Capitalising on cocoa

Cocoa futures in London rose to an all-time high of £9,477 a tonne on Thursday, amid disease outbreaks and destructive weather patterns in West Africa. Cocoa prices have more than doubled this year – Ghana, Côte d’Ivoire, Nigeria, and Cameroon, which together produce more than 75% of the world’s cocoa, have seen drastically reduced crop yields amid droughts, fires and other climate change-induced weather phenomena.

The problems are exacerbated by decades of underinvestment. Farmers export cocoa with little local value addition. The African Export-Import Bank says that the global cocoa industry was worth $200bn annually, but just $10bn of that value appears in West Africa. Manufacturers and dealers gain about 80 cents for every euro spent on a chocolate bar, compared to seven cents for farmers. Ghana, Cameroon and Côte d’Ivoire are increasing the price paid to farmers for the crop, but that will do little to fix long-term structural inequalities.

Some have suggested that, with climate change on the rise, buyers must be prepared to pay a premium to ensure a sustainable industry. Countries must also do more to expand processing and manufacturing, and future-proof the industry against climate change and disease by introducing new beans and replacing ageing plantations. Without reform, West Africa’s cash crop will continue to underperform.

– David Thomas, Editor, African Business