The Sweet Spot for Cocoa

The Western love affair with chocolate has fuelled the growth of Ghana’s cocoa industry, with the West African country the second-largest exporter of cocoa beans in the world after neighbouring Côte d’Ivoire.

But with Ghana’s cocoa production hitting a record low in recent years, the cocoa industry has been feeling the pressure. Soon after she became Managing Director of Federated Commodities (FEDCO) in 2017, Hajia Maria Adamu-Zibo understood the need to branch out from the company’s traditional mainstay of cocoa.

Founded by her father, Alhaji Adam Iddrisu, parent company Global Haulage has a strong presence in the cocoa industry with its four licensed buying companies (LBCs): FEDCO, Cocoa Merchants, Royal Commodities and Transroyal. Together, they account for 25 percent of the cocoa market share in Ghana.

“I had a very good understanding of what the challenges were.”

Her extensive experience in the family business since she left school has served her well. Having worked at one of the group’s other cocoa companies, Cocoa Merchants, and then at its financial institution Royal Bank, her step up to the Managing Director role at FEDCO after her father’s passing in 2016 felt totally natural, she explains.

“I was groomed well enough when I was at Cocoa Merchants, virtually doing most of the work before I left, playing a significant role supporting the Managing Director there. So I had a very good understanding of what the challenges were,” she tells The CEO Magazine.

Her banking experience was also a boon, with LBCs such as FEDCO working closely with banks like Zenith Bank to support their financial needs.

Shifting Focus

As with any change of leadership, what followed was a state of flux as the company forged a new direction under its new head. “It’s a family business but after the demise of my dad, there was some restructuring with some changes in shareholdership,” Adamu-Zibo explains. “The companies are more independent now.”

She welcomed this new phase of change, as she was full of ideas for ways to drive the business forward. Among them, was a plan to diversify away from FEDCO’s traditional staple of cocoa – a refocusing that is already well underway.

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”FEDCO has demonstrated ingenuity, credibility and diligence in Ghana’s cocoa industry. As a strategic partner, Zenith Bank Ghana takes pleasure in its collaboration with FEDCO and is committed to providing the right mix of banking solutions for its dynamic needs.” – Henry Chinedu Onwuzurigbo, Managing Director and CEO, Zenith Bank Ghana

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“When I came in, I decided that we could not stick to just one commodity, we needed to diversify,” she explains. “So we’ve actually diversified into other commodities like cashews.”

Rice is another area it is exploring, with the rice milling equipment already purchased and a dedicated factory in the process of completion.

That doesn’t mean that cocoa has fallen by the wayside, however. Where the company was once involved only in cocoa buying, now it is expanding into the processing of cocoa beans. “We are going to have our own processing plant, which is a huge project that we are working on currently,” she says.

Sustainable Success

Delivering cocoa that meets the changing needs of its customers is also crucial to remain relevant. With cocoa farming long scrutinized for its impact on the environment and its production methods, Adamu-Zibo is particularly proud of FEDCO’s sustainability record.

The company has invested US$12 million on sustainability initiatives, with an in-house sustainability department focused on building farmers’ capacity by using tools that drive productivity in a responsible manner, and working with institutions such as the World Cocoa Foundation, the Rainforest Alliance and World Agroforestry.

Its goal is to train 26,000 farmers on agro-economic practices in order to produce 28,000 metric tons of certified cocoa beans across 17 districts each year – a target it hopes to reach this year.

It is also establishing 550 registered community Village Savings and Loans Associations in 42 operational areas as part of a collaboration with the Solidaridad Network, and working to create wealth for at least 10,000 farmers in five key areas through ‘alternative livelihood programs’.

“The farmers are the producers – they are the core of the business that we do.”

Through such projects, Adamu-Zibo has transformed the company. When she took the reins, FEDCO was producing around 2,000 metric tons of ‘special’ cocoa, less than five percent of its total tally of 50,000 metric tons. “Today we are making about 60,000 metric tons in total, and about half of it is going as ‘special’, which is about 30,000 metric tons,” she says.

“That tells you that within six years we’ve really been able to create that room, that confidence, that trust, be with our clients to get more partners on board and then also to be able to do more business with them.”

In terms of the sustainable cocoa market share, FEDCO now commands 10 percent where just six years ago, it sat at 5.7 percent.

These are major strides. But the achievement that Adamu-Zibo is most proud of is the impact FEDCO has on the farmers themselves, made possible through the strength of the company’s partnerships with key chocolate makers. “The farmers are the producers – they are the core of the business that we do,” she says.

“We’re bringing a difference in the community, not just buying and then leaving them, but being with them there, giving them projects that are going to help them with increasing their income – sustainable income.”