The port town of San Pedro is an archipelago of fenced-off warehouses separated by wide expanses of red dirt and wild vegetation. At the end of the dry season it is washed with dust stirred up by the wind coming of! the Atlantic, its provincial calm belying its huge significance as the heart of Cote d'Ivoire's cocoa trade.
Close to 20% of the world's cocoa crop passes through San Pedro on the way to Europe and Asia, and the smell of roasting beans hangs on the processing facilities close to the sea front. Across the region, dirt tracks wind out of the bush to link up with the main trunk roads--themselves battered and cracked from decades of neglect--used by the middlemen that link hundreds of thousands of smallholder farmers to world markets.
The global chocolate market has always leant heavily on West African farmers. In Cote d'Ivoire, which produces 40% of global cocoa supply, 3.6m smallholders feed the industry. In Ghana, which accounts for a further 20%, 3.2m farmers work at the beginning of the supply chain. It is a structure that has served retailers and processors well, but which is now creaking.
Fuelled by an economic recovery in Europe and growing markets in Asia, cocoa demand is outpacing supply, with major manufacturers forecasting a 100,000-120,000 tonne per year shortfall by 2020. West African smallholders' productivity is not growing in step, bringing into focus decades of underinvestment in the economic, social and environmental underpinnings of the supply chain. The chocolate industry's attempts to mitigate a looming shortage could mean hundreds of millions of dollars flooding into West Africa--and even lead to the restructuring of an industry where less than 6% of the value of the finished product reaches farmers.
"What's clear today is that if we're operating in emerging economies, particularly in cocoa, we have to understand more about the supply chain," says Gerald Manley, who heads the cocoa business of Olam, the world's largest originator and trader of the crop. "We have to invest more in the supply chain."
The convergent economic, environmental and social pressures facing the cocoa industry are not unique, but the structure of the supply chain is such that it is more vulnerable than any other.
Cocoa, unlike most major cash crops, is almost exclusively a smallholder business. Around 14m farmers work in the supply chain--10m of them in West Africa. They face the same challenges of smallholders worldwide, struggling to move beyond near-subsistence levels without access to finance for inputs and training. In cocoa, these problems are particularly acute due to the timescales over which trees reach maturity.
Cacao trees take around five years to reach peak productivity. They continue to produce for around a decade, then begin to decline. This means that cocoa is a business that requires long-term planning, but tight economic conditions tend to drive farmers towards making short-term decisions. In an environment of low and uncertain incomes, few farmers in West Africa have systematically invested in replanting.
Lower yields also mean less income, further undermining farmers' capacity to reinvest in inputs, locking them into a vicious cycle of underinvestment and low productivity...