Cocoa Deforestation – lessons from Palm Oil

There are many significant challenges in the cocoa sector.  One of these is deforestation.  Cocoa smallholder farmers are encroaching on forested land in an attempt to improve their income.  There are many issues intertwined with this – low yields on existing plots (which is itself connected with the issues of a living income), a lack of full-appreciation of on the importance of the forests, an unknown farmer base (companies don’t know which farmers they buy from let alone whether they are farming deforested land) etc.  Because small-scale farmers do not have access to adequate financial resources and services, it’s more economical for them to clear new land, with the slash and burn method, than to use intensive agricultural practices such as fertilising.  So how can these challenges be addressed?  Maybe lessons can be learnt from the Palm Oil sector.

Palm Oil and Cocoa similarities

  • Unknown smallholder farmers:  In both sectors, the industry is supplied by thousands of smallholder farmers working in remote and vast areas.  The current data on these farmers is extremely limited.

  • Forest encroachment:  Smallholder farmers are either expanding existing plots into forested land or developing new plots in forested land.

  • Middle men and tracing data:  There are many middle men purchasing from smallholder farmers and selling to traders, exporters, and processors.  There is usually very little data conveyed at the point of sale as to where the product was originally sourced from, the quality and prices paid.  This makes it difficult to understand whether produce was grown on deforested land and if farmers receive the right market signals.

What is being done in Palm Oil

The Palm Oil sector has started tackling the issue of deforestation head-on.  There are a number of things happening in the sector, which the cocoa industry could learn from:

  1. Collaboration:  Any solution requires collaboration between a range of stakeholders from Government and Industry bodies enforcing policy and standards, to private sector companies adopting new sourcing practices, and NGOs supporting through training and education.  In Indonesia, we are seeing numerous stakeholders come together to tackle Palm Oil related issues.  The projects we are involved with include traders, mills, middlemen, smallholder farmers, funders, NGOs.  Collectively they are providing the resources and opportunities to adopt technology and behaviours to limit deforestation and at the same time help increase crop yields.

  2. Traceability:  Key to eliminating deforestation is a transparent supply chain that provides visibility of where produce is sourced.  To enable this, GeoT has successfully developed the first ever genuine tracing system able to link oil palm Fresh Fruit Bunches arriving at the mill back to the field where it was grown.  This means that all fruit processed at the mill can be traced back to the farmer who produced it.  The mapping functionality of the GeoT’ System shows for each consignment received at the mill the location of the fields where the fruits were harvested.  There are other benefits to this system as well, such as the ability to send real-time alerts when issues arise.

  3. Yield improvements:  Farmers must receive a living income.  Without this it is no wonder that forest encroachment occurs to increase incomes.  Therefore, if deforestation is to be tackled it must be hand-in-hand with improving the yield farmers receive from their crop.  To support this, the GeoT System is used to collect data on the farmer’s production methods and crop characteristics.  This is used to generate individual business plans , which set-out for each farmer what practices they need to adopt or how they should modify existing practices to improve their yield.  Working with NGOs, agronomists, and the private sector, an aggregated plan can then be used to target interventions effectively.  This information is passed to financial institutions to provide tailored financial services to farmer groups and individual farmers.  The traceability data, which usually includes delivery records, can then be also used to monitor changes in yield and farming practices.  Over time, the production data can be re-collected and the plans adapted accordingly.

These ideas of collaboration, traceability, geo-localisation and yield improving practices could also be adopted by the cocoa sector to tackle deforestation and other sustainability issues.

If you are interested in discussing these ideas further, please get in touch at info@geotraceability.com.