Ghana Grows Our Cocoa, So Why Can’t It Make Chocolate? | Big Business

Summary

Ghana, the world's second-largest cocoa producer, earns minimal profits from the $100 billion industry due to exporting raw cocoa. Despite challenges like climate change and poor land conditions, Ghanaian entrepreneurs are striving to establish local chocolate industries. The government is backing these efforts to process more cocoa domestically, aiming to increase farmer incomes and reduce poverty. Initiatives like the Living Income Differential have helped, but Ghana still processes only 30% of its cocoa domestically, with most of the value addition happening abroad. The narrative highlights the struggle to decolonize chocolate and the need for a fairer share of profits for Ghanaian farmers.

Takeaways

• 🍫 Ghana is a leading cocoa producer but only earns a small fraction of the industry's profits, with most revenue generated from the finished chocolate products.
• 🌍 Cocoa beans from Ghana are primarily exported to Europe and North America, where they are processed into chocolate by major chocolate companies.
• 💰 The disparity in earnings is stark, with large chocolate companies making billions while many cocoa farmers live in poverty, earning as little as $2 a day.
• 🏭 Ghanaian entrepreneurs face challenges in establishing chocolate factories within the country, aiming to 'decolonize' the chocolate industry.
• 📈 The Ghanaian government is investing in the domestic chocolate industry, but the question remains whether local entrepreneurs can secure a larger share of the profits.
• 🌱 Ghana and Ivory Coast, together producing over 60% of the world's cocoa, have introduced a fixed price system to ensure better earnings for farmers.
• 💲 The Living Income Differential (LID) is a premium added to the price of cocoa, directly benefiting farmers, but some large companies have been accused of not paying this premium.
• 🌡 Climate change, plant disease, and exhausted land are among the challenges faced by cocoa farmers, affecting their productivity and livelihoods.
• 🌿 The organic farming of cocoa without pesticides can yield higher incomes for farmers, but many small farms are not certified organic, keeping earnings low.
• 🏛 The historical context of colonialism has contributed to the current state of the cocoa trade, with a legacy of raw product export and farmer poverty.
• 🏭 Efforts to process more cocoa domestically face hurdles such as the lack of a local dairy industry, the need to import sugar, and challenges with temperature and power stability in Ghana.

Q & A

What is Ghana's position in the global cocoa production?

Ghana is the world's second-biggest producer of cocoa.

What percentage of the $100 billion cocoa industry does Ghana earn from its cocoa production?

Ghana earns only about 2% of the $100 billion cocoa industry.

Where do Ghanaian cocoa growers primarily export their cocoa beans?

Ghanaian cocoa growers primarily export their cocoa beans to Europe and North America.

What is the main issue with the cocoa value chain according to Lloyd?

Lloyd points out that the money in the cocoa value chain is made in the finished product, not in the raw state that Ghana is shipping out.

What is the average income of many cocoa farmers in Ghana?

Many cocoa farmers in Ghana live in poverty, earning just $2 a day.

What is the main challenge for Ghanaian entrepreneurs like Michael in opening chocolate factories in their home country?

Ghanaian entrepreneurs like Michael face challenges such as the lack of a domestic chocolate industry and the struggle to decolonize chocolate production.

What efforts is the Ghanaian government funding to grow a domestic chocolate industry?

The Ghanaian government is funding efforts to support cocoa processing inside Ghana, including creating a free zone outside Accra with tax breaks for factories.

What percentage of the world's cocoa does Ghana and Ivory Coast grow together?

Ghana, together with Ivory Coast, grows over 60% of the world's cocoa.

What is the main reason for the low income of cocoa farmers in Ghana according to Kristy?

Kristy explains that the small size of farms and the lack of organic certification are part of the reasons why cocoa farmers are so poor in Ghana.

What is the Living Income Differential (LID) and how does it benefit cocoa farmers?

The Living Income Differential (LID) is a premium added to every ton of cocoa, which goes directly to the farmers, helping them to take home nearly 30% more money than the year before.

What is the main challenge for Ghana's chocolate industry in terms of production?

The main challenges for Ghana's chocolate industry include the lack of a local dairy industry, the need to import sugar, and the difficulty of maintaining appropriate temperatures for chocolate production due to Ghana's hot climate.

What is the current state of Ghana's cocoa processing and what is the goal for the future?

Currently, Ghana processes only 30% of its cocoa beans domestically, with most being sent overseas. The goal is to increase the export of cocoa in its semi-finished and finished state, and to create demand for finished chocolate within Ghana.

How does the fixed price system introduced by Ghana and Ivory Coast aim to help raise farmer wages?

The fixed price system sets a price floor for cocoa, ensuring a minimum income for farmers, and includes the Living Income Differential (LID), which provides an additional premium to farmers.

What is the role of Niche Cocoa Industry in Ghana's cocoa processing?

Niche Cocoa Industry is Ghana's second-largest cocoa manufacturer, processing 10% of the country's cocoa and has become successful by taking advantage of the tax breaks in the free zone outside Accra.

What are the challenges faced by small companies like fairafric outside the free zone?

Small companies like fairafric face challenges such as not receiving tax breaks, difficulties in procuring cocoa beans, and the high costs associated with building a cold chain for chocolate distribution.

What is the current consumption rate of chocolate in Africa compared to Europe?

Cocoa consumption in Africa is very low, with an average of 0.4 kilograms per person, compared to Europe where the average is about 5 kilograms per person.