Cocoa, a tree of change rather than a change of tree

Cocoa, a tree of change

rather than

a change of tree

International Symposium “Cocoa, a tree of change” Kumasi 28-29 October 2008

Francois Ruf CIRAD

The starting point:

African hegemony on the cocoa sector:

until when?

Production mondiale de cacao par continent 0 500 1000 1500 2000 2500 3000 3500 30 60 90 anné e s to n n e s

« Cacaoculture de grands propriétaires »:

seulement efficace quand les prix sont élevés

‘A country has to be killed’..It will not be Malaysia’ (1990)

Production de cacao en Malaisie et Brésil 0 50 100 150 200 250 300 350 400 450 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Années Millie rs de t onne s 0 20 40 60 80 100 120 140 160 180 200 P ri x (Us Cen ts / £)

Malaisie Brésil Prix international Balai-de-sorcière

1.

From Boom to Bust.

From wealth to risks of chaos

Competitiveness between producers, countries, regions, is not ‘static’,

- neither in terms of production

- or quality (showcase of Southern Philippines in 1990)

(showcase of Côte d’Ivoire in the 1990s and 2000s)

It must be approached in a dynamic perspective

A model,

- as a tool to understand this dynamic

of competitiveness

- puting cocoa at the crossroads of economic,

ecological, institutional and political changes

. Ecological accidents FOREST = Land + Forest rent

- Consumption of the forest rent Structural

ecological change

and increasing costs COCOA - Ageing of plantations - weeds

BOOM - Ageing of migrants - pests and diseases - Indebtedness - disturbed

- Development of land rents rainfall pattern and a land market - winds

- timber scarcity - protein scarcity

Pulling factors

- Roads and tracks,

- Logging companies More difficult access to land

recruitment

- Information Structural emergence - Planting material of land and inter-generational

conflicts MIGRATIONS

Fall in local yields and local supply Technical, institutional and financial Replanting difficulties

Pushing factors that free

up labour flows from neighbouring regions - drought, flooding - Economic collapse - Technical progress

and savings (green revolution)

Market supply

Surplus

DIVERSIFICATION

Fall in absolute prices if alternative and relative prices crops and

activities

COCOA RECESSION

Exogenous informations and

Copying effect

Price rise often benefiting another region or another country

y . Ecological accidents FOREST = Land + Forest rent

- Consumption of the forest rent Structural

ecological change

and increasing costs COCOA - Ageing of plantations - weeds

BOOM - Ageing of migrants - pests and diseases - Indebtedness - disturbed

- Development of land rents rainfall pattern and a land market - winds

- timber scarcity - protein scarcity Pulling factors

- Roads and tracks,

- Logging companies More difficult access to land

recruitment

- Information Structural emergence

- Planting material of land and inter-generational conflicts

MIGRATIONS

Fall in local yields and local supply Technical, institutional and financial Replanting difficulties

Pushing factors that free up labour flows from neighbouring regions - drought, flooding - Economic collapse - Technical progress

and savings (green revolution)

Market supply

Surplus

Fall in local yields and local supply Technical, institutional and financial Replanting difficulties

Pushing factors that free

up labour flows from neighbouring regions - drought, flooding - Economic collapse - Technical progress

and savings (green revolution)

Market supply

Surplus

DIVERSIFICATION

Fall in absolute prices if alternative

and relative prices crops and

activities

COCOA RECESSION

Exogenous informations and

Copying effect

Price rise often benefiting another region

2

.

Illustration of economic changes

Impact of prices and revenues

Production de cacao au Nigeria et Cameroun 1970/71 - 2007/08 50 100 150 200 250 300 350 197 0 197 2 197 4 197 6 197 8 198 0 198 2 198 4 198 6 198 8 199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 Années Mill ie rs de t onn e s Nigeria Cameroun Libéralisation et Augmentaion du prix au producteur

Ghana: 1990s: also an efficient partial liberalization

1970s: a way about how to kill an industry

Cocoa. Production and real producer price in Ghana. 1960-2008 0 100 200 300 400 500 600 700 800 60/ 61 63/ 64 66/ 67 69/ 70 72/ 73 75/ 76 78/ 79 81/ 82 84/ 85 87/ 88 90/ 91 93/ 94 96/ 97 99/ 00 02/ 03 05/ 06 08/ 09 Years P ro d u ct io n (X 100 0 to n n e s ) . 0,0 200,0 400,0 600,0 800,0 1 000,0 1 200,0 1 400,0 19 94 real p rice ( 1994 c edis / kg ) Production Price

Low price, low production, Low revenues…

Despite some decisive improvements, the daily life and labour productivity of coca farmers remains relatively poor

Producer Price and Purchasing power

En interaction avec tous les facteurs de prix, de politique

monétaire, de politque de non-taxation, de disponibilité de forêts, de migrations massives, cette traduction en réel boum du pouvoir d’achat a certainement joué un rôle clef dans le boum cacao de Sulawesi

Le boum cacao de l'Indonésie

1970-2007 0 100 200 300 400 500 600 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 Années M illie rs d e t o n n e s 0 20 40 60 80 100 120 140 160 180 200 P ri x co u ran t ( c en ts/ lb )

Purchasing power of cocoa in the three main

producing countries in early 2008

How many

How many kg of

How many kg of

kg of rice can be

cocoa are needed cocoa are needed

bought by one kg to buy one 100 cc

to buy one fertilzer

of cocoa?

motorcycle?

bag

Indonesia

4,2

800

8

Ghana

1,5

2900

14

Côte d'Ivoire

1,1

5500

52

Fertilizer adoption and Cocoa price

around Soubré (Côte d'Ivoire)

0 200 400 600 800 97/ 98 98/ 99 99/ 00 00/ 01 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06 06/ 07 07/ 08 years C faf / kg 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 Nu m b e r o f F e rt iliz e r b a g s

Yield per hectare and Fertilizer adoption

around Soubré (Côte d'Ivoire)

0 200 400 600 800 1000 1200 97/ 9 8 98/ 9 9 99/ 0 0 00/ 0 1 01/ 0 2 02/ 0 3 03/ 0 4 04/ 0 5 05/ 0 6 06/ 0 7 07/ 0 8 years kg /h a 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 N u m b e r o f F e rt iliz e r ba gs

Conjonction des cycles de vie

de la plantation et du planteur

« Notre papa est malade de la prostate il lui faut 1.300.000 F pour son opération. On nous demande 300.000F pour les premiers soins pour le sauver. A cause des mortalités des cacaoyers et du mauvais prix du cacao, on a rien envoyé ».

Ce planteur avait eu le courage de quitter son village et migrer vers les forêts du sud, pour planter le cacao et contribuer à la richesse du pays. 30 ans plus tard, il est trahit par le cacao et le prix du cacao. - il n’y a plus d’argent pour fertiliser les cacaoyères,

- il n’y a plus d’argent pour payer l’hôpital.

Faute de pouvoir se « soigner mutuellement »,

le planteur et sa plantation :

Cocoa Production per Country

Côte d'Ivoire, Ghana, Indonesia 1955/56 - 2007/08 0 200 400 600 800 1000 1200 1400 1600 19 55 19 58 19 61 19 64 19 67 19 70 19 73 19 76 19 79 19 82 19 85 19 88 19 91 19 94 19 97 20 00 20 03 20 06 years Thous a nd of t o ns

One of the explanation of the cocoa resilience in Côte d’Ivoire was the worsening itutaion of the coffee sector

Ratio de Production Cacao/café et Prix relatif Cacao/café en Côte d'Ivoire. 1972/73 à 2002/03 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 années R a ti o de pr oduc ti ons 0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50 R a ti o de s pr ix

« Rubber makes you as a civil servant »

(presented at WCF, Washington, Oct 2006)

Production of natural rubber in Côte d'Ivoire

0 20000 40000 60000 80000 100000 120000 140000 160000 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 years P roduc ti on ( tons )

3

.

Illustration of Ecological changes as Pushing

factors towards higher or lower competitiveness

Planting and cocoa hybrid adoption

Axim-Asasetre area. Western region, Ghana

0 20 40 60 80 100 120 140 160 < 1960 1960-69 1970-79 1980-89 1990-99 2000-05 Planting Periods Ac re s Coconut Oil Palm Cocoa Rubber

March 2005

On the opposite, the biological/ecological change

also brings cocoa to a dangerous point

From Ecological change to a change of tree

The cocoa/oil palm showcase: Kade, Eastern region of Ghana

      Cocoa farmers  who diversify  who do not diversify   cocoa + oil palm         cocoa only Several hectares of cocoa

_100%

_0%

44%

56%

4

.

Illustration of the Interacting Economic and

Ecological changes

Cocoa. Production and real producer price in Ghana. 1960-2008 0 100 200 300 400 500 600 700 800 60/ 61 63/ 64 66/ 67 69/ 70 72/ 73 75/ 76 78/ 79 81/ 82 84/ 85 87/ 88 90/ 91 93/ 94 96/ 97 99/ 00 02/ 03 05/ 06 08/ 09 Years Product io n ( X 1000 tonnes) . 0,0 200,0 400,0 600,0 800,0 1 000,0 1 200,0 1 400,0 1994 real p rice ( 1994 ce d is / k g ) Production Price

Cocoa. Production and ecological change in Ghana. 1960-2008 0 100 200 300 400 500 600 700 800 60/ 61 63/ 64 66/ 67 69/ 70 72/ 73 75/ 76 78/ 79 81/ 82 84/ 85 87/ 88 90/ 91 93/ 94 96/ 97 99/ 00 02/ 03 05/ 06 08/ 09 Years Produ ct ion ( X 1000 t o nnes) . Production 1983 fires

Cocoa. Production and real producer price in Ghana. 1960-2008 0 100 200 300 400 500 600 700 800 60/ 61 63/ 64 66/ 67 69/ 70 72/ 73 75/ 76 78/ 79 81/ 82 84/ 85 87/ 88 90/ 91 93/ 94 96/ 97 99/ 00 02/ 03 05/ 06 08/ 09 Years Production ( X 1000 tonnes) . 0,0 200,0 400,0 600,0 800,0 1 000,0 1 200,0 1 400,0 1994 real p rice ( 1994 ced is / kg ) Production Price 1983 Fires

4.

Illustration of Pushing factors:

social/institutional changes

1. 18th century - Venezuela

Sugar cane estates : slaves are freed

This liberates labour and energy to generate a smallholder cocoa sector

2. 20

_{century – Eastern Indonesia: Sulawesi}

From the DI/TII rebellion in the 1950s to the peace agreement in the 1960S and the cocoa boom in the 1970s

A network to spread information and knowledge about cocoa ..and about remote fertile places

3

.

21th century – Western Indonesia: Aceh

From the GAM rebellion in the 1970s to the Tsunami in 2004, the Helsinki peace agreement in 2005 and the expected cocoa boom in the 2010s

Cocoa adoption, price and peace in Aceh Provisonal estimate of the trend

0 1000 2000 3000 4000 5000 6000 7000 8000 2000 2001 2002 2003 2004 2005 2006 2007 2008 years Planted H ectar es 0 5000 10000 15000 20000 25000 R p / kg Helsinki agreement Tsunami Projects P

Back to the cocoa belt of Soubré:

Cocoa belt until when?

Ageing factors, inter-genertaional and social conflicts, policy difficulties, and economic alternatives

5.

Food crops

opportunities and constraints

Sulawesi cocoa smallholders’ capacity to

respond the rocketing price of maize

Comparative prices of cocoa and maize do not

explain much

Prix du cacao et du maïs à Sulawesi 2001- 2008 0 5 000 10 000 15 000 20 000 25 000 2001 2002 2003 2004 2005 2006 2007 2008 Années R oupi e s / k g cacao 0 500 1000 1500 2000 2500 R oupi e s / k g m a ïs

Revenus par hectare du cacao et du maïs 2001- 2008 -2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 2001 2002 2003 2004 2005 2006 2007 2008 Années R even u / h a (x 1000 R o u p ie s)

Pourquoi cette réactivité sur le maïs?

•

Une taille de la famille plus réduite en Indonésie favorise

la commercialisation de surplus

•

Une demande interne forte

•

Changement biologique (maladies/dégâts du cacaoyer)

et revenus relatifs

•

Progrès technique: hybrides, engrais et machines

•

Un réseau de commerçants bugis.

•

Crédit et transactions assurées par le réseau de

commerçants

One key of that Impressive capacity of Cocoa

smallholders to respond to the rocketing price of

maize: Hybrids made available to farmers through a

network of middlemen

Cocoa farmers in Noling who started to cut down cocoa

and replant with selected planting material

57% of them say that they would have done it

without the maize revenues

but acknowledge that the maize opportunity

encouraged them

43% state that they would have not done it

without the maize opportunity

Food crop competing with cocoa

or complementary to cocoa?

Maize and cocoa replanting in Sulawesi

Some potential ‘lessons’ in terms of food policy and

cocoa replanting in West-Africa ??

Adoption and use of herbicides on food crops in Soubré

2004

2005

2006

2007

Own land reserve

1 034

2 010

3 713

3 641

rented land

1 070

1 001

1 719

2 389

Total

2 103

3 011

5 432

6 030

Sources: CIRAD survey, 2004-2008.

Migrations and innovations : Herbicides. The Soubré showcase

Adoption of herbicides = 2004 Land renting contract = 1990s

Two indicators of a tentative increase of food crop production, but mostly for self-consumption

- labour saving technology - kind of ‘fertilizer’

Migrations and innovations : A beginning of organic fertilizer adoption: chicken dump

+- 2 to 3% of cocoa farms in Côte d’Ivoire and Ghana

(spread of information about its efficiency … in home villages)

Adoption de l'engrais et du fumier de poulet à Nkrankwanta, Brong Ahafo, Ghana

0 5 10 15 20 25 30 35 40 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Années N o m b re d' a d opt e ur s de l' in tr a n t ( v a l. c u m )

Conclusion: A non negligible risk of cocoa decline

in some African countries

Top priorities

• Seriously increase the cocoa

Producer price in West-Africa. This is economically and

socially crucial

• Replanting and fertilization, in interaction with

– food crops and food crop markets

– Labour saving strategies

• Accompany Farmers’

diversification strategies but taking in account the risk of re- conversion