The most important African countries when it comes to cocoa production are Ivory Coast and Ghana. Ghana has a great economy in spite of its relative poverty and a GDP that is growing rapidly year to year. This might be about to change now that cocoa production is entering a serious crisis. Ghana supplies 21 percent of cocoa demanded around the globe. In this article, we will analyze this crisis and find potential solutions to it for the sake of global cocoa business.
The Effects Of The Cocoa Crisis
The cocoa supply shortage is affecting a variety of other products. The main good based on cocoa is chocolate, which is produced worldwide by importing cocoa from countries like Ghana. Chocolate is one of the most important foodstuffs in the whole world!
A cocoa crisis doesn’t only reduce the production of chocolate but also raises the prices of it which may transform chocolate and other products based on cocoa into luxury items. It is of a relative consequence based on each country as well, but the effects are visible already.
Most cocoa is produced by small independent farmers who are about to suffer from the shortage of funds, that previously the government provided.
Without any investment, cocoa production problems will only grow in the coming years. It will dangerously affect Ghana’s economy and even increase the level of poverty in the country. But this is an effect that can attack other countries that produce cocoa as well, and the situation can easily get out of control.
As a consequence of the cocoa shortage, many Ghanaian farmers turn to smuggling as an alternative to producing a regular income. They start selling their cocoa by using illegal networks in Ivory Coast, which has a significant impact on the country’s economy.
Even if Ghana used to produce around 930,000 tonnes of cocoa per season until last year, their income was never a significant one. This is why farmers started to look for alternatives. Since the production of cocoa entered a crisis, their income is even more affected. The cocoa production supports around 15 percent of Ghana’s GDP.
This crisis led to protests in the streets of Ghana’s capital, Accra, against government corruption and the depreciation of the national currency. The cedi reached a low value of only 40 percent of a dollar which is a big red flag for the local economy. Even if the price of fertilizers and other supplies needed to grow and harvest cocoa beans increased and even doubled, the farmers would receive the same income in spite of their investment. For a 64 kilograms bag of cocoa, they receive around 30 Euros, and this amount has stayed the same for several years now.
It may be the most important effect of the cocoa crisis, after the chocolate shortage that is the fact that the local economy can be seriously damaged only in a couple of years. Ghana is already a developing country regarding wages and privileges and a cocoa crisis that does not conclude quickly, will only be destructive for other local industries and fields of activity.
More people and farmers will migrate toward urban areas since there are no more jobs for them in cocoa production and will become consumers. It can switch the entire proportions of the country because there will not be enough workers to provide for the urban population. Overall, the cocoa crisis is not looking good for Ghana in many aspects, but it is a serious global threat as well. This is why solutions to this situation are mandatory.
Measures That Need To Be Taken To Fix The Cocoa Crisis
While the effects of this crisis are quite visible in Ghana but also in other parts of the world, some solutions could completely change the situation. People and especially politicians and economic experts should realize the importance of cocoa and its production and facilitate certain ways to support it. Even if protests started to arise around the country, so far measures are being delayed, and the farmers struggle to keep their work going against the obstacles they face.
But with biologists and investors working hand in hand with cocoa farmers, there is hope to fix the current problems that the market is facing. If the cocoa crisis keeps increasing, its effects might be devastating for the rest of the world. The most obvious consequence would be the deficit of chocolate which would reach 100 000 tons less per year. And this will happen in just a matter of years if no measures are being applied to end the cocoa crisis. Not only chocolate but also chocolate flavored goods, drinks and different foods will be affected, making our planet a much poorer, and less tasty place.
1. Adapting To Environmental Changes
The cocoa bean is extremely sensitive to weather and its changes around the year. Cocoa environmental issues are present and increasing the climate changes that affect the entire planet. Cocoa is meant to grow in a humid environment such as tropical rainforests climates.
There are several unfortunate consequences of a potential large production of cocoa which would be great from an economic point of view but not from a natural one. It would involve clearing large areas of forests and adapting the climate to the needs of the cocoa beans. And these needs can be very specific.
Once an ecosystem is destroyed, it can be hard and sometimes even impossible to regenerate which would bring devastating results for the environment. Among other aspects affected by large cocoa, productions are damage to soil fertility, soil erosion, and stream sedimentation.
But these risks are not always necessary as cocoa can still be cultivated in an environmentally friendly way. It would be a double benefit for both the economy of Ghana and the protection of the environment. The main measure that needs to be taken is the education of the farmers. If farmers are conscious on the effect their production has on the environment, they can adapt to the needs of nature and improve their system of growing cocoa.
The problem is that, without being financed enough, farmers are left to grow cocoa in damaging conditions and without the necessary chemicals needed during the process. Cocoa beans need shade and humidity but also many types of artificial fertilizers to support them. By investing in such fertilizers and pesticides, not only the cocoa production would increase, but it would adapt better to the environment without damaging it for the long run.
Another aspect that is a link between cocoa crisis and the environment is the fact that global warming is sucking the humidity out of the soil where the cocoa trees grow. It affects not only the production of cocoa but also the rest of the environmental aspects. Cocoa trees are extremely delicate plants and can be affected even by the smallest weather conditions from one season to another.
Especially if we talk about farmers that organically grow cocoa and completely relying on the environment rather than chemicals and fertilizers. Experts are extremely worried regarding these weather conditions and the change of climate. According to them, by 2050, Ivory Coast and Ghana will suffer tremendously from the cocoa production crisis that will degenerate due to global warming. Things can get so serious that the cocoa beans might be impossible to grow because of these inevitable natural reasons.
The solution to this issue would be for cocoa farmers to relocate their production to higher fields, where humidity is still maintained to an optimum level. But even this solution can rise a variety of other issues based on competition. The fields where cocoa could be grown in the future are limited, and the struggle to obtain one is not easy.
2. Foreign Investors Can Support The Industry
Investments can fix a big part of the cocoa crisis by being invested in the key areas of cocoa production. But these finances have to come from somewhere, and the best answer is foreign investors. In other business people from all over the world would invest in the production of cocoa in Ghana like there are foreign investors in local rice production, for instance, the crisis would end in a couple of seasons.
Developing a local cocoa farm can be a great way to export cocoa to Ghana by basically producing it locally. And exporters have the means to invest in such an industry considering that it can generate enormous profits for both local economy and foreign investors.
Investing in the cocoa farms in Ghana is not only a local solution, but it can also save the chocolate production worldwide. Since the cocoa crisis began, there is a chocolate crisis also that threatens other sides of the global economy. And if the cocoa crisis is a problem of Ghana and other African countries that rely on cocoa production, the chocolate shortage can affect richer countries with stronger economies as well.
Even chocolate producers can have a positive impact on the cocoa crisis because it is in their direct interest to fix this problem. As an important effect of the cocoa crisis the chocolate price that keeps going up along with the demand present in most countries.
Foreign investors can get in contact with local cocoa farmers and start to collaborate with them in a mutually beneficial way. If you are interested in this type of business, know that it is well worth it for the long run and it can bring significant profits. You will need to identify your local contacts and get familiar with the paperwork that needs to be done to be able to support a local cocoa farm. Or, you can build one from scratch by buying a terrain and have the right farmers to work on it by using the best fertilizers on the market.
Initially, the investment could be a significant one, but profit should appear not farther than the first harvesting season. The good news is that Ghana is open to this type of collaboration and the authorities are willing to facilitate access for foreign investors, at least regarding legislation and bureaucracy. With the right team of lawyers, researchers and biologists, you can become a cocoa field owner and make a change not only on the African market but also on the international one.
Once you produce enough cocoa, you can export it to chocolate producers all over the world. It can be a great international trading opportunity for the right companies considering that the market is suffering from this cocoa crisis at the moment.
3. Understanding the Gravity of the Problem
Before trying to fix the cocoa crisis is important to understand the gravity of the situation. Without cocoa, not only the chocolate market is affected but also the jobs of those implied in the process of producing cocoa. In Ghana, the majority of farmers are involved in growing cocoa, and they gain their existence from this type of agriculture. Once the crisis of cocoa emerged, many farmers had to reconsider their cocoa production for the following seasons. In best cases, some started cultivating other crops or even getting in the gems and minerals business to sustain a living for them and their children.
Even if the decrease of cocoa production could represent a benefit for the environment, this is not a desirable outcome. Its economic consequences are far more dangerous and can affect a lot of lives. To fix these type of issues, good research regarding cocoa production is welcome especially if a foreign investor is considering supporting it in Ghana.
Nowadays the range of products based on chocolate is very wide, and with its development, people’s tastes also improved. They want healthy chocolate, dairy free chocolate and even chocolate with different flavors.
But one thing remains common to all kinds of chocolate, and that is the cocoa ingredient. In most cases, the quality of the chocolate depends on cocoa and its quality as well as in a symbiotic relationship. So the crisis of cocoa not only needs to end to produce more chocolate but also the quality of cocoa needs to remain the same or possibly improve. And since the cocoa crisis has such important effects on different industries and economies, it is crucial to find a solution to it especially when it comes to such an important producer like Ghana.
Another thing to understand about this crisis is that even the production of cocoa that is being reached in Ghana might not be completely sold. The prices dropped so much that farmers can’t sell it so cheap and it gets stored in warehouses. It is not a good outcome for anyone involved in the process because the farmers work for nothing without any income and the potential buyers can’t buy it to its fair price which is a problem that agitates the market altogether.
This is why negotiation between cocoa farmers and cocoa buyers should be a national priority to reach an agreement. It can be done by adjusting the economic needs on both ends and find the right compromise to be made between the two parts. And this poor cocoa marketing is not only affecting Ghana but also Ivory Coast and the rest of the world.