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Chocolate is a treat but leaves a sour taste in cocoa farmers’ mouths

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For Larbi Siaw, a cocoa farmer in Ghana’s western north region, this is one of the busiest times of year. Like millions of smallholders across west Africa, he and his family are chopping down ripe yellow pods, scooping out white pulpy beans and leaving them to dry on reed mats in the heat. 

Ghana and neighbouring Ivory Coast produce 60 per cent of the world crop and at the December height of the main harvest, visitors to their rural heartlands are greeted by the smell of drying cocoa, seductive and familiar.

But for Mr Siaw, who has grown cocoa for more than half of his 60 years and whose father farmed the same crop, this year leaves a sour taste. For a start, the rains didn’t come as expected in July, so output may be low. Even though the government has raised the farmgate price nearly 30 per cent to $1,800 a tonne, he complains that it is still too little. “They don’t give us a good price,” he tells me. 

The 2020 Cocoa Barometer report on the sector’s sustainability agrees with him, estimating that farmers need at least $3,100 per tonne to make a decent living. Governments in Ghana and Ivory Coast have long argued that farmers should earn more for their labour. By some estimates, they make just 6 per cent of the sale price of a bar of the confectionery.

With this in mind, Accra and Abidjan recently added a $400-a-tonne “living income differential” to the price of cocoa harvested from this crop year. When Hershey bought cocoa on the futures market instead — which analysts said allowed it to avoid the LID — both countries shut down the company’s sustainability programmes. In the end Hershey agreed to pay the surcharge. 

But the problem of how to agree a fair price for farmers’ output rumbles on. When I was a reporter in west Africa nearly 15 years ago, I visited cocoa farms, warehouses and buyers regularly so I could file stories for Reuters’ commodity news service. Working in the world’s second-largest exporter of beans (after Ivory Coast), I grew to appreciate the popular saying “Ghana is Cocoa and Cocoa is Ghana”. It was commonly said that about a quarter of the country’s population relied on cash from cocoa.

I visited small villages, which often lacked electricity, water and decent schools, and spoke to the sharecroppers, migrants and families upon whose labour the world’s chocolate industry rests. It is back-breaking and hard, carried out with nothing more sophisticated than a machete.

Officials were suspicious and anxious about my reports, which could move the price. Such was the sensitivity surrounding a crop that brought in much-needed foreign exchange that one request for an interview was met with the reply: “Why is it in the interests of mother Ghana for us to speak to you?” 

In truth, there are a lot of reasons farmers’ incomes are low. The government sets the farmgate price and can tax it heavily. It strives to give smallholders at least 70 per cent of the price at export but at times has paid just a fraction of that.

While Mr Siaw supplements his income selling palm oil, many rely on a few bags of cocoa for their annual income. Farms are small and scattered, yields are low, productivity poor, disease can wipe out the crop. Farmers are often poorly educated and struggle with modern farming techniques. Increasing cocoa prices also encourages farmers to grow more, driving prices down in a vicious circle that it is hard to escape. And with most chocolate made close to the end market of western consumers, little value is added in west Africa.

The most pertinent question of all may be whether farmers will want to stick with the crop in the long term. Most want a better future for their children and many hope this will not involve the cocoa farm. “I can’t advise my children to do it,” says Mr Siaw, as he complains about the price. He is not alone.

Accra, the Ghanaian capital is now jazzed up by oil money, and full of energy. It is an attractive prospect for a young person in the bush. The cocoa price is an issue not just for Mr Siaw but also the global confectionery industry that relies on the output of people like him.

If farmers don’t think it’s worth their while to labour during the cocoa harvest, then the whole industry crumbles. 

orla.ryan@ft.com



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Ecuador’s exporters caught between US and China after debt deal

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Exporters in Ecuador are worried that their all-important trade with China will suffer as a result of a controversial agreement the US says is aimed at shutting China out of the South American country’s 5G telecoms network.

The agreement, signed by the US International Development Finance Corporation (DFC) and the Ecuadorean government just days before Donald Trump left office in January, envisages the US buying oil and infrastructure assets in Ecuador on the understanding Quito uses the proceeds to pay off its debt to China.

It also obliges Ecuador to sign up to what the Trump administration called the “Clean Network” — a state department initiative designed to ensure that nations exclude Chinese telecoms services and equipment providers as they build out their high-speed 5G mobile networks.

Adam Boehler, the recently departed chief executive of DFC, has described the deal as a “novel model” to eject China from the Latin American nation.

But it has caused unease in Ecuador, which has become increasingly reliant on exports to China.

“The announcement has generated a lot of inquiries and a lot of doubts,” said Gustavo Cáceres, head of the Ecuadorean-China Chamber of Commerce (CCECH). “We hope our authorities handle this in the best way possible so as not to give the impression that we’re turning our backs on China.”

One of the smallest countries in South America, Ecuador has traditionally exported primarily to the US and Europe, but China is fast catching up. Its share of Ecuador’s exports jumped from 3.9 per cent in 2015 to 15.8 per cent. In the same period, the US’s share fell from 39.4 per cent to 23.7 per cent.

The Chinese buy oil, shrimp, bananas, cut flowers, cacao and timber from Ecuador. Last year, despite the coronavirus pandemic, Ecuador’s exports to China grew more than 10 per cent and, for the first time, the country boasted a trade surplus with Beijing.

The shrimp industry has become particularly important. Since 2016, Ecuador’s shrimp exports worldwide have jumped 86 per cent. The nation of just 17.4m people is now the largest exporter of shrimp in the world, having overtaken India last year, when it exported 676,000 metric tonnes of the crustaceans in trade worth $3.6bn. After oil, shrimp were the country’s most lucrative export commodity.

Over half of that went to China, which, with its expanding middle class, is acquiring a taste for seafood once seen as a luxury.

“China will remain our main market,” forecast José Antonio Camposano, president of Ecuador’s National Chamber of Aquaculture (CNA), which oversees the industry. “We need a smart approach to China. A market of 1.4bn people with the acquisitive power that the Chinese have? I’m a businessman, how can I say no to that?”

The CNA was sufficiently worried by Ecuador’s agreement with the US that it sent a three-page letter to Ecuador’s president Lenin Moreno reminding him of China’s buying power.

While the letter did not mention the DFC deal directly, it urged Moreno — who in his four years in power has shifted Ecuador’s axis away from Beijing and towards Washington, reviving relations with the IMF and renegotiating the country’s debt to bondholders — “to reinforce with senior Chinese leaders the point that the excellent relationship between Ecuador and China remains intact”.

Freshly caught shrimp being packed into containers in Ecuador in 2011
Ecuador’s shrimp industry has fed a growing appetite among China’s expanding middle class © Bloomberg

China’s ambassador to Ecuador, Chen Guoyou, said he was unconcerned by the DFC deal and described media reports that it excluded Chinese companies from Ecuador’s telecoms network as “over-interpretation and gratuitous assumption”.

“China respects the sovereign and independent decision of the Ecuadorean government to develop pragmatic, balanced and diverse partnerships with other countries,” he told the Financial Times in an email.

Responding to his comments, one of the former Trump administration officials who negotiated the deal said it had been made explicitly clear in the text that the agreement was contingent on the country participating in the “Clean Network” — which would prevent it from including Huawei or any other Chinese company in its telecoms network.

The future of the deal, and indeed Ecuador’s future relations with China and the US, will depend in part on the outcome of the country’s presidential election on April 11. It pits leftwing economist Andrés Arauz against Guillermo Lasso, a conservative former banker. 

Arauz has the backing of Rafael Correa who took Ecuador out of the US’s orbit and pushed it towards China while serving as president from 2007 until 2017. He broke off relations with Washington’s financial institutions and signed a series of loans-for-oil deals with the Chinese. If Arauz wins the election he is likely to seek support from Beijing and might rip up the DFC agreement, particularly now Trump is no longer in office.

In contrast, Lasso told the FT previously the deal was “a pleasant surprise” and “good news” for Ecuador.

“It’s clear that the US is our principal ally and in my government I would look for an even closer alliance with the US,” he said.



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Brazil virus variant found to evade natural immunity

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The P.1 Covid-19 variant that originated in Brazil and has spread to more than 25 countries is around twice as transmissible as some other strains and is more likely to evade the natural immunity people usually develop from prior infection, according to a new international study.

The research, conducted by a UK-Brazilian team of researchers from institutions including Oxford university, Imperial College London, the University of São Paulo, found that the P.1 variant was between 1.4 and 2.2 times more transmissible than other variants circulating in Brazil. 

It was also “able to evade 25-61 per cent of protective immunity elicited by previous infection” with any earlier variant, the researchers found, in a sign that current vaccines could also be less effective against it.

International concern about the P.1 variant has escalated recently, with more than 25 countries detecting the variant, including Belgium, Sweden and the UK, which has identified six cases.

The scientists are expected to release a paper describing the research on Tuesday. Dr Nuno Faria, the lead author, did not immediately respond to a request for comment. The study has not yet been peer reviewed.

The researchers have dated the emergence of the P.1 variant to November 6, 2020, around one month before cases began to surge for a second time in the Brazilian city of Manaus. They found that the proportion of cases classified as P.1 in Manaus increased from zero to 87 per cent in the space of 7 weeks. 

The paper concluded: “Our results further show that natural immunity waning alone is unlikely to explain the observed dynamics in Manaus, with support for P.1 possessing altered epidemiological characteristics.”

“Studies to evaluate real-world vaccine efficacy in response to P.1 are urgently needed,” it added.

The researchers also found that infections were 10 to 80 per cent more likely to result in death in Manaus after the emergence of P.1. However, the authors cautioned that it was not possible to determine whether this meant the variant was more lethal or whether it was a result of increased strain on the city’s healthcare system, or a combination of both. 

The P.1 variant has over 17 mutations, which alter its genetic sequence from the virus originally identified in Wuhan, including 3 key changes to the spike protein that it uses to enter human cells.

Researchers in Brazil have been using genetic sequencing technology developed by Oxford Nanopore in the UK to identify and track the variant. The technology was first used in Brazil during the Zika outbreak in 2015.

Dr Leila Luheshi, director of applied and clinical markets at Oxford Nanopore, told the Financial Times that while the B.1.1.7 variant in the UK has similar properties of high transmissibility to P.1 — it is thought to be around 1.5 times as transmissible as variants that preceded it — there was no evidence to date that it evaded past natural immunity in the same way. Studies so far have also shown that current vaccines retain their efficacy against B.1.1.7.

Luheshi said that the concern with P.1 is that “because it has these mutations around the spike . . . the hypothesis is that the vaccine will be less effective.” But she added that there is not yet definitive evidence to support this theory. 



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Coronavirus latest: Production glitches to delay Johnson & Johnson vaccine distribution

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Coronavirus latest: Production glitches to delay Johnson & Johnson vaccine distribution



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