The cocoa supply chain in Ghana key actors and challenges
Farmers in Africa grow 70 percent of the world’s cocoa and Singapore's Olam International Limited is a major player in the global cocoa business.
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| Drying cocoa beans in the sun in Ghana Olam processing |
Cocoa farming is an important industry in Ghana, one of the largest cocoa-producing countries in the world. The country has a long history of cocoa cultivation, with the crop playing a significant role in the country's economy and culture.
Cocoa farming in Ghana is predominantly carried out by small-scale farmers who cultivate the crop on small plots of land. These farmers typically use traditional farming methods, including hand pruning and harvesting, and rely on family labor and a limited amount of hired labor. Cocoa trees are often intercropped with other crops, such as plantains or maize, which can help provide additional income and food security for farmers.
The cocoa supply chain in Ghana is complex, with multiple actors involved in the production, processing, and distribution of cocoa beans. Once harvested, cocoa beans are usually sold to local buyers, who then sell them to licensed buying companies (LBCs) who are authorized to purchase cocoa from farmers on behalf of the Ghana Cocoa Board (COCOBOD), the government agency responsible for regulating the cocoa sector.
COCOBOD sets the price for cocoa beans each season, and LBCs are required to purchase cocoa from farmers at this price. However, the cocoa market can be volatile, and farmers may not always receive a fair price for their beans.
Once purchased, cocoa beans are typically transported to centralized processing facilities where they are fermented and dried before being sold to export markets. The majority of cocoa beans from Ghana are exported to Europe, where they are processed into chocolate and other cocoa products.
While cocoa farming is an important industry in Ghana, it is also marked by a number of challenges. One of the main challenges facing cocoa farmers is low productivity, which can be attributed to a variety of factors including aging trees, disease, and poor soil fertility. Additionally, many farmers lack access to credit, inputs, and technical assistance, which can make it difficult for them to invest in their farms and improve their productivity.
Another challenge facing cocoa farming in Ghana is the prevalence of child labor and forced labor in the cocoa sector. While Ghana has taken steps to address these issues, including implementing child labor monitoring systems and developing community-based interventions, the problem persists and continues to be a concern for consumers and stakeholders in the cocoa industry.
To address these challenges, a number of initiatives have been developed to support sustainable cocoa production and improve the livelihoods of cocoa farmers in Ghana. One example is the Cocoa Abrabopa Association (CAA), a farmer-owned cooperative that provides training, inputs, and marketing services to its members to help improve their productivity and income. Other initiatives, such as the World Cocoa Foundation's CocoaAction program, aim to promote sustainability and improve the livelihoods of cocoa farmers through partnerships between industry, government, and civil society organizations.
Cocoa farming is a vital industry in Ghana, providing income and livelihoods for thousands of small-scale farmers. While the cocoa supply chain is complex and marked by a number of challenges, there are initiatives and interventions in place to support sustainable cocoa production and improve the lives of cocoa farmers in Ghana. By supporting these initiatives and choosing products that are sourced from ethical and sustainable cocoa production, consumers can help promote a more equitable and sustainable cocoa industry in Ghana and beyond.
About Olam and Cocoa
Cocoa farming is an industry that is largely invisible to shoppers, yet essential to feeding the world’s sweet tooth. Cocoa processing, the process of turning raw cocoa beans into powder, liquor, and butter is a major step in creating the candy bars that line store shelves and Olam International Limited is a major player.
Olam International Limited is a leading food and agri-business company that supplies food ingredients, feed and fibre to customers worldwide. It operates in 60 countries and has over 80 processing and manufacturing facilities. It also has its own brands of consumer products in Africa. It is headquartered and listed in Singapore and ranks among the top 30 largest primary listed companies in Singapore. It is also a Fortune Global 500 company and a member of the FTSE4Good Index Series.
Olam International Limited is undergoing a re-organisation plan to create three distinct operating groups: ofi, Olam Agri, and the Remaining Businesses of Olam Group. ofi offers natural food and beverage ingredients and solutions and plans to seek a primary listing on the London Stock Exchange and a secondary listing on the Singapore Exchange.
Olam Agri is a market leading agribusiness focused on high-growth consumption markets and has received an investment from the Saudi Agricultural and Livestock Investment Company for a 35.43% stake. The Remaining Businesses of Olam Group comprises incubator and start-up businesses, shared services, and de-prioritised and gestating assets.
Olam International Limited has a purpose to re-imagine global agriculture and food systems by delivering sustainable solutions that benefit people, planet, and prosperity. It has a vision to be the most differentiated and valuable global food and agri-business by 2040.
It has six values that guide its actions: integrity, ownership, teamwork, mutual respect, continuous improvement, and customer focus. It also has four strategic pathways to achieve its vision: pursuing growth opportunities, enhancing cost and capital efficiency, driving sustainability impact, and building trust with stakeholders.
In December 2014, Archer Daniels Midland Company announced that it has reached an agreement to sell its global cocoa business to Olam International Limited for $1.3 billion. Olam was established in 1989 in Nigeria by Indian conglomerate Kewalram Chanrai Group. Olam International Limited operates in part by growing and selling cocoa beans. The Company has operations across approximately 20 platforms in over 70 countries.
Olam is one of the world’s largest suppliers of cocoa beans and a globally leading processor of cocoa powders, cocoa masses, and cocoa butters. Olam has been accused in the past of deforestation by purchasing cocoa grown illegally in national parks and other protected forests in the Côte d’Ivoire.
The report accused Olam of endangering wildlife by purchasing cocoa beans linked to deforestation; these types of illegally grown cocoa beans are called dirty beans. However, on Olam website, it states, “Our goal is to achieve 100% traceable and sustainable cocoa volumes from our direct origination supply chain by 2020.”
Olam also states, “We work hand-in-hand with partners, customers, governments, NGOs and through joint initiatives to create the necessary conditions for every person whose life revolves around cocoa production to prosper.”
Africa produces around 70 percent of the world cocoa crop, it is the heart of Olam cocoa bean sourcing operations and they are the leading exporter of cocoa beans from the African continent. Olam chocolate bean footprint covers Côte d’Ivoire, Ghana, Nigeria, Cameroon, Republic of Congo, Tanzania, and Uganda. In Ghana in 2016, Olam provided shade trees to increase ground cover and support forest conservation.
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