Boosting Ghana's economic backbone
Cargill’s cocoa sustainability program aims to deliver sector-wide transformation in the world’s second biggest cocoa producing region. It’s a strategy aligned to the government of Ghana’s plans to reinvigorate the economy.
By Taco Terheijden April 11, 2017
Three commodities are pivotal to the economic prosperity of Ghana: gold, the agricultural sector where cocoa is the most significant contributor, and more recently, oil. Historically, they have contributed towards making the country one of the most dynamic economies in Africa.
In January 2017, the newly elected government of Ghana made the strategic decision to improve the competitiveness of the cocoa sector by supporting increased investment and incentives. To achieve this ambitious goal, a collaborative effort between government, financial institutions, development finance institutions and other critical actors in the agriculture value chain, including Cargill, is key. It’s a strategy which firmly aligns to Cargill’s programs on the ground, and we are taking several steps to help Ghana’s cocoa sector thrive.
Direct Sourcing Cocoa in Ghana
First, we launched a specific business model that aims to drive sector transformation in Ghana. On April 11, 2017, we celebrated the establishment of our own licensed buying company (LBC) – Cargill Kokoo Sourcing Ltd – in Ghana.
Although Cargill has been operating a cocoa processing plant in Ghana since 2008, the move to direct sourcing reflects our commitment to continuing to grow capacity in Ghana. Crucially, it allows Cargill to directly source cocoa from certified farmers in Ghana for the first time, which will boost sustainability activities and supply chain traceability.
The LBC became operational in November 2016. Currently, over 25,000 farmers are registered to the LBC, of which 9,000 are actively pursuing selling and/or delivering beans through the network. It’s a tried and trusted model. We already source directly from farmers and farmer organizations in other origin countries in this way. By moving to this innovative model in Ghana, we can more efficiently implement our responsible and sustainable cocoa program, the Cargill Cocoa Promise, and better serve our customers. Through this, farmers and their communities benefit from training and coaching approaches, need-based community interventions, farm development and support in line with the strategy of COCOBOD and private sector partners.
Building Farmer Capacity and Financial Security Through Mobile Payments
Second, we are focused on innovation that will help farmers achieve greater efficiencies to improve their living standards and incomes. Central to this is the Cargill Kokoo Fie – dedicated warehouse facilities in each participating cocoa community. Farmers deliver their cocoa to the warehouses, where their beans are digitally weighed in front of them. The beans are assigned a fully traceable bar code and payment is made to farmers by electronic transfer, straight to their phone or e-wallet. This is a revolutionary initiative, made possible by our partnerships with E-Zwich, MTM mobile Money and Tigo Mobil Money. Farmers have warmly welcomed this, as it provides added assurance and certainty, improves their ability to trade more effectively and eradicates all risks associated with cash payments.
We also see mobile money as the critical first step towards improving living incomes for farmers, as we build the infrastructure and capabilities for a more efficient and effective supply chain. Our aim is to create an enabling environment for smallholder finance for the future, resulting in a better entrepreneurial environment noticeable at the farmer level.
The investment in the Kokoo Fie means that all cocoa beans are recorded in a standardized management system before they are collected by larger trucks, which transfer them to central warehouses. Thanks to the bar code system, each individual bag of Ghanaian cocoa beans can be traced to the individual farm. As a result, we are creating a fully traceable supply chain down to the farmer level.
Partnering On Sustainable Cocoa Supply Chains
Third, intrinsic to the LBC, is a renewed, long-term commitment by Cargill to close collaboration with the government and our multiple, long-term partners from civil society and public and private sectors. This approach is designed to drive forward structural changes and accelerate the progress towards improving farmer incomes and livelihoods.
To analyze the impacts of the programs on the ground, we are planning to emulate the strong monitoring and evaluation system and results framework we have in place in other parts of the world, including Côte d’Ivoire.
There is more to do to secure a thriving cocoa sector in the world’s second largest producing region. However, we are encouraged by the progress being made and the opportunities that the LBC inauguration provides to Cargill, partners, customers and stakeholders.
Speaking of the LBC inauguration, Joseph Boahen Aidoo, CEO from COCOBOD, shared his excitement on the future of cocoa in Ghana with us.
“We are pleased to have worked with Cargill on such an innovative project, and this shows our continued partnership with Cargill goes from strength to strength. We see this model as the future of cocoa sourcing in our country. COCOBOD will continue to work with all stakeholders in the sector to support the livelihoods of the farmers to bring about efficiency in production and at the same time environmental sustainability and transparency in the sector.”
Ultimately, we are looking forward to building on our long history in Ghana and to embracing innovative sustainability practices and the latest technologies along the way. Above all else, we are committed to improving the livelihoods of Ghanaian cocoa farmers and their communities for generations to come.
Taco Terheijden is Director of Cocoa Sustainability at Cargill Cocoa & Chocolate. He spent six years in cocoa trading with Cargill, before heading the company’s commercial program in Ghana from 2007-2010. Since then, he has led the company’s cocoa sustainability strategy, including the creation of the Cargill Cocoa Promise, Cargill’s commitment to improving the livelihoods of farmers and their communities to secure a thriving cocoa sector for generations to come.