Organisation (WHO) data published in 2013.
In the last three seasons, we have seen quite a significant rise in the tonnage of cocoa produced in the country, from 850 000 metric tons of cocoa to 950 000 tons of cocoa beans project for the 2019/2020 crop season.
Although an increase in productivity, it also cast a negative implication in the fall in price of cocoa per tonne as supply outstrips demand. Both the Government of Ghana and Cote D`Ivoire recently introduced the Living Income Differentials amidst backlash from some stakeholders.
The intent is to secure or hedge the farmer from any economic downturn and at the same time improve the average cocoa farmer according to both governments. Not so long ago, the Government of Ghana received a syndicated loan of US$1.3 billion dollars to facilitate the purchase of cocoa for the 2019/2020 crop season. This indeed is a huge commitment on government to procure cocoa and fulfill its mandate by paying back the loan especially in these trying times of COVID19.
Undoubtedly, COVID-19, possess a threat to the successful implementation of cocoa sustainability programmes by government and other equally important cocoa companies. Prior to this pandemic, there were already existing challenges bedeviling the cocoa sector.
These include bad agricultural practices, deforestation & climate change, pest and disease infestation – CSSV, aging farmers and their farms, and the indifference of the youth to venture into cocoa farming as a business. In the wake of this pandemic, which has dire implications on the food supply chain, what can the government of Ghana Cocoa Board and or cocoa companies do differently? The following measures are propounded for consideration by cocoa supply chain actors;
Scale-up use of e-money in cocoa purchasing
Traditionally, most farmers transact businesses with physical cash and this has been the norm for many decades in developing countries like Ghana. In the early 1980s, COCOBOD introduced the Akuafo Cheque System to eliminate the physical handling of cash with regards to cocoa purchasing at the farmer level but this didn’t survive the test time due to poor enabling environment.
We have seen attempts by other private companies like Cargill introducing a digital payment system for buying of cocoa and doing same for paying premiums to farmers. Though some pockets of challenges were observed with respect to internet connectivity particularly in the rural areas, it has proven to yield good results by instilling farmer trust and transparency in their operations.
Indeed, it has given such companies some sort of leverage over their compatriots and thus has increased their purchasing power. The World Cocoa Foundation (WCF) in partnership with the Better Than Cash Alliance initiated a pilot project to promote digital payments among cocoa value chain actors.
The objective was to assist cocoa companies to transition from physical handling of cash to digital transactions given the enabling environment created by Mobile Network Operators. Under this initiative, some member companies of WCF have been trained and supported to set up digital payment solutions in their operations.
It is worth noting that the Ghana Cocoa Board has embraced this innovation by working closely with WCF to implement similar initiative with the Licensed Cocoa Buyers Association of Ghana (LICOBAG). To this end, some License Buying Companies (LBC) has been assisted to set up digital payment solutions with technical support from mobile network operator and other Fintechs.
Indeed, the growth of mobile telephone and robust ICT systems in developing countries brings huge opportunities for the agricultural sector and at the same time provides efficient marketing systems.
The challenge, however, has often been on the capacity of farmers to effectively utilize this technology beyond making and receiving calls. In other African countries where the digital innovation has received massive attention, the use of mobile phones has significantly improved financial transactions; a case in point is the MPESA of Kenya.
In recent times, the government of Ghana has also launched quite a number of digital solutions; mobile network interoperability, the Ghana Interbank Payments and Settlement System (GhIPSS) and Proxy Pay Platform etc., all in an effort to create the enabling ecosystem for digital innovations to thrive in Ghana.
There could not have been any best time than now for Ghana Cocoa Board to launch deep into the digital payment space, especially, at a time when physical handling of cash could pose a threat to human health. It will also eliminate any act of corruption and theft, thereby instilling a high sense of trust and transparency in cocoa operations.
Introduce digital training systems for CEAs
One of the core functions of Ghana Cocoa Board is the Cocoa Health and Extension Division (CHED). This is the hub of all technical know-how on cocoa growth and development providing training on good agricultural practices and deploying community extension agents to assist cocoa farmers in their farm activities.
The traditional training cascade has been to recruit graduates in agriculture, train them on cocoa agronomy and deploy them to either train lead farmers and or directly train farmers on best practices. Though face-to-face training remains relevant, the current health crisis suggests the need to modify this approach.
I did emphasis in my earlier article, ‘The COVID 19- A changing world and a changing approach to agriculture’, that there would be the need to transition from face- to-face training to online training such as the use of webinars, instructional videos etc. Not only will this minimize the spread of contagious diseases but also pave the way for us to explore the limitless opportunities the digital space has to offer.
Some chocolate companies and cocoa traders are advanced in the use of ICT for farmers thus it might be expedient for COCOBOD to reinforce their partnership with the private companies on this direction. Cocoa-link (initiated by The Hersheys), Farming Solution (Solidaridad) and MergeData (Farmerline) are few examples of farmer apps tailored for cocoa and owned by private companies.
Besides, some experts in the cocoa sector have questioned the effectiveness of the traditional group training model and thus have proposed other training methodologies such as coaching techniques for better adoption of training. It is also about time for government and private companies to consider recruiting independent service providers to provide skilled services such as pruning, cocoa pollination, pesticide spraying and fertilization directly to cocoa farmers.
This could be a window of opportunity for many unemployed youths in our rural areas to find jobs and stay in their communities to serve their country. Mobile phones are predominantly used by younger generations than the elderly folks and thus would appreciate any online training technologies. This approach could significantly increase the Agricultural Extension Officer to Farmer ratio which is currently at 1:1300, if all extension workers are deployed.
Introduce online sales portals for License Buying Companies (LBCs)
The Ghana Cocoa Board regulate the purchase of cocoa through four main stages; Farmer level – Society level – District Level – Takeover point (Port). At each stage there’s a unique standard operating procedure that ensures food safety and traceability. These also include unique identification of units/batches, information on when and where units are moved or transformed, and a system linking these data.
Typically, at the district level, Licensed Buying Companies (LBCs) are authorized to buy cocoa from societies. The district operation arranges transport to carry cocoa from the society shed to the district depot on a weekly basis. This movement is called primary evacuation and is supported by a primary evacuation waybill. To this, Purchasing Clerk attaches the waybill to the society daily schedule, which details farmer-by-farmer purchases. This schedule is filed at the district office.
On arrival at the district depot the quality and moisture content of the cocoa are checked (often in the presence of the farmer) by the Purchasing Clerks. Bagged cocoa is stored in a district depot until there are sufficient bags to make up a truck load (normally 600 bags) for evacuation to port (secondary evacuation).
Before cocoa beans can undergo secondary evacuation from the district depot they must undergo a quality test by the Quality Control Division (QCD) of COCOBOD. Whiles this set up is commendable, could we migrate this onto an online portal where sales announcement would be made at all levels until final destination? Undeniably, this will not completely eliminate the human interface but the big takeaway is the fact that it would make available big data for decision making process.
We have seen similar online portals where sales are announced for off takers to make their requisitions. All transactions are recoded online and thus data available at the right time and place. Typically, online portals are designed to offer users an assortment of the most used types of information and services. Example of an online portal for cocoa trading among private companies is the UTZ Good Inside Portal in the rollout of voluntary cocoa certification schemes. Something cocoa producing countries may want to adopt?
Reinforce Cocoa Farmer Cooperative Formation
Not so long ago, the CEO of COCOBOD, Joseph Boahen Aidoo, launched the cocoa farmer cooperatives in Ghana. The launch, which was held in Kumasi, was to officially announce the policy, and plans to assist farmers to form such cooperatives in their various communities across the country.
As captured by the CEO, cocoa farmers have to come together to form an identifiable group; create a documented record of their membership and executives/leaders and then be registered with the Department of Co-operatives, which has the mandate of registering farmer groups into co-operatives.
The cooperatives will then work on behalf of their members for their mutual benefits and become eligible for the direct sourcing of assistance, agrochemical, implements and extension services from COCOBOD.
With help from COCOBOD, the cooperatives will also be coached on way to engage creditors in negotiations to access credit for farming operations; learn to take over the ongoing Productivity Enhancement Programmes (PEPs) when COCOBOD exits and effectively implementing calendar-based farm activities to improve the management and preparation for flowering and pod development.
Cooperatives as we know, puts in place much stronger and effective farmer groups as compared to the traditional farmer association. It gives farmers much power and control to be able to make their own decisions and at the same time increases their bargaining power. It is about time for farmers to be empowered, accountable and responsible for their own decisions. It will be advisable for COCOBOD to reinforce this innovation in collaboration with private companies and experts.
Boost local processing and consumption of cocoa
Ghana is ranked as the second largest producer of good quality cocoa. However, there is little processing and consumption of the cash crop. According to the Cocoa Processing Company (CPC), Ghanaians consume only 400 grams of chocolate daily compared to other developed countries that consume twice the number.
Currently almost 80 percent of cocoa produced annually is exported in raw form. Although a few private companies have started local processing of cocoa, that is not enough to meet local demand allowing for the high importation of foreign-made chocolate. In Ghana, very few companies are engaged in the local processing of cocoa apart from CPC and other multinationals. Statistics show that only 10 percent of the locally processed cocoa is used for the production of confectionary products for the local market.
Recently, government announced its intention to implement policies that will ensure that at least 50 percent of Ghana`s cocoa beans are processed locally and consumed. It is in this direction that Ghana Cocoa Board (COCOBOD) established a US$60 million Cocoa Processing factory at Sefwi Wiawso in the Western Region of Ghana. This follows a partnership agreement between COCOBOD and the Government of China. The government also launched a national cocoa consumption campaign thereafter to get all Ghanaians on board across the country.
Whiles this is commendable, government must increase its campaign on cocoa consumption and remove all the bottlenecks to allow indigenous processing companies to thrive and be more competitive.
These include reviewing trade and taxation policies for local processors, facilitating easy access to cocoa beans for indigenous companies without necessarily having to compete purchasing at the apex level, include consumption of chocolate in the school feeding programme to develop taste right from the basic level and managing macroeconomic ramifications of COVID-19 on food supply.
>>>The author holds a BSc Agriculture, MSc Economics, and MBA in International Management of Resources & Environment. He has over 10 years’ experience in sustainable cocoa production in West Africa. He is an agribusiness specialist, professional trainer and impact investment. Email: [email protected]