Social Innovation

Empowering cocoa farming families with cash transfers

With thoughtful intervention, cocoa-farming becomes more productive for the whole community

With thoughtful intervention, cocoa-farming becomes more productive for the whole community Image: Photo by Etty Fidele on Unsplash

Rémy Ejel
Executive Vice-President and Chief Executive Officer, Zone Asia, Oceania and Africa, Nestlé
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Social Innovation

This article is part of: World Economic Forum Annual Meeting
  • Cocoa-farming families face multiple challenges – from low incomes to the effects of climate change – which cannot be overcome by a single company working alone.
  • Special incentives can address some of the root causes of these challenges and support positive change in cocoa-farming households.
  • One programme, the Income Accelerator Programme by Nestlé, has shown promising results, demonstrating that collaborating with partners, such as local governments, NGOs and key industry players, can deliver positive change.

When you visit a cocoa-farming community, you meet people striving for a better life for their families. Often the parents you meet there will tell you that although the work they do on the farm is hard, it is an investment in the future. They want to use their income to give their children the opportunities they did not get themselves.

But the struggles these communities face are enormous. There are both social and environmental challenges. According to a 2021 study, up to 58% of cocoa farmers in Côte d’Ivoire and Ghana live below the World Bank extreme poverty line and up to 90% do not earn a living income.

These struggles, coupled with fluctuating commodity prices, the rising cost of fertilizer and the impacts of climate change and plant disease leave farmers in a precarious position. Additionally, communities often lack basic infrastructure, such as clean water, healthcare and education. These multi-faceted factors can also increase the risk of child labour. We’ve learned that if you want to reduce that risk, you need to address these multiple root causes, something no company can do by working alone.

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Improving lives by improving livelihoods

Two years ago, we launched the Nestlé Income Accelerator Programme, a collaborative effort between Nestlé and our partners, including the International Cocoa Initiative, the Sustainable Trade Initiative and the Rainforest Alliance. The programme, which now covers 10,000 cocoa-farming families, goes beyond paying a premium for certified cocoa. It provides incentives for enrolling children in school, implementing good agriculture practices, including regenerative agriculture practices and increasing productivity. The incentives, up to €500 annually, are divided evenly between the male and female heads of each household, promoting inclusive decision-making and benefiting the entire family.

What we have learned

The progress we have made through the Nestlé Income Accelerator Programme is encouraging. A 2023 report from the KIT Royal Tropical Institute highlighted several positive impacts of the pilot programme in Côte d’Ivoire:

1. Cash transfers stimulated income diversification, which is a key pillar of the programme to help farmers become less dependent on cocoa. Data shows that, in addition to exploring new income-generating opportunities beyond traditional agricultural practices, many families used the money received to cover health care and schooling costs. This contributed to the improvement of school enrollment rates by 8%.

2. Agroforestry is crucial to smallholder farms for its many potential economic, socio-cultural and environmental benefits. More trees planted equals more shade for the cocoa, which in turn builds resilience and creates a thriving ecosystem.

3. Good agricultural practices through ‘architectural pruning’ (a new structured and graded approach offered and developed with the Income Accelerator Programme) means that one hectare of cocoa land results in approximately two additional bags (130kg) of cocoa or a 20% increase.

4. Finally, the work to incentivize diversified income paid off. Efforts to establish Villages Savings and Loans Associations (VSLAs) resulted in more than 170 loans to cocoa-farming families. By being a member of a VSLA, cocoa farm households gain access to financial services and resources that might have previously been unavailable to them. This enables them to save money and have a secure place to store funds in a community context. The VSLAs also offer opportunities for borrowing, allowing members to access credit for various business purposes, such as investing in their cocoa farms, starting small businesses, or meeting unexpected expenses.

Building on our learnings, Nestlé is committed to expanding and refining the programme. In 2024 we aim to extend it to Ghana, with plans to include 160,000 cocoa-farming families by 2030. To strengthen the programme, we will streamline the identification and verification of school attendance, prioritize pruning for all households and increase the number of team members on the ground to support families. We plan to simplify the mobile money registration and cash transfer protocol even further by partnering with the mobile money platform WAVE to centralize the payments to cocoa farmers. Our suppliers will go through this platform to send the money to farmers and their spouses.

We also need to further build the cocoa farmers’ understanding of the conditions linked to the incentives. This will help them better understand how their actions and behaviours are connected to the money they receive and how they can fully benefit from it in the long term.

Scaling up cocoa farming through collaboration

As we are working hard to make a positive impact in these communities, we also recognize that we cannot do this alone. We are eager to share our learnings and experience to advance this important work.

Achieving our ambitious goals and creating a sustainable impact in cocoa-farming communities requires collaboration on a larger scale. We would like to partner more closely with local governments, NGOs and other industry players. Working together we can create a thriving cocoa industry that benefits farmers, their communities and the environment. The collective expertise, resources and networks these partnerships provide can deliver lasting positive change in cocoa production.

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