The high tech-involved LBC has been operating in seven districts in Ghana since November, 2016, including Awaso, Anhwiaso, Wiawso, Asawinso, Effiduase, Nyinahin and Ampenim. It allows Cargill to directly source cocoa from certified farmers.
Farmers deliver their cocoa to community warehouses, where their beans are digitally weighed, assigned a fully traceable bar codes and funds are then transferred to their e-wallets on their smartphones.
Second premium payment
Cargill said over 13,000 farmers are now benefiting from LBC, up by 30% compared to last year.
“Cargill makes its second sustainable premium payment of $870k to farmers [since establishing LBC]. These premium payments currently represent the highest payment paid per bag of certified cocoa in the industry for the 2017/2018 crop season in Ghana,” said the company.
It added the half of the premium payments are used directly by the farmers to increase productivity and invested in a range of projects such as crop financing and protection, distribution of fertilizer and improving logistics and infrastructure.
The other half is used by local communities to support education, healthcare, women empowerment initiatives and to complement other community projects undertaken through Cocoa Promise, Cargill’s own sustainability program.
Pieter Reichert, managing director of Cargill’s cocoa and chocolate business in Ghana, said: “Our approach offers [farmers] a wide range of support services to help them improve the quality and quantity of cocoa beans produced.
“Such services, delivered under our Cocoa Promise, include one-on-one agricultural coaching, farmer field schools, high quality seedlings and resources for pest and disease management.
“It is our hope that our electronic payment model, which has proven to benefit the farmers, will help encourage the government to fulfill its vision of a cashless economy,” He added.
Accelerating sustainable cocoa volume growth
Cargill Cocoa Promise has previously set five sustainable targets, including reaching 100% cocoa beans traceability and zero deforestation in supply chain by 2030, as well as zero incidents of child labor by 2025.
However, the cocoa industry leaders such as Tim McCoy, VP of member and external affairs at World Cocoa Foundation (WCF), recently shared their doubt on the practicality of these goals.
“We must recognize that targets such as the Sustainable Development Goal for the eradication of child labor by 2025 may be difficult to achieve,” despite the collective industry efforts of establishing monitoring and remediation systems in the supply chain, he said during the Child Labor Cocoa Coordinating Group annual meeting in Côte d’Ivoire last month.
According to Cocoa Promise’s latest progress report that covered the 2016/2017 period, only 4% of cocoa beans Cargill sourced in Ghana were sustainable, decreasing from 5% in 2012/2013.
Cargill said the decrease was caused by switching to LBC in 2016 from buying sustainable cocoa via other companies.
"Prior to the establishment of our LBC at the end of 2016, other [cocoa supplying companies] helped us reach the volumes required," it said.
"Since then we have made a conscious decision to focus only on our own LBC volumes, as a demonstration of our support and confidence in what we are doing via the LBC to increase our volumes of sustainable cocoa."
The percentage of sustainable cocoa Cargill sources in Ghana is also much lower compared to some of the other major cocoa producing nations, including Côte d’Ivoire (59%) and Cameroon (32%).
But Cargill said the current stance in sustainable cocoa volume growth in Ghana is expected to accelerate soon especially with the support from local government.
Joseph Boahen Aidoo, CEO of Ghana Cocoa Board (COCOBOD), previously said his team was pleased to work with Cargill in launching LBC, and he sees this model as the “future of cocoa sourcing.”
Cutting unproductive cocoa trees
In addition to collaborating with Cargill, COCOBOD also started implementing its own plans to improve the productivity of cocoa farmers.
In late last month, COCOBOD and Côte d’Ivoire launched a joint action to fight Cocoa Swollen Shoot Virus Disease (CSSVD) by cutting 40% of Ghana’s unproductive cocoa tree stock and replanting with new seedlings using modern technology introduced by government.
Aidoo noted the decision made by Ghana’s previous administration to let farmers cut and treat their diseased farms did very little in tackling CSSVD. Therefore, a more extensive method is needed.
“When the [cocoa] trees are infected and you plant the young seedlings under it, the entire plantation would be affected,” he said.
“Since the disease is spread by air when all farmers cut their trees and one refuses to, all the others would be affected since the air will spread it across the other farms.”
Aidoo stressed that the western and eastern parts of Ghana are so far the most endemic regions, accounting for around 68% infection rate, adding the staff of COCOBOD will start treating 10,000 hectares of infected farms out of the total 680,000 hectares.