A lot of discussion on increasing cocoa farmer income focuses on higher yield and higher prices and/or premiums. In my opinion, these discussions and solutions are too limited, and some shifts in thinking are needed to achieve long-lasting change.
First, we need to stop talking about income and focus on net income. Costs have the same influence on what ultimately ends up in ones’ pocket as sales value does. Looking exclusively at growth or increased production neglects the rise in labor and input costs associated with a production increase, which is still promoted in high-input, high-output farming models. Strategic efforts to lower the cost of inputs, increase their quality, and generally deliver them more efficiently to farmers can have a demonstrable impact on net income, ultimately raising the profit margins for smallholder farmers.
Second, a “cocoa farmer” is often not just a cocoa farmer. The KIT – Royal Tropical Institute study “Demystifying the Cocoa Sector in Ghana and Côte d’Ivoire” points out that cocoa farming households produce several crops and have several income sources. However, cocoa is – still, and depending on the alternatives – the most attractive crop to grow for many. In households where cocoa is the first or second most important crop, 61% of the total income came from cocoa in Ghana. This number rises to 66% of total income in Côte d’Ivoire.
Third, a household does not only have costs associated with income generation activities, but also for maintenance and upkeep of the household itself. The Living Income Reports (Ghana, Côte d’Ivoire), prepared for the Living Income Community of Practice, found that more than half of a living income benchmark is being spent on food. With improved infrastructure (such as roads and better access to markets), household costs could be reduced.
Within this context, increasing farm gate prices or farmer premiums are important mechanisms to consider, but they are only a part of the solution contributing to higher net income for households producing cocoa. It’s time to move towards holistic and well-balanced solutions.