West-African cocoa yields are low thanks to depleted soil, old trees and old farmers. Young farmers, the ones most likely to use more sustainable methods, are the very ones leaving. The new Farm Family Business Plan may help.
The majority of cocoa farmers struggle to scratch a living off plots measuring 0.5 to 5 hectares. When the soil becomes depleted and the cocoa trees are no longer productive, the farmers cut down a piece of forest to create a new plot instead of investing in existing agricultural land. The practice makes cocoa one of the main causes of deforestation.
Pressure on next generation
“Soil degradation and the consequences of climate change will put even greater pressure on the next generation of cocoa famers,” says Sander Muilerman, Program Manager Climate Smart Cocoa at the World Cocoa Foundation. The organization represents roughly 80% of the global cocoa and chocolate market. “Action needs to be taken now. Investments in sustainable business models and diversification should be made sooner rather than later, and old cocoa plots need replanting with strong new cocoa plants, other food crops and shade-providing trees in order to keep the soil healthy.
“However, you can’t expect the current generation to make this transition alone – the farmers lack the knowledge, the money and the means to make their businesses sustainable. It really will have to come from the next generation,” says Muilerman.
“The transition has to come from the next generation”- Sander Muilerman, Program Manager Climate Smart Cocoa at the World Cocoa Foundation
Muilerman believes young farmers should become involved in their family farms far sooner than they do now. The problem is that hereditary succession is a tricky topic in Ghanaian culture, as project manager at Rabo Partnerships, Corné de Louw, knows all too well. On the instructions of major cocoa producers such as Touton and Barry Callebaut, he works on projects in West-Africa that contribute to making the cocoa sector more sustainable.
“In Ghana, talking within the family about business succession is out of the question,” De Louw explains. “It would be as if the child is saying that the parent will die soon. So business succession is not arranged through mutual agreement. As a result, farmers fail to invest in their business and land, completely depleting both, and their children no longer see any future in rural life.”
“Business succession is a taboo subject for families in Ghana”- Corné de Louw, Senior Project Manager Agribusiness & Cooperative Development at Rabobank Development
Farm family business plan
According to De Louw, a Farm Family Business Plan can help open the subject for discussion. The plan sets down recovery and investment goals for cocoa farms over a period of two or more generations. Succession is included as a purely commercial part of the whole package.
“A business plan like this contains all sorts of agreements regarding ongoing ambitions and investment needs, as well as the contribution, interests and entitlements of the family members involved,” he says. If an external advisor facilitates without emphasizing inheritance, a discussion between family members is possible. That means children can play a role in the business twenty years earlier than they might otherwise, renovating and diversifying the old trees, for example. Here De Louw sees a role for local cooperatives that can help farmers set up their business plan.
Muilerman: “Various generations have to come together to invest in business operations that are entrepreneurial, climate smart and commercially sound. Families need professional financial advice to help them achieve that.”
“That’s why we are developing our approach further with partners like the World Cocoa Foundation,” adds De Louw. “Rabobank will also help local banks we work with to finance the Plan. There are no easy solutions to complex problems, but if everyone does their bit, change is achievable.”