Demystifying the Cocoa Sector in Ghana and Côte d’Ivoire 2018 Bymolt, R. | Laven, A. | Tyszler, M. Senior Advisors Sustainable Economic Development Acknowledgements The researchers are thankful for the financial support provided by the International Trade Initiative (IDH), the Jacobs Foundation, the Lindt Cocoa Foundation and UTZ. KIT is also grateful for the contribution of the German Initiative on Sustainable Cocoa (GISCO). In the field, Agriculture and Lifecycle (ALC) was our local partner in Ghana, while Agricole Local Partner (ALP) supported us in Côte d’Ivoire. We also want to thank our KIT colleagues for their contribution to the research: Cedric Steijn, Genevieve Audet-Belanger, Bas Buurman, Eline Minneboo and Chloe Vaast. Other research partners that supported this research were Friedel Hütz-Adams (Südwind Institute) and François Ruf (CIRAD). Lastly we would like to thank WRENmedia for editing the report and Anita Simons (symsign) for the design. ACKNOWLEDGEMENTS 2 Table of contents Acknowledgements 2 1 introduction 7 1.1 The future of cocoa 8 1.1.1 The age of cocoa farmers 8 1.1.2 Cocoa farmer livelihoods 9 1.1.3 Improving cocoa productivity 10 1.1.4 Higher cocoa prices 10 1.1.5 Diversification 11 1.2 The importance of data for understanding complexity 12 1.3 Demystifying the cocoa sector with open data 13 2 Methodology 14 2.1 Research approach 15 2.2 Research phases 17 2.2.1 Phase 1 - desk research and methodological development 17 2.2.1.1 Research questions 17 2.2.1.2 Development of research tools 18 2.2.1.3 Sampling 19 2.2.2 Phase 2 - Fieldwork and data collection 22 2.2.3 Phase 3 - Analysis and reporting 22 2.2.4 Limitations 24 3 Respondent and household demographics 25 3.1 Demographics 26 3.1.1 Sex of respondent and sex of the household head 26 3.1.2 Age 29 3.1.2.1 Youth 34 3.1.3 Education 34 3.1.3.1 Education of household head 35 3.1.3.2 Education of children and youth 38 3.1.3.3 Literacy 39 3.1.4 Marital status 41 3.1.5 Leadership positions 42 3.1.6 Migration 43 3.1.7 Household composition 46 3.1.8 Summary 51 TABLE OF CONTENTS 3 4 Food and nutrition security 53 4.1 Food security 54 4.2 Nutrition 58 4.3 Availability and affordability of food groups 63 4.3.1 Availability and affordability of food products in Ghana 63 4.3.2 Food availability and affordability in Côte d’Ivoire 66 4.4 Periods of food insecurity 69 4.5 Summary 72 5 Crop choice and diversification 74 5.1 Crops produced 76 5.2 Crops sold 79 5.3 Most important crops 80 5.4 Number of crops produced 84 5.5 Crop combinations and diversification 86 5.6 Summary 92 6 Land 94 6.1 Land tenure 95 6.2 Land scarcity 97 6.3 All land data 100 6.3.1 All land - use and ownership 104 6.3.2 All land – regression analysis 114 6.4 Cocoa land data 117 6.4.1 Cocoa land 117 6.4.2 Cocoa land – regression analysis 122 6.4.3 Cocoa land expansion 124 6.4.4 Cocoa tree ages 125 6.4.5 Cocoa varieties 128 6.5 Summary 130 7 The importance of cocoa 133 7.1 Reasons for growing cocoa 135 7.1.1 Main reasons for growing cocoa in Ghana 135 7.1.1.1 Income 135 7.1.1.2 Tradition and national importance 137 7.1.1.3 Land rights 137 7.1.2 Other reasons for growing cocoa in Ghana 138 7.1.3 Main reasons for growing cocoa in Côte d’Ivoire 140 7.1.3.1 Income 140 7.1.3.2 Tradition and the importance for the country 141 7.1.3.3 Social security 142 7.1.4 Other reasons for growing cocoa in Côte d’Ivoire 142 TABLE OF CONTENTS 4 7.2 Summary 144 8 Cocoa production practices 146 8.1 Cocoa production activities 147 8.2 Timing of cocoa activities 150 8.3 Inputs – fertiliser, herbicide, pesticide and fungicide 151 8.3.1 Input use 153 8.3.2 Input services 155 8.4 Labour activities 158 8.4.1 Labour days per activity 160 8.4.2 Labour availability and affordability 162 8.4.3 Labour types – household, hired and communal 165 8.4.4 Hired labour costs 168 8.4.5 Labour – male and female roles 170 8.5 Losses 172 8.6 Summary 174 9 Cocoa producer groups, certification, training and credit 177 9.1 Cocoa producer groups 178 9.2 Cocoa certification 181 9.3 Training 182 9.4 Credit 186 9.5 Summary 191 10 Production and yield 193 10.1 Production and yield 194 10.2 Regression analysis of yield 200 10.3 Summary 206 11 Cocoa marketing and prices 207 11.1 Marketing 208 11.1.1 Marketing structures 208 11.1.2 Seasonality 210 11.1.3 Producer prices 2015/2016 210 11.2 Producer price formation 211 11.2.1 Producer price formation in Ghana 211 11.2.2 Producer prices in Côte d’Ivoire 213 11.3 World market prices 215 11.3.1 Analysis of world market prices 216 11.3.2 Global markets 226 11.4 Summary 227 TABLE OF CONTENTS 5 12 Household income, poverty and wealth 231 12.1 Approaches to measuring poverty – income, expenditure or wealth? 234 12.1.1 Expenditure 234 12.1.2 Income 234 12.1.3 Wealth and assets 235 12.2 How income, poverty and wealth was measured in this study 237 12.3 Results of poverty and wealth analysis 243 12.3.1 Household income 243 12.3.2 Poverty Probability Index (PPI) 247 12.3.3 DHS wealth index 249 12.4 Summary 251 13 Farmer profiles and cluster analysis 254 13.1 Grouping of households 257 13.1.1 Cluster analysis 257 13.1.2 Analytical groups 259 13.1.3 Characteristics of the groups 259 13.2 Household annual income 266 13.2.1 How household income was calculated 266 13.2.2 Net cocoa income 267 13.2.3 Total annual income estimation 272 13.3 Summary 274 14 Gender and cocoa 276 14.1 Differences between male- and female-headed households 278 14.2 Intra-household dynamics – men and women within the same household 283 14.2.1 Labour division and decision-making in cocoa 284 14.2.1.1 Access to land 287 14.2.2 Labour division and decision-making in relation to food crops 289 14.2.3 Labour division and decision-making in non-farm economic activities 291 14.2.4 Labour division and decision-making in domestic work 292 14.3 Summary 294 15 Conclusions 297 16 References 310 TABLE OF CONTENTS 6 1 introduction Introduction Bymolt, R., Laven, A., Tyszler, M. (2018). Demystifying the cocoa sector in Ghana and Côte d’Ivoire. Chapter 1, Introduction. The Royal Tropical Institute (KIT). TITEL 7 1.1 The future of cocoa Cocoa is the raw ingredient of some of the world’s most loved products. We almost cannot imagine a world without cocoa. Yet in 2014, a series of media reports asked us to confront the question: ‘Is the world running out of chocolate?’. The media based their articles1 on warnings by large chocolate manufacturers, such as Barry Callebaut and Mars,2 who had expressed concerns about a potentially serious shortage of cocoa by 2020. In response, the International Cocoa Organization (ICCO) felt compelled to issue a statement emphasising that fears of a cocoa shortage were ‘overstated in the extreme’.3 This proved to be the case when consecutive production decreases in 2014/15 and 2015/16 were followed by a large 18% reversal in 2016/17. This production increase was due to favourable weather conditions resulting from the mild harmattan winds within the West African region. The 2016/17 increase resulted in an oversupply of cocoa on the world market and a drop in prices. The government of Côte d’Ivoire was forced to slash the price it guaranteed farmers by 36%, which had serious consequences for many cocoa farmers living already in disadvantaged situations. Fortunately, the government of Ghana was able to stand firm on its guaranteed prices on this occasion.4 It now seems certain that the world is not running out of cocoa in the foreseeable future. This situation prompted us to ask how different actors could come to such different conclusions about the future of cocoa. As we began to delve deeper, it became apparent that one reason was a lack of quality, publically available data. 1.1.1 The age of cocoa farmers Fears still persist that the world may be running out of cocoa farmers. Several studies have expressed a concern that older farmers are reaching their life expectancy and 1 For example: Guardian. (2014). The cocoa crisis: why the world’s stash of chocolate is melting away. Available at https://www.theguardian. com/lifeandstyle/2014/nov/21/cocoa-crisis-world-chocolate-stash-melting-away; Washington Post. (2014). The world’s biggest chocolate maker says we’re running out of chocolate. Available at https://www.washingtonpost.com/news/wonk/wp/2014/11/15/the-worlds-biggest- chocolate-maker-says-were-running-out-of-chocolate/; Huffington Post. (2014). The World Is Running Out Of Chocolate (Partly Because We’re Eating Too Much). Available at http://www.huffingtonpost.co.uk/2014/11/17/chocolate-running-out-supply_n_6170080.html 2 Food Manufacturer (2012).