Carbon credits and coffee production in Africa

Smart Carbon credit coffee              by Mwangi Mumero

Coffee farmers in Kenya, Uganda and Ethiopia may soon benefit from a ‘smart carbon credit’ compensation scheme that is already earning cocoa farmers in Ghana a handsome income.

Experts are already in discussion with the African Union and COMESA officials on the program that will see coffee farmers insured from lost income brought about by climate change.

“We are in discussion with regional officials on the possibility of initiating such a program in the East African region”, observed Dr John J. Mason, the developer of the ‘Climate Smart Cocoa initiative’ in an interview with this writer in Nairobi.

The risky nature of agriculture in the continent has resulted in few organizations getting interested in financing farmers.

“The biggest challenge facing African farmers is lack of insurance, credit and farm inputs. Farmers face risks ranging from effects of climate change, changes in prices, pest and diseases but there are few insurance companies willing to underwrite this risk”, observed Dr Mason, the Founder and Chief Executive officer Nature Conservation Research Centre (NCRC) – a leading NGO in West Africa and a grantee of the Rockefeller Foundation.

Cocoa production in Ghana has increasingly been threatened by climate change, as deforestation continues, with demand for food and cocoa production opens up more land.

“Over 80 percent of the forest cover in Ghana has been lost as land for growing cocoa is being sought. There has been a need to increase cocoa production without compromising forest cover in the country”, Dr Mason said, adding that players in the global cocoa sector have been helpful in dealing with effects of climate change.

The ‘Climate Smart Cocoa Program’ involves cocoa farmers, insurance companies, the government and global cocoa millers such a Cadbury and Nestle.

Under pressure from the European Union and climate change activists to reduce their carbon emissions, multinational companies such as Cadbury and Nestle have come out to pay for their emission to cocoa producers in the developing world.

This Climate Mitigation Income from these companies is then channeled to insurance companies in Ghana which then underwrite the risks cocoa farmers face in producing their beans.

“Farmers are given a production threshold say of 800 kg of cocoa per acre. If production drops below this threshold, insurance companies compensate farmers for the loss occasioned by climate effects such as drought or other risks. As with other risks few of the farmers are compensated annually making it a profitable business for insurance companies”, he asserted.

The compensation is channeled through local banks which have also agreed to finance individual farmers – increasing usage of farm inputs and other crop requirements.

While the scheme is currently at pilot stage with the 60,000 farmers involved, cocoa production has risen for the farmers currently under the program.

According to Dr Mason, participating farmers have seen cocoa production in their farm rise from an average national yield of 300-400 kg per acre to over 1,200-1,500 kg.

“Once farmers realize that they can be compensated for loss in yield, they are bound to improve their crop husbandry practices impacting positively in overall crop performance. They are also eager to employ practices that absorb as much carbon dioxide from the atmosphere”, noted Dr Mason adding that the involvement with the farmers has seen an 80 per cent reduction in carbon emissions from cocoa farms from 20 tones to 2 tones under this climate smart initiative.

He laments that carbon credit schemes in East Africa have been weather indexed unlike the more beneficial yield indexed insurance in Ghana.

But for cocoa farmers to increase yield, they have had to change their farming methods.

“They have had to increase shade in their cocoa farms from the common 4-5 per cent to 40-50 percent as cocoa is badly affected by too much sun. Availability of farm inputs as banks and other financial organizations are assured of their returns has also improved yields”.

 A Canadian national, Dr Mason has worked in Ghana for over 30 years and is regarded as a leading voice for conservation in West Africa. He was one of the first to draw attention to the long-term threat of climate change to the crucial cocoa sector.

His organization has been working closely with the agricultural extension in the government to increase knowledge on climate smart cocoa to local farmers.

“ We have also be in negotiations with insurances companies, local banks and input companies to bring them on board in developing the system where all players can benefit”, he said noting that to improve information sharing information technology is used.

Accordingly, every cocoa farm is mapped with GIS and the owner/ land use information digitalized and supplied to banks, insurance companies and extension personnel.

Using this information, it has become easier for banks and insurance companies to authenticate land ownership and reduce fraud cases as it is hard for anyone to present fake documents.

 Dr Mason believes that under the program, Ghana may be able to produce over 2 million metric tones of cocoa – a 40 per cent increase in a few years.

With this increased production, Ghana will need to reduce its land under cocoa- otherwise global cocoa prices will plummet –affecting the national economy. The freed land will then be put under reforestation program. (ends)