Africa | Smallholder farmers

How a fair price for cocoa improves farmers’ lives

29 September 2022 17:41

A fair price, cash in hand. Since they joined the cooperative RASSO, hundreds of smallholder cocoa farmers in Ivory Coast have seen their lives improved. And for more and more of these growers, that’s just the start.

“One way to turn the tide is to form cooperatives, where farmers can join forces.”

There’s a good chance that your next chocolate treat was made from cocoa from Ivory Coast. The West African country is the world’s largest exporter: 40% of all the world’s cocoa comes from there. So it’s even more disturbing that only a small percentage of the profits make their way to the people who grow the beans. Most smallholder cocoa farmers in Ivory Coast receive an amount that is far below the market price. As a result, they don’t earn enough to cover their daily expenses, such as school for their children or medical care.

The problem is that many of these farmers haven’t organized themselves. Intermediaries in the cocoa market abuse that fact, and offer the growers a low price for their beans. Since the farmers don’t have any other options, they have to accept the price. One way to turn the tide is to form cooperatives, where farmers can join forces. Société Coopérative Simplifié RASSO (or RASSO for short) is one of those cooperatives. The organization was founded in Ivory Coast in 2015 by Alida N’Takpe-Coulibaly to give smallholder farmers near the city of Agboville a stronger position in the market. N'Takpe-Coulibaly also strives to help the farmers increase their production and make their operations more sustainable.

“We can now pay the farmers at the start of the cocoa season”

Farmers now receive a fair price for their beans

That effort has already borne fruit: as a cooperative, RASSO can negotiate better prices than an individual farmer, so its members receive the fair market price. But smaller cooperatives like RASSO don’t have enough financial resources to pay growers cash for their beans immediately. Many farmers desperately need cash for their daily expenses. To local banks, compact cooperatives seem too risky. And since these organizations can’t get loans, they don’t have enough cash on hand.

Rabo Foundation focuses specifically on these types of smaller farmer’s organizations. In 2019, we offered a working capital loan to help RASSO break out of that downward spiral. With the loan, the cooperative can now pay farmers cash in hand in exchange for their cocoa beans, buy – and therefore sell – more cocoa. That led to higher incomes, which allows RASSO to grow. The cooperative has indeed grown, from 622 members in 2015 to 838 in 2021.

Alida N'Takpe-Coulibaly: “Thanks to the working capital loan from Rabo Foundation, we can now pay the farmers at the start of the cocoa season. That’s important because it’s also the start of the school year. So farmers get the money in time to send their children to school. In general, that means they have enough money for their day-to-day expenses during the harvest season, and they can save for the period after the season when they have little or no income.”

Growers who work sustainably receive an extra premium

The contact between Rabo Foundation and RASSO was made via Progreso. This Dutch foundation has long been a partner of Rabo Foundation, and assists smallholder cocoa farmers and their cooperatives. In RASSO’s case, Progreso offers organizational consulting and access to new markets. The foundation also helped them apply for a loan from Rabo Foundation.

With Rabo Foundation’s financial support, Progreso assists the organization’s farmers in growing cocoa beans according to UTZ norms. Those are standards for things like sustainable production. If the growers meet the norms, they can receive a premium of around 5 percent on average above the sale price. So they earn more just by being sustainable. The UTZ program also encourages farmers to increase their productivity using sustainable fertilizer, which also leads to higher incomes.

Some of the farmers are also experimenting with intercropping under Progreso’s guidance. “Cocoa grows best in the shade”, Alida N'Takpe-Coulibaly explains. “So it’s a good idea to place the cocoa plants among other fruit trees, which block the sun. That’s a form of diversification that also makes the farmers less dependent on cocoa.” Shade is not the only factor that produces a better harvest. Some experts believe that cocoa beans naturally grow better in an environment with other fruit trees. “So there’s no reason not to try it, and increase the chance of a higher income.”

Goals for the future

With the support from Rabo Foundation and Progreso the cooperative is growing. More and more farmers are joining the cooperative. Many of them are women, which is still unusual in the cocoa sector. RASSO paids special attention to these farmers. Alida N'Takpe-Coulibaly: “We’ve grown from 123 women farmers in 2015 to 306 in 2021. Together with Progresso and the financial support of Rabo Foundation, we started a special program for this target group where we try to convince men to make land available for women – registered under their own name – where they can grow cocoa. We then help the women get started by providing cocoa plants. And with the creation of Village Savings and Loans Associations, we help them stand on their own two feet financially.”

The cooperative has more plans for the future: “One of our goals is to continue to improve the quality of the cocoa, so that farmers can increase their incomes. We also want to become a fully-fledged export cooperative, and do business directly with chocolatiers in the international market. All of that will help ensure our farmers can build better lives and make a sustainable living from their produce.”

Would you like to help contribute to a better life for smallholder cocoa farmers? Check whether the chocolate you’re buying is certified by organizations like UTZ, Rainforest Alliance or Fairtrade. Then you know that the farmer receives fair compensation.