THAT MATTERS LEARNING FROM OTHER SECTORS: SUSTAINABILITY IN THE - PowerPoint PPT Presentation

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LEARNING FROM OTHER SECTORS: SUSTAINABILITY IN THE PALM OIL AND COCOA SECTORS JAN MAARTEN DROS, SOLIDARIDAD CHOCOA CONFERENCE 2014

SECTOR TRANSFORMATION PROGRAMMES IN THIRTEEN SECTORS WORLDWIDE 4

WE OPERATE AS A WORLD WIDE NETWORK OF REGIONAL EXPERTISE CENTRES Utrecht Beijing San Francisco New Delhi Guatemala City Nairobi Accra Lima Johannesburg Buenos Aires 5

PRESENTATION OUTLINE COCOA & PALM OIL: A SECTOR COMPARISON THE BUSINESS CASE FOR A WEST AFRICAN FAMILY FARM TOWARDS INNOVATIVE SOLUTIONS

THE GLOBAL COCOA SITUATION 7

THERE ARE MORE COMPLICATIONS … 8

A LOOK AT PALM OIL

GLOBAL PRODUCTION MAJOR OIL CROPS 2012 OUTPUT (M Mt) PALM OIL SOYBEAN RAPESEED SUNFLOWER COCONUT PEANUT OLIVE OTHER 10

SIMILARITIES  Tree crop in hot and humid climates  Manual harvesting  Livelihood for millions of smallholders  Majority of production from only three countries  Trade highly concentrated

DIFFERENCES: PALM HAS  Most production from large estates;  Immediate processing by mill;  Exponential demand growth;  Price floor determined by mineral oil;  And is a liquid bulk commodity – difficult to trace .

PALM OIL & COCOA PRODUCTION OUTPUT 1970-2013 & OUTLOOK 2020 (MILLION MT/YR) 90 80 70 60 50 Cocoa 40 Palm Oil 30 20 10 0 1970 80 90 2000 05 10/11 13 20F

PALM OIL OUTPUT 1970-2013 AND OUTLOOK 2020 (MILLION MT/YR) 100 90 80 70 Latin America 60 Africa 50 Other Asia 40 Malaysia 30 Indonesia 20 10 0 1970 80 90 2000 05 10 13 20F 14

COCOA PRODUCTION 1970-2011 & OUTLOOK 2020 (MILLION MT/YR) 6 5 Rest of World 4 Other Asia Latin America 3 Other Africa Indonesia 2 Ghana Côte d'Ivoire 1 0 1970 80 90 2000 05 11 20F 15

THE BUSINESS CASE FOR A WEST AFRICAN FAMILY FARM

4 HA OIL PALM FARM 1,600 KG/HA • 6,400 KG TOTAL YIELD • $0.75 / KG • REVENUE $ 4,800 • COST 2 WORKERS, LOAN • REPAYMENT, FERTILIZER ~ $ 3,200 NET INCOME $ 1,600 • POVERTY LINE $ 5,800 •

4 HA COCOA FARM 400 KG/HA • 1,600 KG TOTAL YIELD • $1.20 / KG • REVENUE $ 2,000 • COST OF WORKERS AND • INPUTS ? NET INCOME ? • POVERTY LINE $ 5,800 • OIL •

4 HA OIL PALM FARM WITH IMPROVED PRACTICES: 3,000 KG/HA • 12,000 KG TOTAL YIELD • $0.8 / KG • REVENUE $ 9,600 • COST WORKERS AND • INPUTS ~ $ 3,200 NET INCOME $ 6,400 • POVERTY LINE $ 5,800

COCOA FARMER WITH 4 HA OF LAND AND IMPROVED PRACTICES: 1000 KG/HA • 2,800 KG TOTAL YIELD • $1.50 / KG • REVENUE $ 6,000 • COST 2 WORKERS @ • $2/DAY + INPUTS ~ $ 2,400 NET INCOME $ 3,600 • POVERTY LINE $ 5,800IL

HOUSTON, WE HAVE A PROBLEM ….

WHAT IS A VIABLE FAMILY FARM? TOWARDS INNOVATIVE SOLUTIONS

WHAT IS A VIABLE FAMILY FARM? • TECHNOLOGY / VARIETIES • BEST AGRONOMIC PRACTICE • LABOR AVAILABILITY SKILLS VS COST • SCALE • MARKETS AND (FAIR) PRICING / WORKING CAPITAL

CHECK YOUR ASSUMPTIONS • ONE WORKER PER HA. IN COCOA? • 400 KG / HA / YEAR MEANS • ~ 3 KG COCOA PODS PER WORKER PER DAY • IN PALM OIL ONE WORKER HARVESTS 550 KG OIL FRUIT BUNCHES PER DAY

WE WORK ON SOLUTIONS

SOME EXAMPLES OF WHAT WORKS

TOGETHER WE MUST INCREASE SCALE SPEED INNOVATION

INTEGRATED APPROACH FOCUS: SMART & SUSTAINABLE LAND USE, FOOD SECURITY, NUTRITION AND FUTURE FARMERS IMPROVE THE SUSTAINABLE COCOA BUSINESS CASE DEVELOP SELF-SUSTAINING DELIVERY MODELS: INPUTS, TRAINING AND CREDIT

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JOIN US FOR CHANGE THAT MATTERS janmaarten.dros@solidaridad.nl