As restrictions continue to ease here in the UK, international social lender, Shared Interest continues to keep in touch with farmers in developing countries, as they also adapt to an everchanging world. Here Managing Director, Patricia Alexander, describes how the pandemic is just one of the many challenges faced.
Before Covid-19, there was another major threat to cocoa production, and it continues to affect farmers, particularly in Ghana and Côte d’Ivoire. A pricing war began two years ago, when government bodies threatened to cut off the world’s cocoa supply if a minimum price was not achieved. Following a number of negotiations, the two governments settled for a fixed premium of 400 US Dollars above the predetermined Cocoa Futures contract price – the world benchmark for the global cocoa market.
However, they could not have anticipated a global pandemic was on the horizon. As countries across the world locked down, demand for cocoa plummeted – and yet again, farmers are paying the price. Yves Kone, Managing Director of Cote d’Ivoire regulator, Le Conseil du Cafe Cacao, described how some cocoa buyers are now backtracking on the commitment made, in a letter to the World Cocoa Foundation in November last year. He believes that some buyers are currently refusing to buy directly from Ghana and Cote d’Ivoire.
Ghana and Côte d’Ivoire together provide 70% of world’s cocoa, and according to research carried out by the World Cocoa Foundation, the average West African grower farms less than 3.5 hectares, with no access to irrigation or modern farming techniques. Also, a typical farmer, working outside of Fairtrade, lives on around 75p per day (far below the World Bank’s extreme poverty line of £1.40) and many are responsible for a household of up to eight family members. Thanks to the investment of over 10,000 UK members, Shared Interest provides finance to Fairtrade businesses in 51 countries.
This much needed support means that co-operatives are able to increase their productivity and provide a stable income for farmers. Côte d’Ivoire remains the largest supplier of cocoa in the world market. However, unfortunately, Covid-19 restrictions have affected supply chains and consumer behaviour. The impact of falling sales has not only left growers without a supply chain for their crop, but many have nowhere to store it. The only remaining option is to sell to local middlemen, who demand a heavily discounted price. Farmers are also faced with the immediate effects of climate change. Shifts in weather patterns can dramatically affect harvest times, causing fluctuations from year to year, even on the same farm. However, despite this, the majority of our cocoa farmers have reported a strong harvest. In fact, many farmers are now facing a surplus and struggling to store the cocoa they have not managed to export. Often, the road networks are poorly maintained and are vulnerable to flooding in the rainy season, making the transportation of cocoa difficult. ECOOKIM is a union of seven co-operatives, working with over 30,000 producers, across four rural regions of Côte d’Ivoire. These communities all suffer high unemployment levels and poor healthcare. They also face the challenges caused by deforestation, soil degradation and water pollution. Farmers tend to work in family groups of between 10 and 15 workers. Cocoa is vital to their livelihoods, providing 70% of their income.
ECOOKIM is one of the best performing Fairtrade cocoa producers in the region. They have used a Shared Interest export credit facility for almost eight years, and the co-operative has continued to grow during that time. Fortunately, they prepared for the potential impact of the pandemic and continue to work closely with farmers to sell the cocoa harvested. Sadly, this is not always the case and the message we receive from our regional team in Africa is that Shared Interest continues to be a reliable source of finance when the future remains uncertain for most.
