Steps to Mitigate COVID-19 and Economic Downturn Risks for the Coming Cocoa Trade Season

Recommendations for Liberia’s cocoa trade actors

COVID-19 and the associated economic downturn pose challenges for Liberia’s cocoa industry this year. As the country prepares to re-enter the main trading season, there are a number of steps that industry buyers, exporters, traders, and cooperatives can take to shore up supply chains, secure future contracts and mitigate risk.

Health and Safety

• Integrate COVID-19 safely guidance and protocols within trade and business practice. At the beginning of the pandemic, the GROW program disseminated World Health Organization (WHO) COVID-19 safety and health guidance for cooperatives and farmers. As the harvest and trading season gets underway, it will be important to operationalize COVID-19 safe protocols, including:
  • Maintain social distancing and require masks, including during the delivery of cocoa by farmers or group work like fermenting, drying, selection, bagging, and warehousing.
  • Encourage the purchase and use of soap, masks and disinfectants and clean water where groups gather, including drying slabs, weigh points and warehouses.

Quality Control

• Increase cocoa quality control to prepare for potential delays. COVID-19 global protocols may result in delayed cocoa trade and shipments, including slower port logistics, delayed contracts from buyers, or lower demand. With this in mind, it will be important to maintain the crop for longer. Some key steps include:
  • Build proper ventilation for warehouses.
  • Keep cocoa pallets at a distance from the walls and ensure proper pest control.
  • Reduce moisture to 7% max.
  • Use double corrugated cardboard lining and appropriate desiccants and dry bags.
• Implement strong business and production practice to facilitate resilience. Invest in education, good agricultural practices, and responsible and accountable financial management. “The quality of your staff, the education level of your farmers and the financial reserves of your company will enable you to respond more effectively to unexpected situations.” GROW is currently supporting cooperatives and traders in Nimba and Lofa county to strengthen their business practice and incorporate Good Agricultural Practices (GAP) training to farmers, improving the soundness and quality of operations.

Finances

• Work to secure long-term contracts. Limited trade activity may put your ability to cover running costs at risk. Long term contracts support predictability.
• Ensure sufficient cash on hand. Cocoa buyers may slow payments, shipping, or contracts for the cocoa you bought from farmers. Establish tighter controls over cash and bring in cash-related key performance indicators (KPIs) to reduce leakage and minimize risk.
• Diversify the income of your company and farmers. COVID-19 is expected to push sub-Saharan Africa into a recession. To mitigate increased pressures on farmer incomes, the diversification of crops is essential. Growing other cash crops, such as coffee, nuts, fruits or peppers will create supplemental income for farmers.

Customer Engagement

• Use this time to improve your marketing and establish new relationships. This is an especially important time to establish an attractive presence online. With international buyers who are likely spending more time on their computers, the present time presents an opportunity to attract their attention and build relationships.
• Be more client oriented. Solidify your position as a valued supplier in the long term by trying to understand and position for client needs now.
• Improve your country’s marketing. A shared vision for industry development and branding that benefits all stakeholders and drives interest to Liberia is needed. With more interest in online engagement, the current times present a unique and important opportunity to move this ahead. Check out Five Actions to Take Now to Position Liberia for the Premium Market for more on GROW’s efforts to work with the Government of Liberia (GoL) to differentiate the Liberian cocoa sector and command a greater share of industry wealth globally.

About GROW Liberia

GROW is an agri-business and investment advisory program that partners with businesses, investors, associations, and government agencies to accelerate inclusive economic returns within high growth industries in Liberia. GROW is supporting public and private partners and markets to respond to the COVID-19 emergency. Learn more about our research, advisory, and support here.