Continaf B.V. was founded in Amsterdam on August 22, 1930, by Pieter Arnold Fopma. 80 years later, Continaf B.V. signed a letter of intent with the Dutch Government and started trading certified cocoa beans.
IDH funding facilitated the establishment of a consortium with three private companies—Continaf B.V., Petra Foods Limited (formerly Delfi), and Ferrero—working in partnership with the Farmer Development Union (FADU) and two NGOs (Oxfam Novib and Solidaridad). (FADU is a micro-finance NGO that also delivers technical assistance, advocacy, marketing, and technology transfer services to micro- and small entrepreneurs in Nigeria.) The Kokodola project aimed to create a sustainable value chain for certified cocoa, and to improve the rural livelihoods of cocoa farmers in the states of Osun and Ondo in Nigeria. It was designed to deliver the productivity package to farmers: training in Good Agricultural Practices (GAP) through a step-down approach for 7,500 farmers, followed by fertilizer application (which was new for both Continaf and FADU), agro-chemicals, and farm rehabilitation, (through the Cocoa Research Institute of Nigeria).
In terms of training and certification, the program performed well. Yields doubled in many cases but despite payment of premiums, very low volumes of cocoa were secured, which made the project unviable commercially.
From July 2015, Continaf’s participation in the Program was taken over by ECOM through TCP (the Theobroma factory in Nigeria) and the supply chain was restructured to make it commercially viable. Although the project itself has ended, a new project will continue to work with all farmers. The satellite stores and communities will remain, and will be up-scaled by 1,000 farmers annually.
Discover the stories behind five years of partnership with CPQP
Trialing inputs on credit in Nigeria
The Kokodola project was one of the first to establish an input finance model for smallholder cocoa farmers. Finance was channeled through FADU’s Credit Associations, which consisted of a few hundred members grouped into smaller Farmer Credit Societies (FCS).
A premium was paid for the delivery of quality cocoa beans (by the FCS to the supplier), and used in part to settle loans for inputs.
Unfortunately, this inputs program was not a success: 70 % of the farmers defaulted. Kokodola began with an inadequate administrative structure in place to deliver the credit and the inputs to individual farmers, and an inexperienced team handing out those inputs. Farmers who had newly joined FADU had little familiarity with the FADU credit system and no credit history.
Significant changes were subsequently made to the Kokodola program, which began linking farmers directly to an accredited chemical supplier—allowing them to buy high-quality inputs on a cash and carry basis. This arrangement took care of the default risk and brought stability to the price of inputs.
See also: Finance
Satellite stores: bringing the Kokodola project to the farmer
To encourage farmers to deliver certified cocoa to the project, five ‘satellite stores’ (warehouses) were built by local communities. The stores were funded by the project and provided with scales and cocoa quality testing equipment. Their aim: to reduce transaction costs for farmers by bringing the buying stations closer to the farm.
Cocoa is bought at these stores on fixed market days, which provides an interface between the producers and buyers. It also shortens the supply chain, making it more efficient and increasing incomes for farmers.
Demo community-run nurseries for improved planting material were set up next to the satellite stores with seedlings and material provided by the project. Communities have also been introduced to the Cocoa Research Institute of Nigeria (CRIN) to facilitate access to pods and increasing the number of seedlings grown. Despite finding it challenging to source pods from CRIN, the project’s pre-germination system has seen an increase in seedling survival rate.
The joint buying setup forms the basis for a cooperative structure to provide farmers with access to government benefits such as inputs, seedlings, and training. Stores can also serve as collateral for small loans.
Three chemical stores were set up by FADU/Theobroma to facilitate access to inputs on a cash and carry basis.