Chocolate letters, farmers and forests

Published on
January 3, 2018

Andras Tothmihaly defended his PhD thesis recently on the economics of cocoa at the Georg-August-University Göttingen. FNP lecturer Verina Ingram was an external counterpart. Based on long term studies of cocoa production, Andras looked at the trade-off between smallholder cocoa intensification and forest ecosystems in Sulawesi, Indonesia.

Many people in the Netherlands celebrated Sinterklaas on 5 December by giving chocolate letters. Demand for chocolate, both in the Netherlands and globally, continues to rise [1]. However chocolate - made from cacao (Theobroma cacao) seeds - has long been associated with worrying social and environmental impacts: high levels of cocoa farmer poverty, deforestation and degradation in the tropical forest zone where it is grown [2-5]. Continuing deforestation, cocoa farms encroaching into protected areas, and rising consumer and industry awareness of these problems [5, 6] have led cocoa and chocolate manufacturers to make commitments at the UN Climate Change Conference (COP23) to end deforestation in their supply chains. (See also this.)

Different routes exist to meet global demand for cocoa, increase cocoa farmers’ income and reduce deforestation. One is to increase the area of cocoa grown. In the main production areas - West Africa and Indonesia - this has been the main route [7], resulting in deforestation [5, 8]. Second is to increase the price paid for cocoa to farmers to ensure they earn a decent, living income [9, 10], for example through different pricing policies and premiums for fairly trade, sustainably certified cocoa. The cost of which may, or not, be passed along the supply chain to consumers. A third option is to increase the productivity of cocoa farming using inputs, such as chemicals, fertilizers and pesticides. Fourth is to increase technical efficiency: maximizing the output given a fixed level of inputs used in cocoa production on a given area, for example through improved farming techniques and higher yielding trees. Whilst higher productivity can increase income, the benefits need to be weighed against environmental impacts such as decreasing soil fertility and nutrient loss, pollution, biodiversity loss and contributions to climate change. This can be measured in terms of environmental efficiency: the ratio of reduced environmental impact and increased production value. Andras Tothmihaly explored this subject in three essays on the economics of cocoa, focusing on the technical and environmental efficiency of Indonesian cocoa [11]. Based on long term studies of cocoa production, Andras looked at the trade-off between smallholder cocoa intensification and forest ecosystems in Sulawesi, Indonesia. He found high technical and environmental inefficiencies. Tothmihaly calculated however that increasing efficiency could lead to a win-win-win situation: with higher production coming from fewer hectares, with more native plants co-existing with cocoa in the same area. His studies point to a possible production expansion of 367 kg of cocoa per farm and year, to a possible increase of 43,680 rainforest plants per farm, or to a possible acreage reduction of 0.52 hectares per farm. Agricultural extension services linked can play a major role in helping increase efficiency, with a possible solution of “linking credit to extension services as part of this effort for improving efficiency.” Tothmihaly’s work helps to inform development policies of the complex elements in the global cocoa bean market, farmer economics and impacts on forests.

1. CBI, Exporting cocoa to the Netherlands. CBI Factsheet. 2017, CBI - Centre for the Promotion of Imports from developing countries, Ministry of Foreign Affairs: Den Haag. p. 13.
2. Ruf, F. and H. Zadi, Cocoa: from deforestation to reforestation. 1998. First international workshop on Sustainable Cocoa Growing, 1998-03-29 - 1998-04-03, Panama City, Panama. Smithsonian Institute p.36
3. Owusu, V., K. Yerfi Fosu, and C.P.J. Burger, Intersectoral labor mobility and deforestation in Ghana. Environment and Development Economics, 2012. 17(6): p. 741-762.
4. Ruf, F., G. Schroth, and K. Doffangui, Climate change, cocoa migrations and deforestation in West Africa: What does the past tell us about the future? Sustainability Science, 2015. 10(1): p. 101-111.
5. Kroeger, A., H. Bakhtary, F. Haupt, and C. Streck, Eliminating Deforestation from the Cocoa Supply Chain. 2017.
6. Bitty, E.A., S.G. Bi, J.-C.K. Bene, P.K. Kouassi, and W.S. McGraw, Cocoa Farming and Primate Extirpation Inside Cote D'ivoire's Protected Areas. Tropical Conservation Science, 2015. 8(1): p. 95-113.
7. Nkamleu, G.B., J. Nyemeck, and J. Gockowski, Technology Gap and Efficiency in Cocoa Production in West and Central Africa: Implications for Cocoa Sector Development, in Working Papers Series No. 104. 2010, African Development Bank: Tunis. p. 18.
8. Wessel, M. and P.F. Quist-Wessel, Cocoa production in West Africa, a review and analysis of recent developments. NJAS-Wageningen Journal of Life Sciences, 2015. 74: p. 1-7.
9. Mulangu, F.M., M.J. Miranda, and E.W. Maïga, Cocoa pricing options and their implications for poverty and industrialization in Ghana. Agricultural Economics, 2017. 48(4): p. 481-490.
10. Hütz-Adams, F., C. Huber, I. Knoke, P. Morazán, and M. Mürlebach, Strengthening the competitiveness of cocoa production and improving the income of cocoa producers in West and Central Africa. Sudwind e.V.: Bonn. 2016. p.156.
11. Tothmihaly, A., Three essays on the economics of cocoa – The technical and environmental efficiency of Indonesian cocoa production, Faculty of Agricultural Sciences. PhD Thesis. 2017, Georg-August-University Göttingen, Germany: Göttingen, Germany. p. 108.