African Cocoa and Coffee Farmers’ Marketing Organization
Non-governmental Organization
Policy Analysis for Regional Economic Integration, Provide Agribusiness Services
(Common Solution to Agricultural Commodities – Central African Sub Region – CSACCA)
Regional Office: P. Box 5804 Douala, Tel: +237 79 29 49 14/22 01 84 20. Fax: +237 33 42 88 68 E-mail:
Friday, January 30, 2009
COMMENTS and suggestions ON A SUSTAINABLE COCOA ECONOMY
Structural adjustment policies of the 1980s, liberalization of the commodity trade, the acceptance of market-led development and more recently globalization have all had a direct effect on the provision of agricultural services. The trends have led to new opportunities opening up for developing countries and Least developed countries and countries in transition to participate under more favourable conditions and to tap new sources of earnings. However, globalization and economic liberalization have also produced serious challenges that carry risks to cocoa farmers and Farmers Cooperative Societies. The chanllenges facing cocoa and other agricultural commodities is to adjust the farming and marketing system to changing world market conditions and opportunities through commercialization and diversification of on-farm and off-farm enterprises.
Farming and rural enterprise development is viewed as an importnat pathway for poverty alleviation, job creation in the farming communities in the region and constitutes a challenge lying at the heart of the Millennium Development Goals (MDGs). With an increaing withdrawal of the public sector from the delivery of services like finance, marketing, input supplies, extension and business advisory services to farmers, ACCFMO (NGO), private sector have assume the role of intermediaries and collaborate with farmers in the sub region through farmers groups in service provision. Familiar with the problem of the small holder farmers of agricultural commodities (Cocoa) in the Central African Sub region and Cameroon in particular in compliance with the structural readjustment policies and the Global Initiative on Commodity, ACCFMO seeks to play an important role for a SUSTAINABLE COCOA ECONOMY.
Demerits of Global policymaking Exclusion on Sustainable Cocoa Economy
It is worthwhile noting that the famours Structural Adjustment Programme lacked fondamental ingridients of policy coherence in its implementation, neither was the liberalization of the cocoa marketing and trade a trustworthy matching conditionality from the Bretton Wood Institutions to local authorities of cocoa producing countries. The dramatic shift of state control to privatization of the cocoa marketing and trade has brought disastrous consequencies to the cocoa economy and deepining socioeconomic problems to most producing countries in the Sub Saharan Africa. In the Central African Sub region, the underlying problem is the missing at national level macroeconomic capacity to establish a structured integrated framework and a market-led developmental idiology within the context of a liberalized world cocoa economy. The concept liberalization, has often being intepreted differently between public authorities, the private sector economic players, acedemia and the Civil Societies making it very difficult for these countries (Cameroon) to came up with a compatible structural readjustment policy for cocoa marketing and trade.
Need for a less complex and transparent fiscal policy on Cocoa Marketing and Trade
The composition of fiscal income and expenditure varies widely among commodity producing countries, but public expenditure has increased in many countries as capital account and financial liberalization led typically to increase public debt this was due to lack of supportive and proactive measures at the level of global policy management with regards to structural adjustment programme imposed by international monetary organizations. Public debt increased dramatically during currency and financial crises, caused by currency devaluation (Francs CFA). The privatization of public owned enterprises in cocoa marketing and trade meant a reduction in the government revenue and a subsequent deficit in local budget finance. In some cases, the Governments of poorer countries coupled with bad management had to nationalized private liabilities for instance in Cameroon in the produce (Cocoa/Coffee sectors) liberalization programme, the government was compelled to nationalized the debts of the National Produce Marketing Board through the CCEF (CaisseCoopération Economique Française) and also provide costly rescue packages to local financial institutions like SCB (Socièté Camerounaise de Banque), BICIC (Banque Internationale Camerounaise pour l’ Industry et Commerce) etc. Governments had to undertake fiscal reforms in order to adjust to lower income from import taxes resulting from trade liberalization and in some cases to reduced social security contributions resulting from reforms of the social security system.Taxation and tax issues posses a considerable threat to internal economic growth in the cocoa economy. The fiscal policy of most producing countries does not create a conducive environment that can attract potential investors to invest in development cocoa projects. As the world move towards achieving inclusive global world economic system, decision making for sustainable cocoa economy should focus in the introduction of pro-development tax regimes that seek to harness liberalization and globalization for development in the Cocoa business. In most producing countries, the tax system is so complicated so that even its application becomes even more complex ,the tax levied on cocoa activities need to be streamline to attract capital investment, the use of information technology to minimize fraud and tax evasion is and import tax issue that need the International Cocoa organization’s attention.
We cannot produce a stabilization financial package for the marketing and trade of cocoa beans that will impact a sustainable cocoa economy in the long-term through the introduction of new tax scheme on exports under the prevailing circumstances. Financial stimulus package should be accompanied by structural innovative reforms which will induce the development of a broad-basedfinancial sector central to themobilization of domestic financial resources and should be an important componentof national development strategies.
Structural Reforms Needed for a Sustainable Cocoa Economy
There is clear indication that Sub Saharan Africa seems to have been better off under dictatorship regimes than it is under the continues struggle to democratic government. This is false because, no matter the different definitions we give to democracy, it would still embrace the underlying principles like; Good Governance, Public Accountability, Rule of Law, Respect for basic human rights etc. Conventional structural reforms often have a reflex to the above mentioned principles.
The dramatic shift of government managed cocoa marketing organizations to privately owned institutions of marketing and trade did not succumbed to a transitional process that would have address the structural readjustment needed to have cocoa business moving. Therefore, we have to indentify without economic prejudice structural reforms that will streamline the cocoa supply/distribution chain and move the chain upward to include transformation. Transnational Corporation like Berry Callebeaut which has invested in cocoa beans conversion in Cameroon (Chococam) and Cote d’Ivoirefor instance should fund structural reforms projects that are geared to enhance cocoa beans productivity both in quantity and quality, develop measures that seek to enhance cocoa beverage consumption particularly in cocoa producing countries. Ensure that producers and producers´ association are well managed to sustain their livelihood so that they can continue farming in cocoa crop.
This meeting we would urge should reinforce capacity building program for cocoa farmers and farmers´ cooperative societies through proven NGOs and other Civil Societies organizations. The supply chain cannot be effective and efficient in the cocoa marketing and trade when cocoa growers are constantly being abandoned on their own to struggle with the daunting tasks of the production of such a complicated crop, source expensive inputs and search market channels, manage production and trade risks and crave finances for both on-farm and off-farm activities under a liberalized, corrupt and non-transparent atmosphere. Structural readjustment programmes should encompass the above mentioned components of cocoa marketing and trade in order to achieve a sustainable cocoa economy.
The smallholder cocoa farmer is the weakest link in the value chain andthe root source of the purpose of this roundtable meeting therefore, we have an urgent duty to restructure, nurture these individual farmers into vibrant business oriented farmers´ cooperative societies. Establish an integrated innovative structured cocoa finance scheme involving all the commercial payers; Farmers’ body, Traders’ association, Processors’ association, Transporters’ association, Warehouse owners association, Input-put supply company, Collateral Management, Credit service organization, Agricultural technicians, Commodity professional bodies andGovernment regulatory institutions and finally a Commercial bank to which all financial transaction are carried and settlement of accounts between stakeholders are done. An insurance company to effectively assume insurance cover the risks of various on-farm and off-farm activities, price risk management scheme package to deal with cocoa price fluctuation.
ACCFMO has produced a comprehensive contextual project document that is familiar to the Cameroonian cocoa (commodity) authorities and to other international organizations having interest in cocoa business and trade development and poverty alleviation the national Cocoa/Coffee Empowerment Project (Enhancing cocoa finance through farmer’ cooperative societies and Profitability/Risk management of smallholder cocoa farmers). Under this programme, Government authorities are responsible in creating and sustaining an enable environment capable of attracting Direct Foreign Investment and Official Direct Investment in the cocoa economy.
The increasing interdependence of national economies in a globalizing worldand the emergence of rules-based regimes for international economic relations havemeant that the space for national economic policy and for cocoa economy in particular, that is, the scope for domesticpolicies, especially in the areas of trade, investment and international development,is now often framed by international disciplines, commitments and global marketconsiderations. It is for each Government to evaluate the trade-off between thebenefits of accepting international rules and commitments and the constraints posedby the loss of policy space.
Sylvanus Nekenja
CEO/Founder
ACCFMO