Economy

Facing Cocoa Shortage, Swiss Chocolate Makers Aim To Boost African Production

Famous for its chocolate production, Switzerland relies on Ghana for half its supply of cocoa beans, even as the West African nation now focuses on other export products. A new public-private Swiss partnership aims to inject new life into cocoa bean farmi

Cocoa beans get sorted in Ghana (Benketaro)
Kaspar Meuli

SUHUM – It was one year ago that Ghana's president John Atta Mills announced the country's first-ever launch of an oil platform. The December 15, 2010 pomp-filled ceremony, in front of television cameras, marked Ghana's arrival among the ranks of oil producers. Experts say that was also a bad day for the country's cacao producers, as the raw material -- a traditional Ghanaian export -- would no longer get the attention or investment necessary to be sustainable.

The situation was particularly disquieting to Swiss chocolate makers as Ghana is their most important supplier. More than half of the cacao beans transformed into chocolate in Switzerland come from the Western African nation. "Cacao consumption goes up globally by 2% to 3% annually, and that rhythm has been sustained even during crisis periods," says Kamillo Kitzmantel, General Manager of Lindt & Sprüngli Suisse. "Supply can't meet demand, as new suppliers like Vietnam or the Philippines have yet to show that they can deliver the required quality levels."

The Ghana Cocoa Board, a state-run organization that promotes cacao bean production, says that local trees have become too old, threatening to make harvests even more meager. If the 2011 harvest set a record it was only because of exceptionally favorable weather. And beyond the neglect of tree renewal initiatives, there is also a looming shortage of farmers. The average age of cacao farmers is around 55 years old – in a country where life expectancy is 58.

The face of such threats to its top supplier, Switzerland has stepped in with a private pilot project that is receiving Swiss government support. "We show farmers how they can earn money by growing cacao," Yayra Glover explains. "The first step is to get the farmers to feel proud of their production. In Switzerland, there are buyers ready to pay above market price if cacao is produced without child labor or the use of chemical products."

The Ghanaian entrepreneur lived in Switzerland for more than 20 years, then decided to return to Ghana to take up sustainable cacao farming. He is now located in Suhum, in the eastern part of the country, working with 2,500 small farmers who grow cacao organically.

Distribution chains and chocolate

Glover's initiative was possible thanks to his close partnership with Pakka, a Zurich-based company specialized in the development of fair trade for organic produce from southern countries. Pakka also sells products like nuts, dried fruit – and cacao.

"Producers in southern countries can't get into the European market on their own," says Balz Strasser, Pakka's general manager. "We support them by building the necessary networks and distribution chains." Part of the organic cacao from Ghana is thus delivered to Max Felchlin AG, a company in the canton (district) of Schwyz that provides chocolate makers and restaurants with semi-finished chocolate products.

A little more than four years on, the project has cost 1.3 million Swiss francs ($1.38 million). Nearly half (47%) came from the Swiss State Secretariat for Economic Affairs (SECO). The private sector (notably Pakka and Max Felchlin AG) and non-governmental organizations in Ghana came up with the rest.

The example of Yayra Glover may inspire others. The Economic Cooperation and Development division of SECO foresees geographic expansion into the Volta region in the southeast. This would also be a way of stemming rural exodus. Several of Glover's young employees come from Accra, where they graduated from university. Today, they are dedicated to farming cacao. "I've bought some land of my own, and have put in some baby plants," says Samuel Quaque, a manager at Glover's company. "I imagine my future on a plantation, not in a city."

Read the original article in French

Photo – Benketaro

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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