The Organic Cocoa Package: Making Organic Cocoa in ... Tropic… · The Organic Cocoa Package: Making Organic Cocoa in Cameroon and ... • A value chain analysis of cocoa in Cameroon

The Organic Cocoa Package: Making Organic Cocoa in Cameroon and

Togo economically feasible24 March 2009

RSCE2, T&T

Fast Track Grant

Anna Laven Advisor Sustainable Economic Development

Amsterdam, The Netherlands www.kit.nl

Content

1. Feasibility Study: CFC Fast Track Grant

• Components of study

• Participatory process

• Selected areas and producer organizations

2. A changing environment

3. Feasibility study: an example of Cameroon

4. Intervention points

5. Pillars of the organic cocoa package

6. Make organic work…


Feasibility study components • Assessment of current status and opportunities for organic cocoa production and export• A value chain analysis of cocoa in Cameroon and Togo• An Action Plan, for supporting organic cocoa export in selected areas, with selected producer groups and other stakeholders


Participatory process• Building upon existing initiatives/experiences• Multi-stakeholder workshops in Togo and Cameroon and bilateral meetings• Farmer and farmer group surveys • Field visits• Avoid isolation from national/sectoral cocoa initiatives


Selecting areas and organizationsAreas1. Togo: Kpalime2. Cameroon: Central, South West

Producer organizations:1. Togo: set up of new organic farmer union2. Cameroon: 4 cooperatives (UPCOCOA/STCP)


Starting assumptions…Assumptions:• Organic cocoa obtains significant price

premium• Demand for organic cocoa is growing• Organic cocoa is win-win opportunity

Questions:• Is it an economic opportunity for farmers?• Is premium sufficient to cover additional cost

(i.e. certification)• Are farmers willing to convert?• Is the institutional environment supportive?• What are main bottlenecks?

BUT…

SALES WORLD

- 5.000 10.000 15.000 20.000 25.000 30.000 35.000 40.000 45.000 50.000

1998

2000

2002

2003

2004

2005

2006

2007

Growth in turnover:

1998 / 2004 = +269%

2005 / 2007 = +84%

Source: Organic monitor

Organic Cocoa Sales


The market changed…• Since the beginning of 2007 the cost of conventional cocoa has more

than doubled• Buying organic cocoa from African suppliers (single origin group 1) is

relatively expensive• Demand for (some) cocoa-products is decreasing• Supply of organic cocoa has increased• Organic premium is currently non-existent

• Conclusion: feasibility cannot depend on an organic premium• But: organic cocoa production remains important both as market

opportunity as for its intrinsic environmental value and as motor for sustainable cocoa production


Cost-price FOB Douala

Nr farmers 200 Hectares per farmer 2,9Hectares cocoa 580Yield per hectare 457Capture rate 66%Cocoa captured tons 175Grading losses 7%Cocoa exported 163# of containers 8,3 FOBLbs/kg conversion 1 Farmer price 950 CFA/kgCFA/U$ rate Nov 08 534 FOB price 2.400 dollars/mt NY + premium

factor units CFA total U$ total U$/mtInputsJute bags 350 2.499 874.698 1.638equipment/pestcides/fertilizers (organic) 10.680 580 6.194.400 11.600Total input cost 7.069.098 13.238 81

Conventional price 950 per kg 166.192.620 311.222 farmgate 950Premium 0% 0 0Cocoa farmer price 950 166.192.620 311.222 1.913Coop 3.521.712 6.595 41Exporter 6.504.987 12.182 75Port handling 4.654.642 8.717 54ICS costs 1.000.000 1.873Organic certification Ecocert 3.000.000 5.618Certification 4.000.000 7.491 46

Costs FOB Douala 191.943.059 359.444Costs FOB per ton 2.209Sales price FOB 2.400 new yorkOrganic premium 0 premium bio importerTotal FOB price 2.400Profit per ton 31.021 191Margin on cost 8,63%

Feasibility of organic cocoa in Cameroon


Cost-price FOB Douala

Nr farmers 200 Yield per hectare457Capture rate 66%Premium 0% 0 0Sales price FOB 2.400 new yorkOrganic premium 0 premium bio imTotal FOB price 2.400Profit per ton ### 191Margin on cost 8,63%

Feasibility of organic cocoa in Cameroon


What is an organic cocoa package?

‘an integrated programme that addresses all 4 intervention points’:

• Number of farmers• Productivity• Default rate• Premiums


Pillars of the organic cocoa package

Chain governance Building relations and trust • Building upon existing initiatives/partnerships• Strengthening of farmer organization• Stable relation with buyers• Traceability• Prompt payment

Chain information and support Adding value • Training (productivity, quality, organic practices)• Availability and distribution of organic inputs at competitive prices• Market information and (more) direct trading relations• Premiums


The Organic Cocoa Package Matrix

AddingValue

Organic cocoapackage: a business

Trust building

Chain information and institutional support

Chain governance

1

2 4

3


Next step: make organic work for farmersWhat is needed:

•Selection process based on opportunities for farmers • Pre-finance• Quality premium• Effective, available and affordable inputs• Investment plan

•Building upon existing partnerships and establish new ones• Embedding in national/sectoral cocoa policies • Embedding in global round table meetings on a sustainable cocoa economy


Thank you for your attentionThank you for your attention

Documents

The Organic Cocoa Package: Making Organic Cocoa in ... Tropic… · The Organic Cocoa Package: Making Organic Cocoa in Cameroon and ... • A value chain analysis of cocoa in Cameroon