TFO - Private Sector Partnerships in International

Trade Development Projects - November 14, 2012

Cocoa Livelihoods Program

WorldCocoa.org

People

Healthy and thriving

cocoa-farming house-

holds and communities

A one-of-a-kind nonprofit organization

promoting a sustainable cocoa economy

through economic and social development

and environmental stewardship in cocoa-

growing communities.

Planet

Responsible, sound

environmental practices

Profit

Improved and more

equitable economic

returns for farmers

WCF: Improving Cocoa Sustainability

100+ Members

Our Approach

Peace Corps Deutsche

Gesellschaft für Internationale

Zusammenarbeit (GIZ)

International Finance

Corporation

World Education

WCF Bill & Melinda

Gates Foundation

USAID

USDA

Swiss-

contact

Partnerships that ensure accountability,

measurable impact and scale

Cocoa Sector Overview

Cocoa grows in the equatorial band: Latin America (13%), West Africa (70%), and Southeast Asia (17%)

90% of cocoa comes from independent, smallholder farms (2-5 hectares)

5-6 million farmers, few organized farmer groups <15%

Tree crop: 5-6 yrs to produce

On average, low productivity & labor intensive crop

Publicly traded commodity, $100 Billion Chocolate/Cocoa Market

Note: Ghana and Côte d’Ivoire incomes based on an average cocoa farming household size of 6 Sources: Fairtrade Foundation Commodity Update August 2011; Cocoa Research Institute of Nigeria, Ghana Statistical Service, Tropical Commodity Coalition, 2008; World Cocoa Foundation; Bank of Ghana; EIU; IMF Financial Statistics; The Role of Cocoa in Ghana’s Future Development, International Food Policy Research Institute; Ghana Ministry of Food and Agriculture, ICCO,, Bloomberg; Global Industry Analysts

Rationale for cocoa across all stakeholders

Farmers live on less than $2/day

$2.33

$1.76$1.72

$1.21$1.09

Indonesia Nigeria Ghana Cote d’Ivoire

Average daily per capita income of cocoa farmers, 2011

Market Incentives

80% 60%

Ghana Nigeria

$1.76

Cote d’Ivoire

$1.21 $1.09

Cocoa 90%

Other

Sources of farmer income, 2011

Cocoa serves as primary source of income

Production currently in a plateau, but projected to decrease long-term due to continued production challenges.

Demand projected to increase by 1 million tonnes over the next 10 years because of increased consumption projections in China and developing nations.

In order to be sustainable over the next decade, cocoa supply must increase by approximately 20%.

Significant Export Earnings

National export value, Ghana, 2010

Other

Gold 48%

Cocoa

28%

24%

Ag GDP, Côte d’Ivoire

Cocoa 58%

Other 42%

Cameroon

Marketing Production Farmer

Resilience

• Farmers receive 40-70% of farm gate price

• Lack of price information and leverage w/ buyers

• Inefficient service

delivery to farmers

• Aging tree populations

• Plant diseases

• Decrease soil fertility

• Outdated cocoa practices Farmers abandoning cocoa for other crops

• Climate change shrinking areas suitable for cocoa growth

• Farmer vulnerability to climate change

• Cocoa price fluctuations

• Dependency on one income source

Cocoa Sustainability Challenges

Goal: Double the income of 200,000 farming

households over 10 years (Phase I: 2009-13)

Objectives:

Marketing Efficiency

- Farmer Aggregation

- FO Professionalization

Production Efficiency

- Training in GAP

- Increase access to credit and agri-inputs

- Rehabilitating old cocoa farms

Farmer Competitiveness

- Training in farm management

- Diversification of income sources

Cocoa Livelihoods Program Model Type: Coalition

- BMGF

- 16 Industry partners

- 4 Governments

- IDH & BMZ

• Extension: 5 Implementing

partners national extension

services & Matching Grants

• Total Project Budget: $40M

• Locations: Cote d’Ivoire, Ghana,

Nigeria, Cameroon

• Governance: PMU, Steering

Committee, technical committee

Opportunities realized through CLP

BMGF (donor)

Government

WCF CLP

Industry

Cocoa value chain as channel for donor agenda to reduce global poverty Knowledge network across agriculture

(& health) projects Innovative strategies Improving the productivity gap and

market access Financial incentive

Direct relationships with farmers Vested interest in improving

quality and productivity gap Efficient service delivery –

leverage distribution network Development of reliable source CSR Technical expertise

Enabling environment Vested interest in improving quality and productivity gap Strengthening national institutions and infrastructure Workforce and local market economic development

Catalyst & Knowledge

Ownership & Infrastructure

Market Presence & Investment

CLP Key Accomplishments to Date - 36 FOs (12,500 farmers) training in professionalization

- 151,000 farmers trained in GAP, Farm Management, Correct use of inputs

- Development of Growth Fund – Working capital and Input credit

- Transition of extension service to National Agencies

- 80% of program funds remain in program countries

- Growing collaboration amongst industry partners

Innovation Model: Industry Led Development through Matching Grants

- 5 Matching Grants awarded in 2011 to 7 CLP companies

- Projects focused on CLP Objectives: Marketing efficiency, Production, Farmer

competiveness

- Reach an additional 35,000 farmers

Original Structure

Core Led Program

• Implementation by 5 core

partners

• 90% funding towards core

activities

• Industry primary role on

Steering Committee and some

technical participation

Evolution of CLP structure

New Structure

Industry Led Program

• Implementation through

industry led Matching Grants

• Core activities focused on M&E,

Knowledge management,

innovation testing, coordination

& support

• 90% funding towards matching

grants

• Training institutionalized

through national extension

services

CLP Attributes and Lessons Learned Key Attributes Lessons Learned for Success

Multi-stakeholder approach creates stronger program and improves long term sustainability

• Establishing platforms for knowledge sharing and group decision making – i.e. Steering Committee Meeting, task force, web-based knowledge management

• Need to maintain consistent participation of members • Develop knowledge sharing requirement for participation

Embed activities with public and private sector

• Recognize capacity of partners • Support and train partners early in process • Develop appropriate and standardized M&E and reporting

platform and materials

Governance structure enables strategic dialogue and adaptability

• Maintain open, consistent communication • Develop platform for participation • Harness both public and private sector expertise • Know your partners & interests

www.worldcocoa.org