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Development of a Sustainable Cocoa Supply Chain

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

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Development of a Sustainable Cocoa Supply Chain

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  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 1998- Conclusion:“Cocoa -- An economic engine and conservation tool for the rural tropics”

  3. Sustainable Cocoa Team • Sustainable Tree Crops Program begins in 1998 - 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

  6. 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

  7. Cocoa Production Shifts • 1900 - Top three • South America 47% • Caribbean 30% • Africa 15% • 2000 - Top three • Africa 66% • SE Asia 18% • South America 11%

  8. LMC COCOA demand chart 3,500 3,000 2,500 2,000 '000 mt 1,500 1,000 500 0 1900/01 1910/11 1920/21 1930/31 1940/41 1950/51 1960/61 1970/71 1980/81 1990/91 World Cocoa Production, 1900/01-1999/00 2000

  9. World cocoaproduction

  10. ApproximateVolumeof Cocoa Numbers of participants Tonnage of cocoa 600,000 Produce 0.5 - 3 tonnes Farmers Around 5,000 Collects 100 - 200 tonnes Pisteurs Collect and transport 500 - 10,000 tonnes Around 250 Traitants 30 Process and export 10,000 - 60,000 tonnes Exporters 4 - 6 Ship over 100,000 tonnes ShippingLines 5 (US) Processors 9 (US) Manufacturers

  11. 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.

  12. 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

  13. 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.

  14. 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

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

  16. 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

  17. 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

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

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

  20. 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

  21. 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

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