1. Development of a Sustainable Cocoa Supply Chain
John Lunde & David Stuart
Representing:
The Global Chocolate Group
January 15, 2003
AGOA Meeting--Mauritius
cocoaAGOAm1d15y03

2. Sustainable Cocoa:The Beginnings
Smithsonian Sustainable Cocoa Conference Conclusion: “Cocoa -- An economic engine and conservation tool for the rural tropics”

3. Sustainable Cocoa Team
Sustainable Tree Crops Program begins in shortly after Smithsonian conference.
Initial team: African partners, USAID, USDA, NGO’s, UNDP, International Institute of Tropical Agriculture (IITA) and Chocolate Industry.
Modest beginnings, positive contributions from partners and much learning on industry side.

4. Sustainable Cocoa Team
Break through goals developed: Sustainability through improving well being of small holders, their families, communities & protecting the tropical environment.
Working partnership expanded and today, includes DOL, ILO, GTZ.

5. Strength through Partnership
STCP organized into national networks of government, NGO’s, researchers, and farmer organizations
Networks: Ghana, Cameroon, Guinea, Nigeria, and Guinea and they work together regionally!
Managed through IITA
Resources, knowledge shared and leveraged for HOLISTIC APPROACH

7. The Economics of Cocoa 3 million T annual production
Current market value of US$ 6 billion
3% per year annualized increase in demand over last 100 years
68 to 70% of world cocoa from W. Africa

8. Cocoa Production Shifts
Top three
South America 47%
Caribbean %
Africa %
Top three
Africa %
SE Asia %
South America 11%

9. World Cocoa Production, 1900/01-1999/00
500
1,000
1,500
2,000
2,500
3,000
3,500
1900/01
1910/11
1920/21
1930/31
1940/41
1950/51
1960/61
1970/71
1980/81
1990/91
'000 mt
LMC COCOA demand chart
2000

10. World cocoa production

11. Approximate Volume of Cocoa
Farmers
Exporters
Pisteurs
Traitants
Numbers of participants
Tonnage of cocoa
600,000
Around 5,000
Around 250 30
4 - 6
Shipping Lines
Produce tonnes
Collects tonnes
Collect and transport
,000 tonnes
Process and export
10, ,000 tonnes
Ship over 100,000 tonnes
Processors
Manufacturers
9 (US)
5 (US)

12. Cocoa -- A Small Holder Crop
1.2 to 1.5 MM farms in W. Africa -- 3 to 7 ha average
10 MM people on cocoa farms
Supplies up to 56% of the household cash in Ivory Coast
Households growing cocoa are better off.

13. Cocoa is Critical for Trade
As much as 45% of country’s foreign trade can come from tree crops, including cocoa.
Tree crops supply 19% of foreign exchange for Africa.
Africa has a comparative advantage with cocoa

14. Cocoa Economics in the U.S.
US averaged around 750,000 T consumption over last 3 years.
58% of US cocoa comes from W. Africa.

15. Cocoa Economics in the U.S.
For every $1 of cocoa imported--- $1 to $2 of other ingredients used
For yearly chocolate manufacture
1.5 million T of sugar
650 million pounds of milk
25% of all US peanuts
Cocoa Farmers and US Farmers are truly INTERDEPENDENT

16. Areas of Focus in STCP Promote farmer groups
Improve market & trade systems
Research & technology transfer
Work with communities
Cocoa farm diversification

17. Farmer Groups -- Results
Group marketing of products
EXAMPLE. Group selling increases co-op price by 10 to 25% -- $470,000 in Cameroon in 2000/01
Co-op management
Availability of inputs

18. Market and Trade--Results
Shift greater share of world price to farmer
EXAMPLE: Sale timing improves truckload profit by $5,000
Establish tighter quality specs

19. Research & Tech Transfer
Identify and increase high yield plant materials
Example: 50,000 plants distributed in Guinea
Biological control of Black Pod

20. Working with Communities
Co-operative labor sensitization
Example: 15 co-ops sensitized to youth protection
Improve access to education
Traditional
Vocational
Labor Monitoring

21. Farm Diversification Identify new shade systems for cocoa
Example: Cameroon multi-crop system shows both high profit & high biodiversity
Develop new shade species
Systems for land rehabilitation

22. The Challenges Ahead Streamline the supply chain Policy changes
Investments in rural sector
Improve social services
Telecommunications/computers
Farm/co-op credit
Cocoa as a reforestation crop