Barry Callebaut : Agrilogic White Paper

Table of contents

Executive summary

Introduction

Methodology

Cocoa farming model

Priorities

for the future

Table of Contents

1. Foreword
2. Executive Summary

1. Introduction
2. 1  Methodology

8 2  Cocoa Farming Model in Côte d'Ivoire

20 3  Priorities for the future:

An evidence-based approach to support the cocoa sector

Introduction

Methodology

Cocoa farming model

Priorities

for the future

Table of contents

Foreword

This paper summarizes the key findings of research conducted by Agri-Logic, in partnership with IDH & Rainforest Alliance, using the Farmer Field Book Methodology, to draw a picture of the cocoa sector in Côte d'Ivoire on behalf of Barry Callebaut.

This report marks the sixth year of collaboration between Barry Callebaut, IDH, Rainforest Alliance

and Agri-Logic. This paper aims to share key insights gained from this collaboration, with a focus on

data collected and analyzed during the cocoa agronomic season of 2021/22. In addition, these findings provide actional steps that underpin Barry Callebaut's commencement of a transformative and formalized approach to change the existing cocoa farming model in West Africa, and a vision of where we believe smallholder­ cocoa farming should be in 10-20 years.

Executive summary

Introduction

Methodology

Cocoa farming model

Priorities

for the future

Table of contents

 Executive 

 summary

Introduction

Methodology

Cocoa farming model

Priorities

for the future

In 2016, Barry Callebaut established a collaboration in Côte d'Ivoire with the IDH, Rainfor- est Alliance, and Agri-Logic. The results of the Agri-Logic research provides the foundation for the sharpening of Barry Callebaut's strategy to support cocoa farmers in achieving higher cocoa yields, living income and protect the forests surrounding cocoa farms. The results form the basis of our shift in approach from less training to more doing - with less emphasis on farmer training, and increasing investment to support the farmer with more labor, soil management techniques, and planting material. These findings provide actionable steps that underpin Barry Callebaut's commencement of a transformative approach to change the existing cocoa farming model in West Africa.

A picture of farming in Côte d'Ivoire

Cocoa cultivation, unlike many other food crops, is still largely dependent on manual labor in many cocoa-growing regions. Almost two-thirds of global cocoa is produced in Côte d'Ivoire and Ghana and is predominantly grown by independent smallholder farmers supplying a range of companies, sometimes via several cooperatives. Cocoa farmers and their families usually live in villages and are required to travel a few kilometers to work on the farm, with most of the work and labor on the farm undertaken by the farmer and their families themselves. Most farmers work on

more than one field, sometimes owning one of the plots and leasing the others. Cocoa accounts for a significant part of these smallholder farmers' income, at around 70% to 85%1.

Poverty reduction is driven by three factors

Using Farmer Field Book Methodology, data and insights were collected from farmers on a range of topics, including farm investment, household profile, and environmental im- pacts. The data analysis shows that poverty reduction is driven by three key factors - yield, size of farm and price.

Yield

Annual rainfall of between 1,500 mm and 2,000 mm, well distributed throughout the year, is required to grow cocoa in optimal conditions in Côte d'Ivoire.2 With regards to yield, the data analysis shows two findings. The first is farm location. Farmers reporting highest cocoa yield in farms are located in regions which received significantly more rainfall (1,699- 2,500 mm), relative to the cocoa region's aver- age. In contrast, farms that are located in the center north and northeast of Côte d'Ivoire received below average rainfall, reported lower yields in these areas. The second finding is that the level of farm investment in the form of additional labor and input, such as soil management techniques, also impacts cocoa yield.

The data shows the difference between the bottom and the top quintile of investment levels was significant, with the top 20% of farmers collecting nearly double the yield (around 620 kg/ha on average) relative to the bottom quintile, where average yields were a little over 350 kg/ha.

Farm size

Investment is also a critical factor with regards to farm size. The analysis shows that larger farm size does not automatically equate to increases in cocoa yield, in comparison to smaller farms. This is particularly representative when farm management is undertaken only by the household, without the investment of additional labor. In contrast, a large farm with an adequate level of investment, can drive a higher level of income by more cocoa being grown, resulting in higher yields and subsequently higher reported income.

Price

With regards to higher price, the findings show that price mechanisms can support an increase in farmer income, which should be coupled with the other factors such as yield and farm size and farm location. Barry Calle- baut and IDH acknowledges that higher farmgate prices lead to poverty reduction and that the appropriate mechanisms to achieve this should be analyzed in a broader context of price construction, for example the

importance of farm gate price as well as export price, to achieve the biggest impact on farmers' incomes.

A valuable contribution to the discussion of current cocoa farming practices in West Africa

A fully sustainable cocoa and chocolate sector can only be achieved when all supply chain actors are committed to supporting the development of an enabling environment. By sharing this research, we hope that our change in approach from less training and more investment into doing, will be a valuable contribution to the wider cocoa sector discussion on adaptations to the existing cocoa farming model in Côte d'Ivoire, and more broadly, West Africa.

Whilst our key findings indicate what activities and approaches should be undertaken to support farmers to reach a living income, this must go hand in hand with the development of supporting policies to drive poverty reduc- tion. This includes the development of integrated agricultural policies and land titles that align national production targets with global demand. In addition, given the reported rate of deforestation in Côte d'Ivoire, it is critical that there is broader discussion on reforestation strategies and production of the same amount of cocoa on less land.



Introduction

Table of contents

Executive summary

 Introduction 

Methodology

Cocoa farming model

Priorities

for the future

In 2016, Barry Callebaut established a collaboration in Côte d'Ivoire with the IDH, Rainfor- est Alliance, and Agri-Logic. The purpose of this partnership was to generate quantitative and qualitative evidence about the cocoa farming model pursued by Ivorian farmers and derive insights on themes ranging from household and farm profiles, farm management practices, yield, and farm economics. This evidence base is used to identify key factors driving improvements in farmer cocoa yields and incomes and inform better program design and targeting for farmer support interventions.

This report marks the sixth year of collaboration between Barry Callebaut, IDH, Rainforest Alliance and Agri-Logic. We summarize the findings of Agri-Logic's analysis and use it to answer the following research questions:

1. What is the overall state of the Ivorian farming model, notably in terms of labor use, farm management, and farm economics?
2. What are the factors contributing
   to improvements in farmer yields and incomes?
3. To what extent does the adoption
   of "Good Agricultural Practices" lead to increased cocoa yields?
4. Are there major differences in terms of yield and income between farmers who adopt "Good Agricultural Practices" and those who do not?

This paper begins by providing readers with an understanding of the methodology used to obtain the data and analyses. Subsequently, it describes the primary features of the Ivorian cocoa farming model and emphasizes key limitations to improvements in cocoa yields and farmer incomes, notably low investment levels in pre-harvest labor and inputs, which contribute to low productivity levels for cocoa production. It also details factors that facilitated higher farmer yields and incomes, based on the analysis conducted by Agri-Logic. The report concludes by highlighting priorities for future farmer support interventions in the country and identifying opportunities to help farmers diversify their income sources.

We expect this paper to be used to build alignment in the sector among cocoa supply chain actors including farmers, farmer organizations and chocolate makers. Only by working to- gether, combining investments and having coherent business practices it will be possible to make a living income a reality for increasing numbers of cocoa farming households.

IDH works with companies on solutions that enable smallholder farmers in the cocoa sector to earn a living income. The IDH Living Income Roadmap provides an important framework for value chain actors committed to making living income a reality in their supply chains (including members of DISCO and Beyond Chocolate). An important step in this framework is around investing in improved company action which the insights consolidated in this paper are an important example of.

IDH and Barry Callebaut collaborate to gather strategic insights on farm management and farmer economics across West African countries and cocoa sustainability programs linked to major brands. The conclusions on what works or not in improving yields and farmers' incomes reinforce the need for a "smart-mix strategies" tailored to different needs of farm- ers. This involves identifying the services and procurement practices that are essential to improve "income drivers" including yield, production costs, alternative incomes and price. Improving procurement practices such as payment terms, payment of premiums, farm gate pricing and long term relationships are part of this strategy mix to distribute value more fairly to cocoa farmers to make a transition towards a more remunerative and resilient cocoa farming business. Segmentation of cocoa farms and their cooperatives is key for more targeted and effective interventions that can have an impact on the living income on farming households.