Following the recent withdrawal from price stabilisation programmes in West African countries, cocoa farmers have become increasingly exposed to the risks associated with volatile commodity markets. The income from each harvest is becoming more and more unpredictable, resulting in enormous challenges for smallholder farmers and producer organisations in planning and growing their businesses. With returns dramatically smaller than expected, producers can make a loss, enter into debt, or even lose their businesses.
Strategic partnership for regional impact
Twin has partnered with the International Cocoa Organisation (ICCO) to give West African cocoa producers the right skills, knowledge and tools to mitigate the risks associated with trading on global cocoa markets. A programme of awareness raising, training and capacity building will support farmers in achieving better, more predictable incomes. To achieve such an ambitious programme, Twin is engaging local partners in Cameroon, Sierra Leone, Nigeria and Togo.
Understanding smallholder price risk
To better understand the impact of price volatility on cocoa farmers, Twin conducted an assessment to look at the sales strategies of cocoa farmers, producer organisations and exporters and types of insurance cover for farmers. The study also identified barriers for cocoa farmers in accessing price risk management tools. Based on these insights, a strategy is being designed to support farmers in managing market risks across all four countries.
Workshops involving smallholders, producer organisations, exporters, local banks, universities, national cocoa agencies and government ministries will be designed to bridge the knowledge gap and share best practice approaches. At the workshops, participants will discuss key challenges and market intelligence and effective price risk strategies and tools will be presented.
Training and resources for farmers
As part of a training and capacity building programme, Twin will produce a handbook on market-based price risk management strategies and provide on-going monitoring and support in partnership with specially trained local experts. The ultimate aim is to equip local universities and cocoa agencies with the knowledge and tools to directly provide assistance on price risk management for the long term.