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Fair Trade: Overview, Impact, Challenges Annex 4: Case Study - Cocoa in Ghana In the case of initiatives like Kuapa Kokoo the extent to which individual farmers benefit from FT is dependent on the way that the KKU and KKL function. Therefore, it appears to make more sense to concentrate impact assessment initiatives at the institutional level rather than the level of the farm household. ♦ Without FT in Ghanaian cocoa, would KKL exist or be as effective? ♦ Without donor support, would KKL exist? ♦ Even if not, would other LBCs be in a position to fulfil the role played by KKL? Whilst it is true that KKL represents a different model for organising the operations of LBCs and therefore provides farmers with a choice, the most significant benefits from the KKL/KKU model are likely to be concentrated among the following groups. ♦ Members of the executive committees of the primary societies who receive commission per bag handled by their society and who receive training from KKU. ♦ Senior staff and KKU Board members who benefit directly from capacity building initiatives and their increased exposure to other parts of the cocoa supply chain (e.g. through KKU's links with Day Chocolate Company). ♦ Communities where KKFT funds a project. ♦ Women's income generating groups which receive assistance and training. A possible negative impact would be the crowding out of other potential LBCs because of unsustainable donor subsidies (particularly related to credit), although this does not currently appear to be an issue in the case of KKL. 7. Conclusion The experience with Kuapa Kokoo suggests that initiatives aimed at building capacity and promoting organisational development amongst southern market intermediaries, particularly in the context of moves away from state controlled marketing regimes to more liberal marketing arrangements, can be of real value. While the entry of new private licensed buyers has increased the marketing options available to farmers, KKL is an extremely important new initiative. International experience suggests that there are challenges involved in maintaining effective governance of producer organisations as they grow (particularly if they become channels for the provision of government or donor subsidies). However, the existence of alternative marketing options for farmers is likely to improve the effectiveness, efficiency and accountability of all market participants. Although there is substance to some of the arguments advanced by the FT movement in respect of cocoa, real tensions exist between the realities of the production, 4-29
Fair Trade: Overview, Impact, Challenges Annex 4: Case Study - Cocoa in Ghana domestic marketing and international trade in Ghanaian cocoa and certain of the arguments advanced, and standards promoted by the FT movement. Furthermore, the volumes of fairly traded Ghanaian cocoa (in the sense of cocoa that is sold through a FT marketing channel) represent only a small proportion of Kuapa Kokoo's turnover, and a tiny fraction of Ghana's cocoa production. Even very marginal changes in many factors at the international and national level would be far more significant for the welfare of Ghanaian cocoa farmers than the transfers associated with FT; in particular the extent to which the returns to cocoa producers are taxed by the Ghanaian government. What would be of significant importance is the scope for a continued expansion of KKL’s operations, or the development of additional (potentially competing) cooperative organisations. The benefits to producers from the price premium depend upon the way in which Kuapa Kokoo functions, and the use to which it puts the premiums and increased business skills that the relationship with FT organisations can bring. Therefore impact assessment could more usefully focus on the impact of FT and FT related initiatives at the institutional level rather than the household level. 4-30
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