Photo by UNDP Côte d'Ivoire

Sustainable Cocoa Production

Photo by UNDP Côte d'Ivoire

Sustainable Cocoa Production

Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
> 25% (in GPM)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Life on Land (SDG 15) Decent Work and Economic Growth (SDG 8)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Zero Hunger (SDG 2) Climate Action (SDG 13)

Business Model Description

Invest in companies or cooperatives cultivating and harvesting cocoa nuts through sustainable production methods such as agroforestry, organic practices, less reliant on pesticides, focusing on equitable trade practices. Sustainable production involves the early stages of the cocoa value chain, from deforestation-free farming and agroforestry to fair and transparent trade of nuts to cocoa processors to ensure equitable incomes for farmers.

Expected Impact

Protect forests, reduce pesticide use, and boost farmer incomes and working conditions, enhancing environmental health and economic resilience for communities.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Region
  • Côte d'Ivoire: Bas-Sassandra
  • Côte d'Ivoire: Montagnes
  • Côte d'Ivoire: Sassandra-Marahoué
  • Côte d'Ivoire: Comoé
  • Côte d'Ivoire: Lagunes
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
Agriculture and deforestation driven by agricultural expansion are the primary contributors to greenhouse gas emissions in Côte d'Ivoire. From 2010 to 2022, the intensive cultivation of cash crops (cocoa, rubber, palm oil, and coffee) on forested lands led to the degradation of 11% of the land, resulting in significant productivity losses (1, 11).

Policy priority
The National Agricultural Investment Program II seeks to elevate agriculture as Côte d'Ivoire's economic powerhouse, as Côte d'Ivoire remains dependent on imports to meet its nutritional needs. It targets 7.8% annual growth in agricultural production, supported by new agricultural clusters. In addition, the Pacte pour l'Alimentation et l'Agriculture aims to achieve national self-sufficiency in rice and fish by 2025, improve mechanization, reach 70% of private investment in the agricultural sector, and transform locally half of the crops (4, 8, 16).

Gender inequalities and marginalization issues
Agricultural production, including market gardening, cocoa, and rice, remains male-dominated, with access to land and credit for women remaining difficult. Women are underrepresented among farm owners, representing 10% of the total but accounting for almost 80% of food production. They are often employed as unpaid labor (2, 3, 5).

Investment opportunities introduction
Accounting for 28% of Côte d'Ivoire's GDP, the agricultural sector is one of the driving forces behind the economy. Côte d'Ivoire is the world's largest producer of cocoa and cashew nuts, 5th producer of palm oil, 7th producer of natural rubber and 4th producer of cotton. In addition, agriculture has forward linkages with the manufacture sector by providing inputs, including the agro-industry (e.g. chocolate) and textiles (cotton), thereby playing a key role for structural transformation (7).

Key bottlenecks introduction
Climatic hazards can have a major impact on food prices, as can logistical difficulties. The 2022/2023 season was affected by a rise in fertilizer prices due to the war in Ukraine. The amplitude of variations is set to increase with global warming (9, 17).

Sub Sector

Food and Agriculture

Development need
Climate change poses risks to labor productivity and forest cover, threatening agricultural sustainability, notably cocoa, which contributes 40% to export earnings. Additionally, the degree of transformation is low - over half of cocoa beans are exported unprocessed, while the country depends on imports of fish and rice to cover its consumption (1, 10, 13).

Policy priority
The government aims to increase local processing of key crops (100% of cocoa beans by 2030, 2 MT of rice per year). It supports sustainable production under the National Agricultural Investment Plan II (2017-2025), promoting climate-smart agriculture. In its NDCs, it targets a 30.4% reduction in greenhouse gas emissions between 2021 and 2030 compared to a reference scenario (12, 14, 15).

Gender inequalities and marginalization issues
There are significant spatial inequalities in Côte d'Ivoire, with agricultural districts such as Montagnes having extreme poverty rates largely superior compared to urban areas, such as San Pedro and Abidjan (17).

Investment opportunities introduction
Côte d'Ivoire is the world's leading cocoa and cashew producer, with 2.4 million tons of cocoa to be produced by 2022. However, climate change is likely to cause major disruptions, cocoa production is expected to drop by 30% in the early 2023/2024 season. Further investments in staple food production are needed to reach self-sufficiency (6).

Key bottlenecks introduction
Agriculture requires increasing investment as soils are degraded in many regions, undermining productivity and posing a major environmental problem. In addition, the country's taxation system applicable to agriculture is complex and can inhibit the entry of new players (1).

Industry

Agricultural Products

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Sustainable Cocoa Production

Business Model

Invest in companies or cooperatives cultivating and harvesting cocoa nuts through sustainable production methods such as agroforestry, organic practices, less reliant on pesticides, focusing on equitable trade practices. Sustainable production involves the early stages of the cocoa value chain, from deforestation-free farming and agroforestry to fair and transparent trade of nuts to cocoa processors to ensure equitable incomes for farmers.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

Côte d'Ivoire is the world’s largest cocoa producer and supplies 40% of the global cocoa, including exports worth USD 3.3 billion destined to the European Union (EU) in 2022. New EU legislation in 2023 requires cocoa imports to be deforestation-free, creating a more than one billion-dollar opportunity for sustainable cocoa production (23, 34, 58).

Indicative Return

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

> 25%

A study on the profitability of environmentally-friendly cocoa production in neighbouring Ghana found that the return on investment per hectare was 48.54% for agroforestry, 48.51% for high-tech model, but below 0 for full-sun models. Agroforestry integrates cocoa production with other trees and crops to mimic forest ecosystems and foster interactions (shade, nutrients). Full-sun models are more conventional, with maximized sunlight exposure to boost initial yields, which can however lead to soil degradation on the long-term (56).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

A study of the economic profitability of cocoa regeneration techniques in the Soubre Region (Côte d'Ivoire) found that profitability was achieved in less than five years (59).

In the case of loans, the repayment period can be relatively short. For instance, the ABC Impact Fund provided a loan to Ecookim specifically for the production season 2020/2021. Flexibility in terms of loan size, from a few thousands to about USD 865,000, relieve the repayment process (54).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Market - Volatile

Fair trade practices commonly imply fixed-price contracts with producers, exposing investors to fluctuations in world market prices for cocoa, bound to accelerate with climate change.

Market - High Level of Competition

Although the market potential for cocoa processing is important, there are already several companies operating in this sector, including SMEs and large groups. 200 cocoa cooperatives had the Fair Trade label in 2019, against just ten in 2010 (34).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Cocoa-driven deforestation rose from 680 ha/kt in 2019 to 730 ha/kt by 2021, despite anti-deforestation efforts. Over two decades, 2.4 million hectares were lost, reducing biodiversity, climate resilience, and land for food production - posing severe risks to environmental and food security (50,51).

World Bank estimates indicate that if no action is taken to support a sustainable cocoa value chain, Côte d'Ivoire could face a cost of USD 2 billion until 2050 (1).

The entirety of Côte d'Ivoire's forests will have disappeared by 2034 if deforestation trends are not reversed. This poses a direct threat to communities depending on forest resources for food, fuel, and income, and may therefore exacerbate rural poverty (23).

Gender & Marginalisation

Women in cocoa production in earn less than men due to limited land ownership, lower access to credit, training, and farming inputs as well as cultural norms (22).

Cocoa producing areas such as the Montagnes district are particularly affected by extreme poverty rates, with two of its regions (Cavally and Tonkpi) exhibiting higher rates compared to national averages (17).

Expected Development Outcome

Sustainable cocoa production leads to reduced deforestation and improved revenues for farmers, curbing poverty and hunger (44, 45).

Sustainable cocoa production reduces the financial costs associated with deforestation and climate change.

Sustainable cocoa production mitigates deforestation by promoting practices that preserve forest cover, protect biodiversity, and maintain land for food production, enhancing ecosystem resilience to climate change (52, 53).

Gender & Marginalisation

Fair trade practices contribute to raising the income of farmers, and contributes to equal treatment of men and women (44, 45).

Sustainable cocoa production has forward linkages with agro-industry, forestry, and electricity-generation from biowaste, and can therefore acts as a lever for economic development in rural areas.

Primary SDGs addressed

Life on Land (SDG 15)
15 - Life on Land

15.1.1 Forest area as a proportion of total land area

15.2.1 Progress towards sustainable forest management

15.3.1 Proportion of land that is degraded over total land area

Current Value

Forest area represented 9.2% of Côte d'Ivoire's total land area in 2023 (17).

The average annual rate of deforestation since 1986 is 2.8% (18).

11.84% of the total land area was degraded in 2019 (61).

Target Value

The government's objective is to add 6 million hectares of forest cover by 2030, or 27% in total (19).

Increasing forest cover from 3 million hectares to 9 in ten years requires forest growth of 12% annually (19).

Côte d'Ivoire has made commitments to the African Forest Landscape Restoration Initiative to restore 5 million hectares of deforested landscapes by 2030. Its objective for protected areas was 2.25 million hectares in 2023 (14, 24).

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth

8.5.1 Average hourly earnings of employees, by sex, age, occupation and persons with disabilities

Current Value

In 2019, men's monthly revenues averaged 128,016 FCFA (USD 200) and women 78,541 FCFA (USD 129) (14).

Target Value

The government targets equal pay between men and women by 2030 (28).

Secondary SDGs addressed

No Poverty (SDG 1)
1 - No Poverty
Zero Hunger (SDG 2)
2 - Zero Hunger
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Farmers from southern regions benefit from higher revenues due to an increase in cocoa production and efficiency.

Gender inequality and/or marginalization

Women will see their revenues increase comparatively more from an expansion of sustainable and fair trade practices, narrowing the gender pay gap.

Planet

Nature and animals benefit from the protection of their habitats and potentially reforestation. As Côte d'Ivoire has lost 90% of its cover forest, curbing deforestation and extending the forest cover will have drastic environmental effects.

Corporates

Local cocoa cooperatives and firms as well as local cocoa processing units would benefit from an increase in production of sustainable products.

Public sector

The government benefits from increased sustainable cocoa production, in line with its yield and reforestation objectives.

Indirectly impacted stakeholders

People

Limiting deforestation and CO2 emissions benefits coastal populations, which are particularly vulnerable to global warming, also leading to improved public.

Gender inequality and/or marginalization

Rural populations will benefit from increased economic activity and increased revenue-sharing with transformers and distributors.

Planet

Reduced emissions, waste, and deforestation will have beneficial impacts on biodiversity through the preservation of natural habitats.

Corporates

Local firms operating in the traceability, and logistics sector benefit from additional economic opportunities.

Public sector

The government benefits from lower expenses associated with climate change. A reduction in deforestation and the adoption of sustainable practices would enhance the resilience of local ecosystems and provide Côte d'Ivoire with better protection against climate events.

Outcome Risks

If monitoring and enforcement of sustainable farming practices are insufficient, farmers may continue unsustainable practices (e.g., illegal deforestation) while still benefiting from certification programs, leading to a reputational risk for the investor and reduced credibility in sustainability claims.

Impact Risks

If there is insufficient oversight on farming practices and the respect of labor laws, the sustainability of production might be lower than expected, and risks being akin to greenwashing.

If the margins along the cocoa value chains accrue primarily to the retailers, the benefits from sustainable production methods may not improve the livelihoods of local farmers. Previous surges in cocoa prices have been associated with a net increase of profits from foreign groups, but a stagnation or decline in farmers' revenues (32, 49).

If sustainable production is implemented alongside conventional agriculture, rather than replacing it, the effects on reducing deforestation and enhancing incomes are likely to be minimal.

Gender inequality and/or marginalization risk: If income redistribution mechanisms between buyers, managers and farm workers are poorly regulated either legally or contractually, poor women and workers may benefit little or not at all from the sustainability of production.

Impact Classification

B—Benefit Stakeholders

What

Increasing sustainable cocoa production avoids deforestation while ensuring higher incomes for producers, particularly women.

Who

Farmers benefit from equitable practices, enjoying higher incomes, fixed prices, and less stringer output targets. The planet benefits from reduced deforestation.

Risk

Without strict oversight and fair distribution of value in the cocoa supply chain, sustainable practices risk being superficial ("greenwashing"), with limited impact on farmers' incomes, gender equity, or environmental goals.

Contribution

Sustainable cocoa production has forward linkages with agro-industry, forestry, and electricity-generation from biowaste. Due to the magnitude of intensive cocoa production's impact on deforestation, sustainable cocoa production has greatest potential.

How Much

Sustainable cocoa production contributes to the government's objective of restore forest cover to at least 20% of the total by 2030, with projects such as PROMIRE converting 1394 hectares of cocoa production into agroforestry systems (62, 67).

Impact Thesis

Protect forests, reduce pesticide use, and boost farmer incomes and working conditions, enhancing environmental health and economic resilience for communities.

Enabling Environment

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Policy Environment

The National Agricultural Investment Program II (Programme National d'Investissement Agricole or PNIA II) seeks to elevate agriculture as a key economic driver in Côte d'Ivoire with 9% of its GDP, targeting an overall growth in the primary sector of 9% a year. It also aims to enhance productivity, secure food supply, and boost farmer earnings, emphasizing sustainable resource use and climate resilience (8).

Côte d'Ivoire's Nationally Determined Contributions (NDCs) promote deforestation-free cocoa farming, mentioning capacity-building efforts, benefit-sharing plans, and initiatives to reconcile cocoa cultivation with forest preservation (17).

The National Development Plan (2021-2025) aims to increase cocoa production and processing, promote sustainability and stabilize producers' incomes (12, 17).

Financial Environment

Financial incentives: Côte d'Ivoire set up a support fund for investment in the cocoa processing sector, with a 10 billion FCFA budget (USD 16.5 million). On April 22, 2020, the government announced a four-year subsidy of 35 CFA francs (USD 0.06) per kilogram to support national cocoa exporters' competitiveness (39).

Fiscal incentives: A reduction in the differentiated exported tax, a tax imposed on cocoa exporters, was announced in 2020. The Investment code provides other fiscal benefits to boost productivity (31).

Other incentives: The European Union offers financial support to enhance the sustainability of cocoa production in Côte d'Ivoire. It set up a €25 million (USD 27 million) fund aimed at ensuring a decent living income for farmers, halting deforestation, and eliminating child labor in the cocoa sector (30).

Other incentives: Launched in 2021, the PROMIRE project in Côte d'Ivoire aims to promote deforestation-free cocoa production, with a USD 10 million budget funded by the Green Climate Fund. Implemented by FAO over five years, it targets 7,000 hectares and involves 32 villages (43).

Regulatory Environment

The 2019 headquarters agreement of the Côte d'Ivoire-Ghana Cocoa Initiative (ICCIG) established a price-fixing mechanism for cocoa. It creates a "Living income differential" of 400 USD per tonne in addition to market price to address income disparities for cocoa farmers, which is currently in place (21, 36, 42).

Decree No. 2012-1008 outlines the rules regarding the commercialization of coffee and cocoa. It reformed the "Conseil Café-Cacao", the main regulatory body for cocoa production in the country. The entity is in charge of regulating the industry, stabilizing the prices, and sets for two years the price received by cocoa farmers, to ensure that they receive a fair revenue (37, 41).

In 2024, the Conseil du Café-Cacao announced its intention to reduce the number of certified cocoa buyers from over a thousands to 30 in order to combat fraud (38).

Decree No. 2012-1011 sets regulations for cocoa exports from Côte d'Ivoire, defining quality standards, acceptable defect levels, and classifying cocoa into grades. It also mandates quality control and phytosanitary treatment before export (24).

The ARS 1000 standard is an African sustainability and traceability framework for cocoa production, jointly developed by Côte d’Ivoire and Ghana and adopted through the African Organization for Standardization (ARSO). It aims to ensure that cocoa production is sustainable, free from deforestation, and meets international market demands (48).

Marketplace Participants

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Private Sector

Cargill, Nestlé, Mondelez International, Mars, Fairtrade, Ivory Cocoa Product, CITRAC, Confédération Générale des Entreprises de Côte d’Ivoire (CGECI), Socak Katana, ABC Fund, Oikocredit, Ecookim, Ethiquable, Société coopérative équitable du Bandama, Société Coopérative des Producteurs de Cacao Biologique de la Mé, Alter Eco (63, 64, 65, 66).

Government

Ministry of Agriculture and sustainable development, Ministry of commerce and industry, Agence du Foncier Rural (AFOR), Conseil Café-Cacao, Centre de Promotion des Investissements en Côte d’Ivoire (CEPICI).

Multilaterals

African Development Bank (AfDB), Food and Agriculture Organization (FAO), United Nations Development Programme (UNDP), African Development Fund, Africa Growth Together Fund, European Union, African Organization for Standardization (ARSO).

Non-Profit

The Cocoa and Forests Initiative (CFI), The Sustainable Trade Initiative, Prince of Wales International Sustainability Unit, Groupement Professionnel des Exportateurs de Café Cacao (GEPEX), Agronomes et vétérinaires sans frontières, Gesellschaft für Internationale Zusammenarbeit (GiZ), Business France.

Public-Private Partnership

The Cocoa & Forests Initiative (CFI) operates as a public-private partnership (PPP) platform, uniting the governments of Côte d'Ivoire and Ghana, and chocolate companies (including Mars, Mondelez, and Cargill), and other stakeholders to end deforestation and restore forest areas in Ghana and Côte d'Ivoire (57).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
semi-urban

Côte d'Ivoire: Bas-Sassandra

Bas-Sassandra is the district with the highest proportion of cocoa fields, representing 30% of the district's total area. The region is particularly affected by deforestation, with cocoa encroachment into protected areas such as the Niegre national forest (21, 55).
rural

Côte d'Ivoire: Montagnes

4 to 6% of the total area of the Montagnes district is dedicated to cocoa production, it is one of the country's leading districts for cocoa. The district is also affected by deforestation linked to cocoa production, with encroachment of farms in the Mount Peko national park (21, 55).
semi-urban

Côte d'Ivoire: Sassandra-Marahoué

5 to 12% of the district's area is occupied by cocoa plantations, making it the country's second district in production surface and output. The Sassandra forest, a national park located in the district, is threatened by cocoa producers as satellite imaging revealed growing encroachment (21, 55).
semi-urban

Côte d'Ivoire: Comoé

Since 2022, the PROMIRE project coordinated by the United Nations has been helping Côte d'Ivoire combat deforestation by reducing the impact of cocoa production on forests through the development of REDD+ tools and initiatives, including in the regions of La Mé and Sud-Comoé (56).
semi-urban

Côte d'Ivoire: Lagunes

Since 2022, the PROMIRE project coordinated by the United Nations has been helping Côte d'Ivoire combat deforestation by reducing the impact of cocoa production on forests through the development of REDD+ tools and initiatives, including in the region Agneby Tiassa (56).

References

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