With COVID-19 continuing to disrupt supply chains, industries, and markets across the globe, we’re checking in with GAFSP Private Sector Window clients to see how the health and economic crisis is affecting their businesses and the smallholders in their supply chains. In this installment of our “COVID Conversations” series, we talk with Lionel Soulard, Cargill’s managing director for West Africa. IFC and GAFSP’s support to Cargill is helping the company professionalize and digitize Côte d'Ivoire’s cocoa sector. Soulard spoke with us recently about plummeting chocolate sales at airports, the challenges of online training with limited internet, and how the pandemic is accelerating digitization—and with it, opportunity.
Question: How has COVID-19 impacted production, supply, and consumer demand for cocoa?
Like any other sector, we’ve been impacted significantly by the pandemic, particularly around changing customer demand and distribution channels. Historically, demand for cocoa has risen steadily together with global GDP by an average rate of 2-3 percent annually. That changed in 2020 with the COVID-induced crisis, which had a significant impact on cocoa consumption. The restrictions on mobility meant that consumers weren’t going to restaurants and in most countries, they still haven’t returned. Chocolate is a treat and so there’s a direct correlation between income and revenue on one hand and the consumption of chocolate on the other. A lot of chocolate is sold at airports and US gas stations and as we know, travel has slowed dramatically under lockdown. The situation isn’t black and white, and there are regional differences, with Asia recovering more quickly than the U.S.
Question: How has COVID-19 impacted Cargill’s cocoa operations in Africa? And how is Cargill managing these challenges?
We approach our work in a responsible, safe and sustainable way and have prioritized the health and safety of employees and people who work with us, including farmers and communities. We’ve mandated social distancing, temperature checks, and transportation so that our employees can get to work safely. It’s been a collective effort involving both the government and the private sector. By taking drastic action and isolating Abidjan and other cities, the government of Côte d'Ivoire was able to avoid spreading the virus in rural areas. It protected its people, and in doing so, protected its economy. As a result, production has been unaffected, and we are even seeing a big crop this year. The combination of normal production and a drop in demand has created a surplus.
Question: How is COVID-19 impacting the smallholders in your supply chain?
At the start of lockdown, we worked with local communities to prioritize our water, hygiene and sanitation (WASH) programs. We distributed soap and used digital tools to keep farmers informed about the pandemic in four different local languages. To support community resilience, and in collaboration with our customers, we also supported the construction of 37 water points in 35 communities, providing improved access to water for more than 46,000 people. The communities are linked to 15 cooperatives that work closely with Cargill. Our objective throughout has been about putting people first and following our values. We made sure that whoever works for us directly and indirectly was kept safe and healthy.
Question: How has COVID-19 impacted the work you are doing with IFC on the Coop Academy?
The Coop Academy is helping professionalize more than 130 partner cooperatives across Côte d'Ivoire and it remains a very strategic program for Cargill. We typically offer in-person training for the top 4-5 managers in every cooperative, usually in cohorts of 60-70 people. We were scheduled to start a new cycle of the academy just as the pandemic started and with IFC’s help, we were able to quickly move the program online. Agility and flexibility have been key to navigate the new reality and IFC has been a perfect partner. It has been truly remarkable to see: In rural areas, internet access can be challenging and many of the managers are not used to the digital tools, but they’ve adapted very quickly. The Coop Academy also has a gender component and we are seeing that the pandemic is accelerating the need for women’s empowerment and inclusivity. We’re promoting a lot of the COVID-19 messaging around health and sanitization through women’s groups. We’re also seeing a lot of women find success through the Village Saving and Loan Association (VSLA), which Cargill supports. Women are starting small businesses and so their status within their families and communities is rising.
Question: Cargill and IFC have been working together to digitize the cocoa sector in Côte d'Ivoire and elsewhere. How has that been impacted by the pandemic?
The COVID-19 crisis is accelerating the use of digital tools. Our vision on digitization is to be able to implement digital processes from bean to bar so that the farmer can benefit from a more transparent, more secure value chain. In Ghana, we are already 100 percent digital and in Côte d'Ivoire, we’ve partnered with mobile network operators and banks, with support from IFC, with the goal of becoming 100 percent digital in the next 4-5 years. We see it as a huge opportunity in Africa, as well as a big part of Cargill’s strategy. The digital tools will provide farmers with transparency, make it easier for them to get loans and also help them save the money they earn. As soon as our supply chain is digitized and farmers have a telephone that is linked to a bank account, the technology can be used to also give advice on agriculture practices, maintenance, and weather. By digitalizing the sector—and mobile banking is only part of it— we can open up a huge range of opportunities. These were trends we saw before COVID-19 and the pandemic is accelerating these changes. We face technical challenges, but we’ve developed a management system that can work without WIFI or 4G and there’s a synchronization tool for when people get back to an office with internet connectivity. Coverage is increasing every month and we’re empowering our teams to adapt to a new way of doing things.