• Ravi Pillay
Nestlé South Africa public affairs manager
+27 11 889 6799 or +27 82 908 2580
Global food manufacturer Nestlé has launched a plan to help small-scale cocoa farmers, including the thousands living in Africa, take advantage of rising market prices by increasing their yields.
According to Nestlé, the last four years have produced poor yields, a situation that has seen market prices spike. In late October 2009 cocoa futures reached a 30-year high in the US, hitting almost $3 390 (R25 191) a metric ton, a price not seen since February 1980. For the year to date, cocoa futures have risen by 30.4%.
“This is unheard of for us and it is even predicted for next year, going into a fifth year,” said Nestlé executive vice president Petraea Heynike, referring to the current shortage.
Cocoa from Africa
The two West African countries of Côte d’Ivoire and Ghana are responsible for over half the world’s cocoa production, yielding 39% and 19% respectively. Nigeria and Cameroon are also significant African cocoa producers, as well as a number of countries in Central and South America, and the Asia-Pacific region.
Nestlé reported that in the past 20 years chocolate consumption has doubled, with a 14% increase in demand in the past five years alone. This should be good news for cocoa farmers, but the industry is struggling to keep up.
The cocoa shortage is attributed largely to unproductive land and ageing trees that are vulnerable to disease. With farmers worrying about their immediate future, they are unable to invest their attention or money in long-term solutions.
“Production and grinding of the cocoa beans is not meeting the consumption, and that is leading to the very high prices that we have seen,” said Heynike.
The Swiss-based manufacturing giant is one of the world’s biggest buyers of coffee and cocoa beans. Over the next decade it intends investing almost US$460-million (R3.4-billion) into the sustainability of the two industries.
Coffee will receive $350-million (R2.6-billion), and the remaining $110-million (R817-million) will go towards a new project called the Cocoa Plan. This follows the company’s previous investment of $59-million (R438-million) for cocoa and $198-million (R1.4-billion) for coffee over the past 15 years.
Nestlé announced the bold initiative on 22 October 2009 as it presented its third quarter results, which showed good growth for the chocolate sector, although confectionery slumped.
The Cocoa Plan
The Cocoa Plan, according to Nestlé, will bring a variety of initiatives together under one banner.
The plan will address cocoa-related social, economic and environmental issues, expanding on current sustainability initiatives and establishing new ones in cocoa-growing communities. The goal is to boost production quality and quantity of the sought-after bean, and to give farmers a greater profit.
A number of key tactics – such as further training of farmers in modern best practices and encouraging them to become certified responsible producers, and the supply of hardy cocoa trees – will revive the industry.
Further steps include streamlining the cocoa supply chain through direct negotiation with cocoa cooperatives to cut out the middle person; collaboration with plant scientists in other cocoa-producing countries; addressing child labour issues through the International Cocoa Initiative; and working with other relevant partners, such as the Red Cross, to improve the living conditions of communities.
The company also plans to expand the brand-new Nestlé Research and Development Centre, which opened earlier in 2009 in Abidjan, Côte d’Ivoire. The Ivorian centre and Nestlé’s highly advanced plant science facility in Tours, France, are working together to supply a million superior cocoa plants every year from 2012.
About 50-million people around the world depend on cocoa for their livelihood. This includes more than five-million small-scale farmers, many of whom are women.
Nestlé has long shown a firm commitment towards the sustainability of the cocoa and coffee industries, for the benefit of all involved, particularly farmers.
Although the company owns no commercial plantations, it makes substantial investments in research and the development of higher-yielding, more robust plants, meaning that farmers can produce more cocoa on the same area of land, or even less.
This eliminates unnecessary deforestation, and farmers can then use the extra land for other crops, with the Nestlé-supplied trees yielding between 50% and 200% more than current trees, according to a study.
In the past 15 years the company has supplied 17-million elite coffee and cocoa treelets to farmers in producer countries, and over the next 10 years it expects to supply at least 12-million more.
Through field schools, Nestlé also trains farmers and agronomists in topics ranging from tree-pruning and pest control to fermentation, drying and commercial selling, as well as social issues such as child labour.
Over the past 10 years the company has supported the training of about 100 000 coffee and cocoa farmers, helping them to develop better farm management practices coupled with an enhanced sense of responsibility towards the environment.
The next decade will see another 130 000 farmers receiving training and support.