Dec. 6 (Bloomberg) -- Olam International Ltd. and certifying group Rainforest Alliance will invest $1 million over three years to produce sustainable cocoa in Ghana, the world’s second-largest grower.
Sustainable development implies meeting the needs of the present without compromising the ability of future generations to meet their own needs, according to the United Nations. Some farmers have cut forests to grow cocoa, reducing soil fertility and contributing to water contamination, New York-based Rainforest Alliance said on its website.
The two organizations will invest in farmer training, aiming to double yields of cocoa in three years, Olam said. The money will also finance the planting of 100 hectares (247 acres) of native trees, helping restore local forests.
“This project is about training people, educating them and making sure there is an understanding not only about the way they can improve yields, but also making them a bit more aware of the environment,” Gerry Manley, director and global head for cocoa at Singapore-based agricultural commodities trader Olam, said today by phone in London.
Deforestation in Ghana swelled by an average 2.1 percent a year between 2000 and 2010, up from 2 percent the previous decade, data from the UN’s Food and Agriculture Organization show. The country had 4.94 million hectares of forests last year, according to the data.
The project is “an ideal opportunity to stop the deforestation of this sensitive area so that we can protect biodiversity in standing forests,” Tensie Whelan, president of Rainforest Alliance, said in an e-mailed statement.
The world will require an additional 1 million metric tons of cocoa by 2020 to meet demand, according to Barry Callebaut AG, the world’s largest maker of bulk chocolate.
Prices have fallen 16 percent in London and 20 percent in New York over the past month on speculation supplies will outpace demand for a second year. The surplus this season will be 32,000 tons, London-based broker Marex Spectron Group Ltd. estimates. Production exceeded consumption by 434,000 tons last season, it said.
“There was a very big surplus last year and that will have an effect on price but we still see strong demand for cocoa,” Manley said.
Olam and Rainforest Alliance intend to increase the population of trees that shade the beans in Ghana’s cocoa communities, the organizations said. The beans can be cultivated under the shade of native trees, helping maintain a landscape similar to natural forest, the certifying company said.
Climate Change Risk
“This will also mitigate the risk of climate change and warming environments, so that we are protecting the moisture levels within the soil to improve yields,” Chris Brett, head of corporate responsibility and sustainability at Olam, said by phone in London.
The project will start with training of 2,000 farmers in 13 communities and will expand. Growers will be able to certify their cocoa under the Rainforest Alliance scheme and benefit from the premium paid in the market for such certification, Manley said.
Olam sold 18,280 tons of Rainforest Alliance-certified beans in their last financial year ended June 30, according to Olam. Olam and Rainforest Alliance already have partnerships in Ivory Coast, Indonesia and Nigeria and there are plans for another in Togo, Manley said.
--Editor: John Deane
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