Holistic approach to increase incomes of cocoa farmers

By Dr Piera Waibel

Kilchberg / Sep 13, 2019

When the production of a needed crop is concentrated in a few developing countries where poverty is a prevalent fact, contributing to poverty alleviation becomes not only a responsibility, but also a necessity. While poverty has many dimensions, my focus here is on the topic of income.

A lot of discussion around increased farmer income has so far been on higher cocoa yield and higher prices and/or premiums. In my opinion, these discussions and solutions are too limited, and more activities are necessary to create long-lasting change. This, however, requires some shifts in mind-sets.

First of all, we need to stop talking about income, but instead focus on net income, as costs have the same influence on what ultimately ends up in ones’ pocket as sales value does. Only looking at growth or increased production completely neglects the increased costs for inputs and labor associated with production increase, which is still promoted in high-input high-output farming models.

Second, a “cocoa farmer” is often only a cocoa farmer, but a member of a “household” also producing cocoa. The study “Demystifying the Cocoa Sector in Ghana and Côte d’Ivoire” of KIT – Royal Tropical Institute came to the conclusion that cocoa farming households produce several crops, and have several income sources. However, cocoa is – still, and depending on the alternatives – for many the most attractive crop to grow.

Third, a household does not only have costs associated with the cocoa production, but also for the household as such. The Living Income Reports (Ghana, Côte d’Ivoire), prepared for the Living Income Community of Practice calculated more than half of the living income to be necessary for food. With improved infrastructure (such as roads), household costs could be reduced.

Ecuador training on organic inputs making, incl. economic analysis vs. synthetic inputs (photo: Lindt Cocoa Foundation)

Within this context, increasing prices or farmer premiums are one important mechanism to consider, but they are only a part of the puzzle to a solution contributing to higher net-household-income of farmers that grow cocoa. It’s time to move towards holistic and well balanced Solutions.

Net-income of farmers as a key figure

The Lindt & Sprüngli Farming Program (present in Ghana, Ecuador, Madagascar, Papua New Guinea and the Dominican Republic), currently develops, tests and implements such holistic solutions in different origins. All activities are ultimately targeted at increased net-income of farmers, their families and communities1.

The overall approach can be structured in 4 different levels of activity:

Sustainable intensification of cocoa cultivation
Creation of additional income sources
Stabilize cash flow and secure income
Community infrastructure

A sustainable intensification of cocoa cultivation – fostered through targeted provision of resources and services for farming households – will result in increased cocoa production using the same (or smaller) growing areas, and increase the positive impact on an intact environment. To avoid pitfalls of additional costs that are higher than additional income from sales, farmers need to build up the basis knowledge to take informed decisions. More than 400 field staff engaged in the Lindt & Sprüngli Farming Program support farmers in group trainings and individual coaching sessions, while the necessary resources and services are made available.

Then, even with higher net incomes from cocoa, the cocoa farm sizes are often too small to get to a decent standard of living. Thus, the creation of additional income sources becomes relevant. Especially when land becomes scares, and deforestation is an issue, expansion of farm size might not be an option. Further, time for additional activities seems to be available, especially during the lean season. Last but not least, diversified income streams also make sense from a risk perspective. In our Farming Programs, we foster bee keeping, vegetable farming, pig, chicken or snail rearing. Loans offer start-capital in Ghana and Ecuador, combined with capacity building and support. These activities not only create additional income, but also lower the proportionally high household cost for food. If food products – as it is the case in Madagascar’s Sambirano valley – need to be transported long times to reach the communities, this also lowers costs for neighbors and the communities, as they can buy fresh produce locally for a lower price.

The Farming Program supports farmers on the ground

To stabilize cash flow throughout the year (cocoa or other agricultural crops are seasonal), the Farming Program further fosters the creation of Village Savings & Loan Groups – also to reinforce the principle that savings should always come before loans. To secure incomes over the longer term, land and tree rights, climate-smart farming practices, (dynamic) agroforestry or regenerative agriculture are piloted in the Farming Program, and part of our No-Deforestation & Agroforestry Action Plan, linked to our membership of the Cocoa & Forests Initiative.

And last but not least, improved community infrastructure creates the enabling context. Why can a farmer in Ecuador or the Dominican Republic manage 5ha cocoa alone, while their colleagues in Ghana indicate about too much work and require additional labor? There are for sure more sophisticated answers than this one, but my belief is – in short – that it’s because the Ghanaian farming household spends more time outside the farm to cope with life. Instead of riding a horse, motorbike or driving a car on a paved road, farmers in Ghana have to walk to the farms. They spend hours on fetching water every day for household needs, while others just turn on the faucet. Although our influence is somewhat limited in this area, we invested considerable funds over the last years for access to clean drinking water. Even if this may only seem a “drop in the ocean”, it eases life burden – especially of women – considerably.

While there is still a lot to learn on what works best, I am convinced that a holistic approach is key to finally increase net-household-incomes over the mid- and long-term.