Gabon – breathing new life into the cocoa sector

Following several decades of neglect, reviving Gabon’s cocoa ailing sector is now a core element of the authorities’ economic diversification strategy, and represents a bold gamble that is not without several challenges.

In the Central African Atlantic coastal country of Gabon, the 70% plunge in oil prices between 2014 and 2016 served as a stark reminder of the increasingly urgent need to prepare for a post-oil world. Of this the ruling powers are fully aware, and as such have sought to fast track economic diversification by way of the PSGE Plan (Plan Stratégique Gabon Emergent, Emerging Gabon Strategic Plan). Of its three major pillars, the Green Gabon component focuses on investing in the agriculture sector in order to raise its contribution to GDP (currently at just 5%).

Downward spiral

One of the key areas within the Green Gabon component is the longtime overlooked cocoa sector. In contrast with Cameroon, the world’s fourth largest cocoa producer, and Sao Tomé, where cocoa is the nation’s largest earner accounting for 79% of total exports, Gabon’s cocoa sector has been spiraling downwards for decades. Whereas in 1970 an excess of 6,000 tonnes of cocoa was being produced, some twenty years later this plummeted by two thirds to 1,920, and by 2010 production had collapsed to just 370 tonnes. Since then production has been steady at around 500 tonnes (c.f. graph below), albeit a tiny amount in terms of a global market (4,649 million tonnes for the period 2017/2018) that is dominated by Ivory Coast and Ghana (with > 60% of recorded global volume).

A sector that has been in long-term decline…
Changes in cocoa bean production levels in Gabon (tonnes)
Source: FAO and government projections from the Emerging Gabon Strategic Plan 2025

… and is globally insignificant

Source : The International Cocoa Organization (ICOO)
Causes

In one of its sector performance evaluation reports, the African Development Bank explains Gabon’s structural hurdles. The report attributes Gabon’s steep fall in cocoa production to a combination of « demographic factors (ageing population and rural exodus), ageing cocoa farmers, inadequate infrastructure, and dissuasive producer prices. »

Another obstacle has been inconsistency among State stakeholders. Gabon approached the Swiss transnational food and drink group Nestlé for technical assistance, and in a document from February 2017 that focused on relaunching the coffee and cocoa industry, Nestlé observed, « … instability within the institutions tasked with managing the coffee and cocoa industry (SONADECI, SOCAGAB, CAISTAB) has gradually led to a dilution in responsibilities, and especially those of the Agriculture Ministry. »

Emmanuel Mba, a strategy consultant based in the country’s capital Libreville notes, « After independence, the entire agriculture industry was neglected in place of higher income generating extractive industries. »

The Caistab influence

The current economic climate, featuring falling oil prices and State support for economic diversification could thus be fortuitous for Gabon’s cocoa industry. In a bid to stem the downward industry spiral, the Caistab has decided to invest FCFA 5 billion (approximately $8.63 million/€7.63 million) in restarting abandoned cocoa plantations and training a new generation of cocoa growers. The JECCA initiative (Jeunes entrepreneurs café-cacao, Young coffee and cocoa entrepreneurs) was launched in February 2017 and aims to quickly train 250 young aspiring farmers in the techniques of coffee and cocoa growing. Once trained, these farmers will be allocated farmland and resources so they can grow both coffee and cocoa. In addition, the Caistab has underscored its commitment by way of its first-ever FACC (Fonds d’Achat Café/Cacao, Coffee and Cocoa Purchase Fund), which will guarantee the purchase of all the nation’s coffee and cocoa production volumes, and which should also help in ensuring producers receive decent prices.

It’s now two years since the JECCA launch and while most analysts still deem it too soon to fully evaluate its effectiveness, one thing is sure and that is Gabon’s goal of relaunching its cocoa industry is all the more rational given its vast underexploited potential. With almost 15 million hectares of uncultivated land, as well as a favorable climate, Gabon clearly has what it needs to succeed. In addition, most assessments of the quality of Gabon’s cocoa are excellent. The Nestlé report on relaunching Gabon’s coffee and cocoa industry noted that ‘a cocoa quality assessment conducted during the 2000s indicated that 42% of production was of the higher standard, 47% was of the regular standard, and just 11% belonged to the minimum acceptable level. There are thus significant arguments supporting Gabon’s ability to « secure significant international market share, by focusing especially on the quality of its products. »

A positive outlook

A bullish global market trend is also underpinning the industry. In its most recent report on the chocolate industry published in June 2018, specialist research institute Technavio calculates that global market volumes could reach up to 8.51 million tonnes in 2022 compared to 4.5 million tonnes currently, with demand essentially coming from the premium segment and the emerging Asian market. Market research provider, Wise Guy Reports concurs and forecasts the value of the global chocolate market will rise to $66.3 billion (approx. €58.67 billion) in 2025 compared with $50 billion (approx. €44.24 billion) in 2017. This bullish trend should buoy both medium and long term cocoa prices, and it is already benefiting producers. With an almost 30% bounce in prices, 2018 has been an excellent year for cocoa with no other agricultural commodity performing better.

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