Greening the Supply Chain in Ghana and Brazil:

can the private sector address deforestation in the cocoa sector?

Marisa CamargoUniversity of Helsinki

Deforestation and commodities

• Agriculture = 80% deforestation• Zero-deforestation supply chain pledges– Soy, palm oil, cattle, cocoa

• Cocoa – Villain: driving DD 14–15m ha last 50 years– Ally: agroforestry systems in the landscapes– Victim: CC impacts on growing regions

Suitability of cocoa production(current and 2050)

Source: Läderach 2013

Production

Thousand of tonnesSource: ICCO 2015

2012/2013Estimates2013/2014

Forecasts2014/2015

Côte d’Ivoire 1449 1746 1740

Ghana 835 897 696

Nigeria 238 248 235

Cameroon 225 211 220

Africa 2836 3197 2984

Ecuador 192 220 250

Brazil 185 228 215

America 622 708 729

Indonesia 410 375 370

Asia & Oceania 487 454 455

World Total 3945 4359 4168

Ghana

• 2nd largest producer • Farm size below 4 ha • Direct and indirect employment to 2 million people • Cocoa = 25%/a of total foreign exchange earnings• Ghana Cocoa Board (COCOBOD) under Ministry of

Finance, implements government policies and programmes

• Very regulated system to determine logistics and price of cocoa production

Ghana – supply chainMajority is exported

Source: Sutton 2012

• Large number of smallholder • 27 licensed buying companies • Few processors (ADM, Cargill, Barry

Callebaut) and manufacturers (Nestlé) • One exporter (Cocoa Marketing Company)

Challenges

• Farmers average age 50 years• Limited extension services• Productivity is low (355 kg/ha)• Loss of ~34% (diseases)• Cocoa trees are aging• Majority of cocoa is exported • Majority of farmers not organized– Difficult to provide TA and certify

• Most cocoa farmers not bankable

Brazil

• Large global producer, 1970’s no-shade policy• Pest (1980’s) destroyed plantations – areas burned;

producers left idle; no gov/mkt support; rural exodus• Small growers but some large plantations• Challenges: TA, loans, pest, urbanisation, labour costs• >90% production processed and consumed in Brazil • Good cases of successful

restoration of the cocoa landscape, sharing space with other commodities and improve livelihoods – need to scale up!

Cocoa: challenges and solutions• Farmers aging and

scattered in landscape • Low-productivity, lack

of TA, little access to credit, aging trees

• Dependency in one commodity

• Little research on agro-ecology/agroforestry

• Climate change impacts on cocoa growing area

Landscape approach• Work in larger areas with various

stakeholders and activities – education, research (species, agroforestry

(cash and food crops))• Build synergies with other LUs and actors

(Ministries) - Zoning (REDD)• Id and address degradation• Increase resilience• Aggregate several farmers• Promote product diversification• Develop Landscape certification• Empower youth e.g. entrepreneurial skills

$£€¥

Deforestation not the only challenge!

Can the private sector address ‘deforestation’ in supply chains?

Who?

Global JourneyFrom cocoa to chocolate

Who is the private sector?

Benefits and responsibility

• Several private actors benefit from cocoa production….

Farmers 3%

Local taxes and cocoa buyers 5%

Transport, storage, and trade 12%

Grinder/processors 7%

Manufacturing costs 20%

Marketing 10%

Retail/supermarket margins 43%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

• They should also share the costs of producing sustainable commodities

Chocolate value chain

Seed and fertilizer producers

Local buyer/ Traders

Transporter Processing Manufacturer

RetailerConsumer

Investors

Packaging Co Recycling/Disposable

facilities

Suppliers (sugar, dairy machinery)

Farmer

Emissions

Emissions

Emissions

Deforestation not the only activity that leads to emissions

In-setting

Encouraging both supply and demand of sustainable commodities

Supply Demand

Policy mix encouraging demand and supply of sustainable commodities

Education Voluntary

RegulatoryProperty right, price-

based

Advertising, education campaigns, shamming, dissemination of results (evidence)

Exclusive use rights, easements, offset arrangements, leasing and licensing, charges, levies, use fees, tax instruments

Industry voluntary commitments, development assistance, ESG criteria

Zoning, land use restrictions, standards and bans, product labeling, Information disclosure (GHG)

Governments

Thank you!marisa.camargo@helsinki.fi

This research was funded by UK aid from the UK Government, however the views expressed do not necessarily reflect the views of the UK Government