SDM Case Study: Cargill, Ivory Coast

Cargill Cocoa and Chocolate (Cargill) is an established company and has been sourcing cocoa beans from smallholder farmers in Ivory Coast since 1997. The company is looking holistically at cocoa farmer household income to reduce the risk of farmers moving away from cocoa cultivation because cocoa farmers are not earning sufficient income from cocoa to have a clear incentive to continue cultivating cocoa in the long-term, nor to invest in their cocoa plantation.

This study sets out the most important recommendations for Cargill to effectively increase the livelihood of the smallholders it sources from, in order to sustainably secure its cocoa supply. These recommendations are structured along three main topics: (1) increasing farmer income from cocoa, (2) increasing farmer income from other sources, and (3) strengthening cocoa cooperatives.

1. Supporting farmers in securing a higher income from cocoa within the boundaries set by the CCC, is imperative for farmers to continue cultivating cocoa in the long-term;
2. Strategic diversification will only enhance farmer incomes if the approach is well designed, effectively implemented, and efficiently financed;
3. Continued investment will result in professional cooperatives that can play a key role in a service delivery model that is sustainable in the long run.

The results of this study show that (1) current service delivery by Cargill to cocoa farmers can have a significant positive impact on farmer livelihoods, but that more is needed. This is exacerbated by the temporary CCC limitations on supporting further productivity increase, as well as the growing number of farmers that need to plan for the immediate or gradual renovation of their cocoa plantation. This study supports Cargill in looking at other income drivers through which to support farmers in increasing their livelihoods.

(2) Strategic diversification is explored in detail and this study confirms the importance of the careful design of such interventions: the strategic diversification approach developed for members of the example cooperative in Central Ivory Coast is not expected to enhance farmer net income, but rather to significantly decrease it. This is mainly due to significant external labor that would be required and limited finance available to invest in innovations. However, (3) when combined with the potential positive impact on the cooperative income, it becomes clear that there is room for the costs and benefits of this example approach to be distributed more evenly between farmers and the coop.