Cocoaperation is an IDH-sponsored program that  started in 2022, continuing (at least) until the end of 2025. The overall goal of the program is to ensure that 100,000 cocoa farming households in different production regions of Côte d’Ivoire can reduce the average living income gap from over 50% to less than 30% by the end of the program’s implementation cycle.

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The target group for this program will be the median group of cocoa farming families who have 2.0 – 5.0 ha of farmland and their cooperatives. However, this focus does not exclude other categories of cocoa farms and cooperatives.

Main outcomes of the Cocoaperation program include:

  • The targeted 100,000 cocoa farming families will operate a more profitable and sustainable agri-business with cocoa farming as an important component.
  • Their cooperatives and/or other rural community organisations (around 200) have become more effective and efficient in providing marketing services, credit management and technical support to their members;
  • Conseil du Café-Cacao and IDH Sustainable Trade Initiative successfully convene the different stakeholders in the sector and align support and commercial activities of cocoa traders, brands, financial organisations, cooperatives and specific donor supported projects.

Highlights from the Initiative

Building on the experiences with the Farm & Cooperative Investment Program, a new four-year program for the cocoa sector in Cote d’Ivoire will start in 2022. This Farm & Cooperative Income Program will facilitate the adoption of viable ‘smart mix’ practices that help cocoa farming families to close the living income gap. The Initiative will comprise the following main components:

1. Convening by CCC and IDH of a partnership cocoa cooperatives, financialing organisations, cocoa traders, brands, Farmfit, Agri3 and LDN Fund and donor-funded capacity building programs aimed at improving the business environment, coordination of activities and joint monitoring and learning;

2. Provision of technical assistance aimed at the investment readiness of eligible producer organisations and cocoa farmers aligned with credit provision and supply chain arrangements between cocoa trade companies (and brands) and cooperatives;

3. Development and implementation of improved financial services and increasing levels of credit for eligible farmer organisations and cocoa farming families by local financial institutions, including the possible funding and guarantees from the IDH Farmfit Fund to augment the credit portfolio of local lenders to the cocoa farming sector.

Four types of interventions

To achieve the three main outcomes listed in the previous section the Cocoaperation partners will take the responsibility for four different sets of interventions:

Segmentation of cocoa farming households will be at the core of targeting technical assistance and determining investment readiness of cocoa farming businesses. Cocoaperation will start with a simplified segmentation approach which can be gradually further refined and improved based on piloting, studies and joint monitoring and evaluation. The initial segmentation will use mainly overall farm size as the key indicator for dividing cocoa farming households into different categories (see figure 4).

Cocoaperation

Simple farmer segmentation for targeting technical assistance at the start-up phase

Under the previous phase of FCIP cocoa trade companies introduced the concept of farm improvement plans. This approach towards providing cocoa farming families tailor-made advise for a sustainable intensification of their farming activities will also be central to the farmer-oriented technical assistance support under Cocoaperation. Based on certain parameters such as farm size, (family) labour availability, age of cocoa trees, farm location (including soil qualities and climate change relate effects on cocoa productivity) and access to markets the cocoa farming family in category B will be advised on cocoa production improvements. Where appropriate the diversification of cocoa-farming systems and other income generating activities can be part of the farm improvement plans.

Figure 5: Different farming business and investment strategies work for different segments

The development of the sustainable cocoa farm improvement plans will be followed up by training and coaching of the cocoa farmers on implementation issues. The training and coaching will cover both agronomic skills and techniques and farming business development. The organisation of the training and coaching services will be a responsibility of the respective cooperative and their associated trade company and/or brand. These farmer support activities will have to be part of a comprehensive strategy also covering financial inclusion and strengthening of the cooperatives (see point 2 and 3 below).

The technical assistance based on the farm improvement plans should enhance the cocoa farmers’  capacities to adopt and invest in farm production improvements. The investment readiness should make them eligible to receive and use credit effectively and improve their farming  business and increase their net income.

Technical assistance for cocoa farming households with a small-sized farm (category C) requires a different approach. The Cocoaperation partners will jointly review existing (pilot) experiences aimed at finding on-farm and off-farm income generating activities suitable to this segment of cocoa farming households. This should form the basis for future technical assistance initiatives, possibly combined with tailor made credit solutions (based on financial and economic feasibility checks).

The lending organisations and other financial institutions active in the cocoa sector have the ambition to improve and expand their existing cocoa lending portfolio and associated financial services (e.g. crop insurance, saving schemes). Their financial products are targeted at the cocoa cooperatives and their members.

Generally speaking the lending organisations face one or more of the following challenges:

  • High operational and monitoring costs due to small ticket sizes for individual loans (in the case of debt funding for farmers);
  • Weak controls due to limited IT capacity, weak MIS and/or inadequate reporting systems;
  • Operational inefficiencies as a result of unfamiliarity and inexperience of staff with the farming sector, paper-based systems, and/or other inefficiencies in procedures;
  • Poor risk management due to absence of dependable financial information and key data, especially related to smallholder borrowing and other financial transactions by farmers.

Assistance with digitisation of the credit management systems can be part of the solutions to overcome some of these challenges. Other strategies include improved cooperation between cooperatives and lending organisations on segmentation of cocoa farming households for determining the eligibility and investment readiness of cocoa farming households for different loan products. This could be combined with a system whereby the cocoa cooperatives act as the primary borrower of the participating commercial lending organisations. The cooperatives would then manage the loans issued to cocoa farming families.

For the roll-out and scaling of the cocoa lending portfolio and insurances the IDH Farmfit Fund can also provide (subordinated) debt funding to the lending organisations in (local or hard)  currency and/or guarantees. This will be considered on a case-by-case basis and will require separate due diligence assessments and contracting between the respective institution and the Farmfit Fund.

The main financial products that will be considered as part of the Cocoaperation start-up program are summarised in text-box 1. Currently banks and micro-finance organisations in Côte d’Ivoire are mainly involved with working capital loans for cocoa cooperatives and seasonal loans for fertilizers. More details on these financial products are provided in the annex to this proposal. During the Cocoaperation implementation cycle the portfolio can be broadened based on new insights and requirements in cocoa sector.

The following interim outcomes are foreseen as a result these activities:

  • the local financial institutions will provide increased access to short- and medium-term loans for cocoa farmers as well as other financial products;
  • the loan repayment times and default rates on loan repayment to the lending organisations for the respective loan products will improve leading to lower interest rates paid by smallholder farmers. This should lead to more affordable levels and reduced costs for smallholders.

Cocoa trade companies and brands will continue to extend technical support to the cocoa cooperatives with whom they have a trade relationship. The technical assistance and capacity building will focus on improving the business administration, management and operations of the cooperative company. The introduction of digitisation of their administrative, financial and business management activities will be an important support strategy. Donor-funded programs such as the GiZ-funded ProFinA may contribute in the form of training and coaching of cocoa cooperatives.

Whilst the TA of the cooperative’s business management capacities may be combined with developing improved and diversified service provision to the cooperatives’ members (e.g. provision of health insurances and other social services), this will not be a Cocoaperation priority.

The capacity building of the cooperative management and upgrading of the operational systems the respective cooperatives will be able to create the conditions for efficient and reliable long-term offtake relations with cocoa traders and improved commercial services for their members. The eligibility of cocoa cooperatives to receive credit for business diversifications and improvements should enhance.

Piloting, monitoring and learning at sector level is the fourth main set of activities of the Cocoaperation implementation strategy. With technical assistance and co-funding support from IDH pilots will be implemented to assess so-called ‘smart mix’ solutions towards sustainable farming system improvements and enhancing income levels among cocoa farming households. The segmentation of cocoa farming households will be part of the pilot design and implementation approach.

The outcomes and lessons generated from the pilots will be combined with monitoring and evaluation of the combined effects of the ongoing partners’ technical assistance and financial support activities. Together this should give the partners insights to make adjustments and further refine, expand and diversify their respective activities and further improve the internal coordination and alignment.

Quarterly partnership meetings will be convened by CCC and IDH to discuss priorities, progress and outcomes of the different pilots and monitoring activities. The sharing of knowledge and insights is expected to contribute to more diversified solutions and increased cooperation and alignment in the sector.

Publication

Title Type Year Regions TAF
Cocoaperation Governance Other publications 2022 Africa -
Cocoaperation Selection Process Other publications 2022 Africa -
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