Cooperative enterprises put business in the hands of cocoa farmers

From cocoa to chocolates

Mohamed Sidie Sheriff – World Bank, Freetown

7 December 2011

From cocoa to chocolates

Cocoa farmers in Sierra Leone are coming together to increase the value of their produce. They are establishing cooperative enterprises that will effectively market and export their crop.

Cooperatives promote increased competition, drive up prices and give farmers a sense of ownership.

The World Bank is supporting the cocoa cooperatives through its Rural and Private Sector Development Project. In Sierra Leone’s eastern district of Kailahun, Kenema and Kono, the farmers have formed three independent cooperatives that pool cocoa bean exports, and help them compete with large companies. With a membership of almost 13,000, momentum is growing.

“The cooperative network generates a sense of ownership among indigenous cocoa farmers, helps increase price consciousness and generates competition with private companies that leads to higher prices,” said Charles Annor Frempong, World Bank Senior Rural Development Specialist and team leader on the project.

The three cooperatives are all independent, but come together to form a cocoa export company called KayeiGworma, which synchronizes their business activities and helps them compete in the international market.

“The coming into being of our cooperatives has begun to build a new wave of international market price consciousness in the cocoa sector, which has forced traditional cocoa exporters to increase their price offer to us farmers from 1,500 Leones per pound of dried cocoa beans to 3,500,” said Mary Kaikai – a war widow and local farmer.

Mary is responsible for taking care of her six children in Nimikoro Chiefdom. “This has benefitted all cocoa farmers in the country, irrespective of their membership in our cooperatives,” she says.

Although co-op members have yet to meet their target export volume of 3,000 metric tons of cocoa per harvest season in 2011, up from 1,000 in 2010, the sense of ownership has boosted pride among the farmers.

“Within our cooperatives, a new sense of ownership and greater assurance of economic security and social safety net is creeping through our member farmers,” Kaikai said.

Increased competition and higher income

With the entrance of cooperatives in the market, traditional private cocoa exporting companies now faced with new and growing competition. Since the cooperatives were formed, the companies have increased their price offers and incentives to cocoa farmers to between 3,200 and 3,500 Leones.

Private companies also offer farmers other incentives, including advance loans in the form of food-for-work and shelter materials.

These shelters help indebted farmers store their cocoa after the harvest season, instead of selling it at lower prices that are often dictated by the creditors – as a form of debt relief. The companies also provide trucks that can navigate the rugged rural road networks to cocoa growing villages.

Despite some of these incentives, the cooperatives are still forced to fight back against the private companies, which have tried to keep prices low by buying from non-cooperative farmers and purchasing low-quality cocoa.

Cooperatives look to success in Ghana

In their bid to survive the competition and challenges, the cooperatives have been drawing from similar experiences of successful cooperative arrangements and growth in Ghana. This is done through continuous hands-on mentoring by a cocoa expert from Ghana, Kwabena Ohemeng-Tinyase.

“Prior to the project’s intervention, cocoa farmers in Sierra Leone faced numerous setbacks after the war,” said Ohemeng-Tinyase. “Many had to redevelop their farms and did not know the best procedures to produce high quality cocoa beans.” He observed that farmers also played no role in marketing their cocoa, and had no control over their selling price.

“By putting the control of the business in the hands of the farmers, the cooperatives can now help members reap the greatest possible benefits from cocoa farming,” he said.

World Bank Involvement

Before the country’s civil war began in 1991, cocoa was Sierra Leone’s number one agricultural export. In 2006, the World Bank conducted a Diagnostic Trade Integration Study in Sierra Leone that advised the government to focus on cocoa because of its growth potential and the positive experience of exporting cocoa in Cote d’Ivoire and Ghana.

The study’s most important message was “Get the cocoa sector working again”.
In order to help boost Sierra Leone’s cocoa farming sector, the cooperatives launched a program that aims to transition small-scale farmers to larger scale production for international export.

This was done with management assistance from the Government of Sierra Leone and funding from the World Bank’s Rural and Private Sector Development Project. In addition to the cocoa cooperative, the project also provides knowledge and equipment to farmers, improves rural infrastructure and supports storage facilities.

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