Climate change poses a multitude of risks to business. From the effects on agricultural commodity production, to the cost of rising fuel taxes, to human health threats caused by extreme weather events. As a result, businesses are increasingly building a climate change agenda into their own risk management strategies. But how can a company such as Olam, which sources cocoa from thousands of smallholder farmers, ensure that the climate change risks to its complex cocoa supply chain are minimised?
The answer begins with taking a landscape approach. Olam have partnered with the Rainforest Alliance, who have significant expertise in climate change adaptation, sustainable cocoa production and Climate Smart Agriculture (CSA). The Rainforest Alliance model seeks to create sustainable landscapes by focusing on value chains, and harnessing the transformative power of markets. Many of the Sustainable Agriculture Network (SAN) Standard criteria necessary for certification promote this by looking beyond the farm gate and focusing on the agriculture-forest interface. As such, other landscape elements such as ecosystem conservation of surrounding forest areas and other natural habitat, wildlife conservation, water conservation, and community relations all form critical components in helping to formulate a basis for such an approach. The SAN standard incorporates training and technical assistance to identify priorities beyond the farm-scale such as restoring ecosystem function and addressing climate risks. The application of the SAN Standard and its voluntary climate module in the Juabeso-Bia region of Ghana provides an example of how this worked. Project activities geared towards sustainable development and enhanced livelihoods, improved institutional and community governance, capacity for REDD+ readiness and improved market linkages through a leading cocoa buyer, laid critical foundations.
Historically, deforestation in Ghana’s Western Region has been driven by cocoa production. Ghana is the second largest producer in the world, and more than half of the country’s production comes from the Western Region. The landscape composition has been severely affected through conversion of species-rich tropical forest to cocoa production systems, which are less structurally and floristically diverse. From 1988 to 2010, cocoa cultivation in Ghana expanded by almost one million ha, much of that occurring in the Western Region, including the Juabeso-Bia District. At the same time however, per-hectare production of cocoa decreased because of poor management practices and ageing cocoa trees.
All of these factors, combined with cocoa’s vulnerability to climate change – changes in seasonal weather patterns, increased pest and disease occurrence, and increased likelihood of forest fire – present the cocoa farmers of Juabeso-Bia, and therefore Olam’s cocoa value chain, with an uncertain future.
In order to build resilience and adaptive capacity into the cocoa supply network, the Rainforest Alliance identified a need for increased community involvement in governing forest resources. This would demonstrate that forests are not obstacles, but rather opportunities to create a diversified economy based on sustainable farm and forest management. Local and regional land-use planning was perceived to be weak, with little involvement from traditional chiefs and cocoa farmers in framing a long-term vision of Ghana’s cocoa farming lands. In addition, structured discussions and planning between the Forestry Commission, which manages a large number of forest reserves across this cocoa landscape, COCOBOD (Ghana Cocoa Board) and other cocoa-sector entities had not taken place.
The landscape-level project therefore took a multi-tiered approach, working with farmers to implement Climate Smart Agriculture practices, with project activities being directly linked to Ghana’s national agricultural and environmental policy for cocoa production and biodiversity conservation.
Farmers were given technical assistance to achieve the rigorous standards of the SAN, which encourages farmers to analyze and consequently alleviate environmental and social risks caused by agricultural activities. The project also developed additional livelihood enterprises around beekeeping and rearing of the greater cane rat, to provide economic opportunities during lean times between seasonal cocoa harvests.
So what are the outcomes of this resilience-building project? To date, approximately 2,000 farmers from 34 communities have been trained. This has resulted in more than 6,000 ha of land achieving SAN certification. Through a “train the trainers” approach, 68 lead farmers serve as extension agents to facilitate farmer field schools. As part of the SAN standard requirements, forest area has been restored through the provision of native tree seedlings, leading to increased on-farm carbon stocks. The project has also helped farmers organize into 12 cooperatives, which has improved the coordination of activities such as enrichment planting, farmer field schools and overall training delivery.
At the start of the project, the Rainforest Alliance identified several potential project risks, including insufficient internal organizational capacity on the part of communities, lack of clarity on the tree ownership rights of smallholders, and marginalization of key stakeholders. The project addressed many of these organizational and administrative capacity issues through the development of cooperatives and a local authority for land management, the Landscape Management Board (LMB). This governance model has been structured to ensure that the LMB is involved in each step of the project cycle: planning, approving, implementing and monitoring activities.
There are lessons to be learned from this model: by taking a landscape approach to addressing risk in the cocoa supply chain, Olam have established a business case for private-sector investment to generate significant co-benefits. Interventions implemented by the Rainforest Alliance have assisted in increasing farm productivity, and in adapting production systems to be more sustainable and to respond favourably and lastingly to future carbon market opportunities. A major component in the success of this approach was the integration of a diverse range of strategies to support livelihood opportunities and long-term resource security among landscape stakeholders.
The overarching goal of this collaboration was to create a sustainable landscape that harnessed the transformative power of markets. By the commitment of Olam International to sourcing climate-smart cocoa, and connecting the company’s supply network and consumer base, they have helped engage thousands of farmers, who are now at the stem of a more resilient supply chain.
Martin Noponen is a senior manager in the climate programme at the Rainforest Alliance (RA) and is responsible for providing direct technical support and coordination on climate change adaptation and mitigation strategies and activities across multiple Rainforest Alliance projects. He leads RA’s development of climate-smart and adaptation initiatives that help farmers and communities enhance their resilience and has extensive experience in designing, managing and evaluating community based forest carbon projects, for the benefit of climate change adaptation and mitigation, conservation and livelihood provision.