UNCTAD seeks integration of farmers in cocoa value chain

Worried by the poor benefits enjoyed by farmers despite contributing largely to revenues that are generated along the cocoa global value chain, the United Nations Conference on Trade and Development (UNCTAD) has sought the integration of all stakeholders in the value chain.

Specifically, the report advocated development of multi-stakeholder approach, engaging governments, the private sector, civil society and international organizations, as well as the farmers, in order to tap into the specific comparative advantage of each entity.

According to UNCTAD in its latest report, cocoa farmers receive less than 6.6 per cent of the total value added to one tonne of cocoa beans that are sold, based on data from Cocoa Barometer.

Indeed, the report noted that the situation has led to cocoa farmers in key producing countries to live poorly, thus leading to a situation that discourages young people from entering the business.

The report says that this undermines the sustainability of the cocoa economy and could threaten it if the issue is not addressed through concerted action, adding that the situation can partly be addressed, by higher prices for farmers.

Furthermore, the report explained that the reforms led to high market concentration in cocoa markets.

“Indeed, the complexity of cocoa markets, characterized by the ease of access of transnational corporations to resources, with a key objective of achieving economies of scale, has led to increased vertical and horizontal integration in the industry”, it added.

The report estimates that the three biggest cocoa trading and processing companies traded between roughly 50 and 60 per cent of world cocoa production in 2013, while four transnational corporations on average, controlled more than 60 percent of world cocoa grindings in 2014, in terms of cocoa processing capacities.