Producers

KUAPA KOKOO CO-OPERATIVE
Kumasi, Ghana
FLO ID 1475

"Fairtrade is a good thing. Things you take for granted may be hard to come by in Ghana. Fairtrade is good to the farmer and makes us happy. We would like to sell more cocoa to Fairtrade so more farmers can taste a better life."

"We have taken our destiny into our own hands. Through Fairtrade and Kuapa we now have a lot of progress. We have good drinking water, toilet facilities and schools. Kuapa pays the farmers on time and there is no cheating when the cocoa is weighted."

Comfort Kwaasibea, cocoa farmer

Introduction
Kuapa Kokoo is a cocoa-growing co-operative set up in 1993 in response to the partial liberalisation of the cocoa sector in Ghana. It is the only farmer-owned organisation among the private companies that have been granted government licenses to trade cocoa. In this marketing role, Kuapa Kokoo purchases cocoa from members and other farmers on behalf of the state-run cocoa board, which controls all exports. Kuapa Kokoo now represents almost 63,000 small-scale cocoa beans growers and in 2008/09 sold 27% of production to Fairtrade buyers.

   
Some of Kuapa Kokoo's farmers (©Kennet Havgaard)

Background
The organisation was founded as Kuapa Kokoo Ltd in 1993 by a group of cocoa farmers supported by Twin Trading, a UK alternative trade organisation, and SNV, the Netherlands Development Organisation. This was in response to the partial liberalisation of the cocoa industry in Ghana in which the structure was changed from a single government-controlled cocoa purchasing entity to a system in which private companies could take on the role of licensed cocoa buyera. The farmers saw this as an opportunity to protect their interests and take on the internal cocoa marketing function by setting up their own company to sell cocoa to the Cocoa Marketing Company Ltd (CMC), the marketing arm of the Ghana Cocoa Board (Cocobod), which retains a monopoly on exports.
Kuapa Kokoo is the only farmer-owned entity among 24 privately owned buying companies which have been granted licenses to buy cocoa from farmers on behalf of the CMC. From modest beginnings, Kuapa Kokoo has rapidly grown into an organisation of national importance. Kuapa Kokoo means 'good cocoa farmer' in Twi, the local language.

Kuapa Kokoo Membership
Kuapa Kokoo started with just 200 members in 22 village societies and is now a national co-operative union with a membership of more than 1,300 village-level co-operatives societies. It now represents almost 63,000 farmers - around a third of which are women - and is continuing to grow. Kuapa Kokoo members produced 35,000 tonnes of cocoa beans in 2008, representing 5% of Ghana's total production of 700,000 tonnes.

Kuapa Kokoo Structure
Kuapa Kokoo is a composite organisation under the umbrella of the Kuapa Kokoo Farmers' Union, whose objectives are to empower small-scale cocoa producers, enhance female participation in the decision-making process, and encourage environmentally sustainable production. The four sub-units are:

Kuapa Kokoo Limited - the commercial and trading wing, a private company accredited as a Licensed Buying Company (LBC) and authorized to carry out cocoa purchasing activities throughout the country. It provides a range of training programmes and services such as subsidised agricultural inputs.

Kuapa Kokoo Farmers' Trust - a trust fund which receives Fairtrade Premiums and other funds intended for farmers and their communities and uses them to provide social infrastructure and income generation for farmers.

Kuapa Kokoo Credit Union - a legal identity that promotes savings schemes and performs the role of a rural bank by enabling members to access credit at competitive rates. Members can take out loans to pay for school fees, build or renovate houses and pay for other social obligations.

Divine Chocolate - a UK chocolate company set up by Kuapa Kokoo, Twin, and partners, which markets chocolate products made from Kuapa Kokoo cocoa. Kuapa Kokoo owns a 45% share in the company and has two elected representatives on the board. It contributes to manufacturing and marketing decisions and receives a share of company profits.

Social Context
Women farmers at workMembers are predominantly smallholders living in remote and deprived parts of the country. Most of the cocoa growing villages do not have access to healthcare, clean drinking water, or electricity and rely on kerosene for artificial light. Most villages lack basic schools, educational materials, and teachers. High illiteracy rates are improving with the introduction of the government's free compulsory basic education programme.
The average farm is 4 hectares with around 3 hectares under cocoa, which accounts for virtually 100% of farmers' cash income. The farms are family-run but larger farms sometimes employ seasonal labour. Some farmers grow plantain, cocoyam, cassava and vegetables for home consumption and plantain, oranges and palm fruits for sale at local markets. But the soil in many cocoa farms is too poor to grow vegetables and other food crops so they must be bought in at extra cost.
Transporting cocoa and other crops is hampered by unreliable transport and the lack of access roads. Apart from free basic education, farmers must contribute to social services such as healthcare and secondary education. Farmers are very concerned about having to employ expensive casual labour to help with weeding and harvesting because of the decrease in family labour as young people in particular are increasingly migrating to towns looking for a better life.

Kuapa Kokoo and Fairtrade
Kuapa Kokoo was certified as a Fairtrade producer organisation in 1995. Sales to the Fairtrade market have grown from around 3% of total production in 1999/2000 to 27% in 2008/09. The Fairtrade Minimum Price for cocoa is USD 2,000/tonne plus the Fairtrade Premium of USD 200/tonne for investments in business, social or environmental projects. When the market price for cocoa is over the Fairtrade Minimum Price of USD 2,000/tonne, then buyers will pay the market price plus the Fairtrade Premium. The Fairtrade Minimum Price is an export price paid to the producer organisation and includes the cost of delivery to port and loading on the ship (known as Free On Board or FOB). The producer organisation deducts its costs from the amount it pays farmers for the cocoa beans.
Each year the Cocobod sets a farmer price for the coming cocoa season. It is a proportion of the predicted world FOB price, based on an assessment of world cocoa futures prices at London and New York. The high quality cocoa grown in Ghana typically attracts price differential which is shared with growers at the end of the season in the form of an annual bonus payment. The government price has effectively been above the Fairtrade Minimum Price in recent years due to high world prices. It includes an additional differential of up to 10% for high quality Ghanian cocoa beans, an incentive to increase productivity and boost the economy with additional dollar earnings.
Like most commodities, world cocoa prices are volatile and have been subject to a long-term downward trend - figures from the UN Food & Agriculture Organisation (FAO) show that in real terms price in 2000-2005 were a quarter of what they were in the 1970s.
Cocoa future prices at the New York Exchange fell to a 27-year low of USD 714/tonne in November 2000, before tightness of supply saw them rebound to a 28-year high of USD 3,275 in July 2008.

Kuapa Kokoo's partnership with Fairtrade is helping develop a strong, democratic institutional framework at all levels of the organisation. With the additional income from Fairtrade Premiums, Kuapa Kokoo has been able to improve the livelihoods of its members: projects undertaken by the organisation have helped farmers, especially the women, empower themselves, build confidence and independence, and ensure a sense of community participation and ownership. The extra income from Fairtrade sales has been used for:

• Direct payments to farmers in the form of an end-of-year bonus.
• Dozens of social projects including the provision of wells and bore holes for drinking water, and construction of public toilets.
• Mobile health programme visiting members' villages.
• Funding of various activities including the construction of two day-care centres, a block of six classrooms and purchase of two mobile cinema vans for a farmers' education programme.
• Construction of warehousing at Tema port.
• Employment of Development Officers to advise farmers on good agricultural prctices, set up training programmes in management and leadership skills, and organise HIV/Aids workshops.
• They have also initiated alternative income generating schemes, particularly for the empowerment of women, such as tie-dye textiles, soap making, palm nut production and palm oil extraction, corn milling, and snail farming for local and export markets.