New Internationalist

Cocoa Addicts

Issue 204

new internationalist
issue 204 - February 1990

Cocoa addicts
More than 40 Third World countries produce cocoa for world
markets yet few of its people actually eat its product, chocolate.
The rich are hooked on consuming it, the poor on producing it.
John Tanner looks at a key primary commodity -
and at how it conditions life in Ghana.

Bite into a chewy Hershey Bar or select your favourite Cadbury's chocolate and you are at one end of the cocoa trade. Swing your cutlass to sever the ripe yellowish-red pods from the cocoa bush and you are at the other.

The chocolate bars we buy in the West never go down in price. Their prices are raised 'in line with inflation' but never cut to fit in with the cheaper cost of cocoa on the world market. The result has been huge profits for the three multinational corporations which dominate the chocolate market: Mars and Hershey of the US and Nestlé of Switzerland.

The cocoa-producing countries at the other end of the chain have no such price stability. Every year the price of cocoa is utterly unpredictable - though in the last decade if you'd predicted disaster you wouldn't have gone far wrong.

In the 1980s world cocoa prices fell by half. More and more producers began chasing fewer and fewer buyers. Production soared. The surplus cocoa mountain now stands at a huge one million tons, almost half what the world produces each year. It is a sad but typical story of the trade in primary commodities: Third World countries are so desperate to boost exports that each is always willing to undercut the next.

Ghana is one of those countries dependent on cocoa for the hard cash it needs to develop. The tradition of cocoa growing has put down deep roots into Ghanaian soil. Each village in the central zone around the Asante city of Kumasi has its cocoa storehouse. When the ripened pods are collected, they are cut open to reveal the white beans which must be fermented and dried. It is skilled work fermenting the beans under plantain leaves and then turning them dark brown in the sun.

Until 1980 Ghana was the world's largest cocoa exporter. It lives, breathes and thinks cocoa. One Ghanaian in four earns their living from the crop, which provides 60 percent of the country's foreign exchange. Cocoa supplies one third of Ghana s tax revenue.

[image, unknown] The cocoa-price slide of recent years has thus been a disaster. Ghanaian cocoa does attract a small premium for its flavour, particularly from traders supplying the British market. But even so, cocoa brought Ghana just $395 million in 1988, compared with $503 million in 1986. Even less is expected for 1989.

All the same, successive Ghanaian governments did not help over the years by ignoring the cocoa farmer and causing a collapse in production. The Ivory Coast paid its cocoa farmers much more for their beans and became the number one exporter. Cocoa farmers in Ghana were the goose that laid the golden eggs, but the goose was never fed. Cocoa could only be sold to the Ghanaian Cocoa Board (known locally as the Cocobod), which paid farmers a small fraction of the world market price. By the early 1980s villagers were being paid so little that they left beans on the ground to rot.

Meanwhile, cocoa exports were used to finance luxury imports for the wealthy in Ghana and cocoa taxes paid for much of the civil service. The Cocobod's pay-roll grew from 22,000 in 1964 to over 100,000 in 1985, all on the back of the cocoa farmer. When the current military government led by Flight-Lieutenant Jerry Rawlings came to power it investigated the Cocobod. It found that 15,000 of those on the payroll were 'ghost workers' - staff who had died or long since left who were still being paid.

Paradoxically, while the collapse in cocoa prices has been disastrous for Ghana as a whole, the cocoa farmers themselves, 95 per cent of whom work small-scale peasant plots, are now feeling much better off. The Rawlings Government, under International Monetary Fund (IMF) guidance, decided to pay the farmers more in a bid to rehabilitate the cocoa sector. 'Formerly they were not even buying our cocoa but now that Chairman Rawlings is in, he is giving us encouragement', said one peasant.

Today the Cocobod is paying farmers about half the world market price. That was cedis 10,440 ($37) for a 60-kilo sack of beans at the end of last year - about a month's pay for a private soldier. Last season's record crop was partly down to good weather but also a result of much better returns for growers. Peasants who in the drought years of 1983 and 1984 had switched to food crops have been returning again to cocoa cultivation.

The economic recovery programme derived from the IMF has made winners out of cocoa farmers and businesspeople who can export. Entrepreneurs can keep 30 per cent of their foreign-exchange earnings to pay for the import of luxuries. The losers are state-employed civil servants and teachers and, of course, the rural and urban poor. The civil servants and teachers have been forced to take second jobs, driving taxis or running market stalls. The poor are offered PAMSCAD, the Programme for Action to Mitigate the Social Costs of Adjustment, which has been slow to start.

Once considered dangerously radical, the Rawlings regime is now much favoured by foreign-aid donors and is held up by the IMF as a shining example. 'Most of what we would like to see happens to be what the IMF would like to see,' I was told by Government representative Paul Victor Obeng. As a result a continued slide in cocoa prices would undermine Ghana's economic 'recovery' and be highly embarrassing for the IMF. It is a nightmare scenario which Obeng would rather not think about and which would force him to say to Western countries: 'As you are paying less for our cocoa, please give us more aid instead'.

The memory of hunger in 1983 and 1984, when bush fires raged, still haunts the Ghanaian imagination. The Government's objective has been to reduce malnutrition among under-fives from the 42 per cent in 1985 to 17 per cent by this year. No-one knows how successful they have been but at the moment markets in the villages and towns are piled high with plantains, fruits and vegetables - at a price.

Ghana does have enough land to feed itself. But the problem is that the amount of land claimed for agriculture by cutting down the forest has already reached its limits. This century Ghana's forests have shrunk from 8.2 million square kilometres to only 1.9 million. If population continues to increase at 2.6 per cent a year, a choice will soon have to be made between growing cash crops or growing food. At the moment farmers are being paid to grow cocoa but food production is being left to market forces.

Ghana probably has three options for the future. It can continue producing cocoa as now and hope that prices will recover and become more stable. It can develop the processing side of cocoa. Or it can switch to plantation production.

Ghana already produces its own chocolate at the busy port of Tema, but only for home consumption. Ghana Cocoa Products manufactures its 'Golden Tree' brand of milk chocolate, which is good quality and could in theory be exported. Demand for chocolate is increasing in the Third World, where the product usually has to be sold from the refrigerator. But Ghana would face fierce competition from companies such as Cadbury Schweppes. Alternatively it might process its own beans into cocoa powder and cocoa butter for export; subsidiaries of the big cocoa traders - Gill and Duffus of the UK, Cargill of the US and Cacao Barry of France - have been grinding beans in Brazil for home and abroad since the 1970s.

Faced with such competition from multinationals, Ghana seems more likely to go down the road of creating its own plantations. Tony Fofie is the senior manager in charge of the Cocobod's 21 cocoa estates and he has visited plantations in Malaysia. 'Oh you know, the rate at which Malaysia is producing cocoa on an estate basis is just fantastic', he said. He believes that with the right investment Ghana could make its estates profitable and produce cocoa just as efficiently as Malaysia. But public or private estates using new techniques would inevitably threaten the traditional farmers.

Like a junkie dependent on drugs, Ghana cannot give up cocoa. So whatever route it chooses it will remain prey to the vagaries of the world market. The best hope for Ghana and all other cocoa producers lies with an International Cocoa Agreement that would try to improve prices. This is not idealistic fantasy - such an agreement actually came into force in 1987. But it failed miserably because Indonesia, Malaysia and the US refused to participate. Indonesia and Malaysia are low-cost producers who believe they make more money with low prices than if they agreed to limit their exports. The US, the single biggest cocoa importer, simply says it supports a free market.

In the long term Ghana and countries like it can hope that the growing demand for chocolate in the Third World itself will revolutionize the cocoa trade. But in the short run prices will remain a lottery and the chocolate multinationals will continue to play off one Third World country against another.

John Tanner is a journalist who specializes in trade and development issues.

[image, unknown] The life of Akua Kru

John Tanner meets a woman who has been
farming cocoa since the British ruled Ghana.

An old Asante woman, with lined face and sinewed arms, squatted on the hard red-brown earth of the courtyard. Akua Kru was determined to be heard, despite the men of the village.

Barefoot, she was dressed in brown with a blue apron tucked in at her waist and hair in a scarf. She had placed herself just outside the circle of half a dozen male elders assembled to greet the visitors from the capital Accra.

The guests, officials from the Cocoa Board, and the head of the village, sat on low carved wooden stools. Beyond the inner circle, 30 or 40 men, women and children (lots of children) looked on, sometimes shouting comments.

On the four sides of the courtyard were single storey mud-walled buildings with rust-brown tin roofs. The village of Kwakokrum, between Kumasi and Obuasi in Ghana's Asante region is a typical cocoa village.

Akua Kru, one of the oldest and largest farmers, felt she had a right to speak. 'I think I am 67 years old, I have three daughters and seven sons and some of them are grown up', she said. 'My husband died some time back'.

The widow grows oil palm, cocoa yam and cassava, as well as cocoa, on two farms totalling 32 acres. 'I'm happy about the price paid for my cocoa but I should be given pesticides, boots and protective clothing', she complained.

For Akua Kru cocoa farming is not that different from pre-1957 when the British ruled the then Gold Coast. The same network of national marketing board, local cocoa buyers and the village cocoa store, remains. Communications with the main road are still along a winding muddy track through the forest. But these days the village has a brand new concrete-lined well, very few roofs are thatched and there are transistor radios.

In the old days the farmers received only a credit note for their sacks of beans. Today farmers are paid straight into their bank accounts through the 'Akwafa Cheque' system (akwafa means 'farmer' in Akan, the Asante language).

The villagers complain that while cocoa prices are reasonable, the prices of cement, building materials and cloth are continually rising. 'If it hadn't been for Chairman Rowlings I would have stopped cropping cocoa altogether', said one.

If times are hard, Akua Kru can always return, like peasants everywhere, to growing only food crops. But her grandchildren go to school in the town. They want well-paid city jobs and may turn their back on grandma's cocoa farm.

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