Advise on cocoa reached the top
NAI researcher Gun Eriksson Skoog visited Liberia in May to share her research findings about the cocoa market. To her surprise, she was invited by the president’s chief economist to present her recommendations on how to improve market conditions.
“The chief economist was interested and I got the opportunity to follow-up on my previous recommendations. Despite positive developments, there is much more to be done to make the cocoa market develop its longer-term potential for smallholder farmers as well as the country as a whole” she says. See the video of her discussing her research.
According to Eriksson Skoog, there is an imminent risk that short-term business interests will control too much of the cocoa market which is supplied by smallholder farmers. She had two concrete pieces of advises for the presidential advisor, to improve conditions for farmers and the total market.
“Too many cocoa buyers in Liberia profit from farmers who need cash for the day, and buy low-quality cocoa at low prices. The farmers then lose the opportunity to connect with long-term buyers who can invest in their business.” ‘
The licensing of buyers would promote those who invest to stimulate production and the processing of cocoa, and at the same time prevent the export of ungraded, low-quality cocoa, a form of pure raw material extraction with no development potential. Investors who offer credit to farmers for fertilisers, high-yielding seeds and the processing of cocoa beans are few in number. More investors are also needed to increase competition in the market, according to Eriksson Skoog.
The quality of cocoa is crucial to cocoa prices. Today it’s the buyers who grade the cocoa.
“My proposal is to set up an independent institution for grading the quality. Farmers often complain about buyers downgrading the cocoa so they can pay less,” says Eriksson Skoog.
The Ebola epidemic last year meant that farmers couldn’t harvest and sell their cocoa as usual, partly due to transport restrictions. However, the epidemic proved to be a temporary setback for the farmers and by early this year business already was back on track. A month ago, Liberia officially declared the Ebola epidemic to be eradicated.
Must be prepared
“Policy makers must be prepared for further adjustments in market conditions. Reforms already implemented may need to be modified”, says Eriksson Skoog. She also points out the lack of aggregated data on the cocoa sector as a problem, a deficiency that makes it hard for both policy-makers and the investors to plan.
Eriksson Skoog recently published a Policy Note on cocoa-market developments in Liberia. She presented it to various stakeholders in Liberia, among them representatives of the government and cocoa sector. She also presented her results, including the findings from her visit to Liberia, to a seminar at NAI on June 2, attended by the “Liberia Network” consisting of primarily Swedish researchers, policy-makers and consultants with connections to Liberia.