Cocoa farmers only earn about 6% of the chocolate industry’s total revenues
Jeudi, 10 Décembre 2020 12:04 - Mis à jour Jeudi, 10 Décembre 2020 12:19

ACCRA, Ghana, December 10 (Infosplusgabon) - Recent studies criticising the global
chocolate industry for exploitative practices have concerned ethical consumers. 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.

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

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 the majority of the crop coming fromsmall farms (3-5 hectares of land).

Cocoa farmers work very hard, often under strenuous conditions, yet don’t earn enough tocover their basic needs. Although the worldwide chocolate market is valued at USD 103 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 socialamenities.

Furthermore, labour practices on cocoa farms are problematic. In a bid to reduce productioncosts, farmers are inclined towards child labour. An estimated 1.56 million children work on

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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 intheir 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.

Federated Commodities’ Sustainable Practices Countering Child Labour in the Cocoa Industry

The Director of Impact at the Fairtrade Foundation (www.Fairtrade.org.uk), Louisa Cox, cited ina Guardian article (https://bit.ly/2JubU5y) suggested that ‘long-term finance, training andtechnical services, and helping farmers diversify beyond cocoa’ is needed to help address childlabour in the cocoa industry. These are all measures that Federated Commodities (FedCo)—anindigenous licensed buying company (LBC) founded in 1996 in Ghana—has a sustained trackrecord of taking.

“As an affiliate company of Global Haulage (GlobalHaulageGroup.com), 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, whichempowers them economically,” says Hajia Maria Adamu-Zibo, the Managing Director of2 / 11

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Federated Commodities, in an interview with AfricaLive.net (https://bit.ly/3ocQE3B).

“The wellbeing of the farmer is of high priority to us. We strive to have a relationship beyond justtransactions with the over 50,000 farmers who make up our supply base. We were amongst thefirst indigenous privately owned firms to go into sustainability. FedCo has achieved several
milestones since then. We have 300 employees, 1,700 purchasing clerks, a larger fleet ofvehicles, as well as an affiliate company that does not only cocoa haulage but also otherendeavours related to the industry.”“We have also touched the lives of countless farmers and communities across Ghana throughsocial 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 3,000 farmers have benefited
from various forms of financial support in excess of USD 500,000 towards their farmingactivities. Together with our partners, FedCo has since 2012 supplied over 44,000MT ofsustainable cocoa beans and invested about USD 7 million in sustainability, through training,cash premium payments, and various projects.”“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 theirpre-and post-harvest work. We are big on helping farmers by assisting them add value theirlivelihoods. Going forward, we intend to help more farmers improve their living income byhelping them get sustainability programs that will see them get paid more.”

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On diversification beyond cocoa, Hajia Adamu-Zibo says, “We have diversified into the cashewmarket which gives us a great alternative during the lean period of the cocoa season. Part ofour 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 Local Educational Authorities and Skills 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 Hajia 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 andintend to build more,” she says.

“Training programmes for farmers are also part of our agenda so that they can learn how to4 / 11

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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 2,032
farmers have enrolled in FedCo’s Village Savings and Loan Programme, run in partnership withSolidaridad West Africa, which is enabling farmers to save for their futures and fund theirventures. 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, Federated Commodities aims to be able to do more, formore 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,”says Hajia Adamu-Zibo.

Working with Valrhona to improve educational facilities in Ghana’s Western Region.

FedCo has a long-term agreement with Valrhona (www.Valrhona-Chocolate.com), a French
premium chocolate manufacturer that sources and transforms the finest cocoa to makehigh-quality chocolate. The agreement allows Valrhona to source cocoa directly from 1001
producers in eight communities in Ghana’s Western region.

Community leaders stressed the importance of improving educational facilities. A subsequent

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assessment of schools revealed 30% of students were learning in unsafe conditions, while athird of children were out of school. In 2017, Valrhona launched a five-year project to improveaccess to education and learning conditions for the communities’ 4882 children.

FedCo-sponsored Asamankese Cocoa Pilot Project

Cocoa farming is the economic base of Asamankese town, in Ghana’s Eastern Region, but thefarmers have struggled with skilled labour and agricultural inputs—which has contributed tolimited yields and little to no profit.

FedCo has been working with farmers in Asamankese to improve production and yield by
providing skilled labour and inputs such as fertilizer. However, the project is currently on holddue to funding challenges. Hajia believes that this project has lots of potential and that many
more similar ones can be done;“in spite of these initial challenges we are determined to pursue this and similar projects
because we believe that they offer significant benefit to our farmers”.

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FedCo is open to new partnerships that will allow the project to recommence.

As one of the top foreign exchange earners for Ghana, cocoa is central to the country’seconomic development. The ‘cash crop’ has sustained lives over generations and successive
governments have explored interventions to revamp the sector.

Interventions taken by the Ghana Cocoa Board (Cocobod) under President Nana Akufo-Addo’s
administration, have since 2017 included increasing volumes of cocoa production throughimproved agronomic practices and increasing producer prices. In September 2020, thegovernment announced a 28% increase in the guaranteed producer price it pays to farmers forthe 2020/21 growing season. The price rise is due to the implementation of a price floor of USD
2,600 per tonne and a living income differential of USD 400 per tonne, to put more money into
the hands of farmers. Ivory Coast is taking similar steps.

“Indeed, cocoa has been an important commodity for our country. Cocoa is not just a cash cropfor us; it has also become part of our politics. The cocoa sector feeds about 800,000 people inthe country and issues that affect the industry can be quite emotive. Unfortunately, our industry
has suffered a dip in production in recent times occasioned by climatic changes as well asfactors such as disease. The impact of the measures the government has put in place will start
being felt in a few years, with the expected rise in volumes of production,” says Hajia
Adamu-Zibo.

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Cocoa farmers only earn about 6% of the chocolate industry’s total revenues
Jeudi, 10 Décembre 2020 12:04 - Mis à jour Jeudi, 10 Décembre 2020 12:19“Adding value to our cocoa is also part of our national strategy. Value addition will help increase
the value of our product, boost our standing in the global cocoa industry, and lead to job
creation.”“The government is focusing on increasing production while also encouraging diversification in
the overall agriculture sector to improve the sector and boost our national revenue. Cocoa andcashew processing will help add value and put even more people to work. It will also help morecompanies like us benefit from the industrialisation drive of the Ghanaian economy. Other
commodities the government is looking at include coconut and rice production, to ensure theagricultural industry reduces its reliance on cocoa. This will give Cocobod room to better
strategise and add value to cocoa.”“In the future, cocoa will not be the dominant crop in Ghana if our diversification plans come tofruition. Cocoa will still be an important and relevant crop but it won’t be as prominent as it isnow.”

Partnership: The Path To International Growth8 / 11

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With the African Continental Free Trade Area (AfCFTA) agreement set to commence in January
2021, Hajia Adamu-Zibo believes that Ghana stands to gain greatly as long as the country
improves its skill base and makes production funding more accessible.

“We are well endowed with natural resources and qualified hardworking personnel. The relevantbodies are doing their best, but we are still not as sophisticated as we need to be for theinternational market. The majority of items we import can be produced locally, but we lack thefinesse required to make our products more attractive. A lack of focus on perfecting ourproducts opens the door to a high import rate. Our country must improve its skill base,” shesays.

“The other obstacle in the way of our production capacity is funding. The cost of funding inGhana is very high compared to other countries. If the interest rates eat so much into yourmargins, then you can barely run a profitable venture. If we work on the rate and make funds
more accessible, we will create room for more innovation and production in our country.”

Federated Commodities is exploring global partnerships to tap more into the global cocoa
industry. “We are looking to seal important contacts in Europe and America as we seek
sustainability partnerships that will be of mutual benefit. In Africa, we are looking at maybe
getting partners in Cote D’Ivoire as well as South Africa because these are two strong cocoa
markets. We possess the knowledge as far as cocoa is concerned and an ideal partner would
be someone who has the technical expertise to process on a large scale,” says Hajia
Adamu-Zibo.

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Cocoa farmers only earn about 6% of the chocolate industry’s total revenues
Jeudi, 10 Décembre 2020 12:04 - Mis à jour Jeudi, 10 Décembre 2020 12:19“Ghana can be the hub when it comes to business in all spheres if we adjust our tariffs. Thatway, we will favourably compete with Togo and Cote D’Ivoire. Maybe we also need to diversify
our languages and get proficient in French. Ghana is surrounded by francophone countries andthat should push us to learn French to properly transact.”

Skills Development: Optimising for Greater Heights

As Ghana seeks to grow its economy and compete more on a global scale, Hajiya Adamu-Zibo
calls on the government to, “place more emphasis on skill development.”“We must cultivate a culture of perfectionism so that we develop the right disciplines andproducts that serve our people and beyond. If we have the right skills, we will have the rightmindsets and ultimately the right products. Of course, we have to tackle issues of cost andinfrastructure but I believe skills should be our priority,” she says.

On Federated Commodities’ ambitions to make greater contributions to the global sustainablecocoa industry, as well as Ghana’s agricultural sector, Hajia Adamu-Zibo, says, “There are a lotof challenges in the cocoa industry, and the competition is very keen, yet we have a loyal
customer base. I believe Federated Commodities must be doing something right and that is why
our farmers are happy with us.”10 / 11Cocoa farmers only earn about 6% of the chocolate industry’s total revenues
Jeudi, 10 Décembre 2020 12:04 - Mis à jour Jeudi, 10 Décembre 2020 12:19“We need good partnerships to help our farmers so that we can keep them motivated. We arelooking at skill development, education sponsorships, loans and savings programmes and hostof other programmes. Our consistency has made us very trustworthy and reliable in a very
competitive environment. In a decade, I foresee a company full of diversified professionals thatcan thrive in many fields and make this company a huge name in Ghana and beyond.” (Distributed by APO Group).

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