Supply Chain of Shea Butter

The Supply Chain of Shea Butter: An Industry Overview from the Perspective of the Sheanut Picker

Bill Reinecke

Monterey Institute of International Studies Professor Bruce Paton 26 August 2010 Version 7

Acknowledgments I would like to thank the following individuals for their assistance during the research and writing of this report: Dr. Bruce Paton, Vanessa Adams, Julianna White, Joe Lamport, Ryan Yingling, Kafui Djonou, Dr. Peter Lovett, Senyo Kpelly, Sarah Brabeck, Walisu Alhassan, The McNally Family, Mike Simpson, the women of Kpawmo village, the Chief of Kalpohin village, the Kalpohin Shea Butter Extractors Association, Dr. Joshua Yidana, Mritunjay Das, Peter Stedman, Obed Asante, Ata Frimpong, Dr. Salifu, Sandra Rulliere, Colin Duncan, Andrea Cole, Robert Reinecke, Morgan Hayes, and Diane Tworog.

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Table of Contents EXECUTIVE SUMMARY..........................................................................................................................6 Graph 1: Pricing (See Appendix 1, Price Comparison for additional details):........................... 7 INTRODUCTION ......................................................................................................................................8 A DAY IN THE LIFE OF A SHEANUT PICKER ..........................................................................................................8 A BRIEF BACKGROUND ........................................................................................................................9 THE SHEA TREE .........................................................................................................................................................9 THE MODERN MARKET AND MARKET FACTORS .................................................................................................9 VEGETABLE FATS.................................................................................................................................................... 10 COSMETICS ............................................................................................................................................................... 10 EXPERT SUPPORT ................................................................................................................................................... 10 INSTITUTIONAL SUPPORT ..................................................................................................................................... 11 GHANAIAN FEDERAL GOVERNMENT SUPPORT ................................................................................................. 11 MARKET FACTOR SUMMARY ................................................................................................................................ 11 THE SUPPLY CHAIN: A SNAPSHOT................................................................................................. 12 Figure 1: Simple Supply Chain......................................................................................................................12 Table 1: Supply Chain Summary..................................................................................................................13 Figure 2: Supply Chain Enhanced ...............................................................................................................13 AARHUSKARLSHAMN OR AAK (LARGE SHEANUT EXPORTER) ..................................................................... 13 LODERS CROKLAAN, AN IOI CORPORATION (LARGE SHEANUT EXPORTER) .............................................. 14 OLAM INTERNATIONAL (LARGE SHEANUT PROCESSOR)................................................................................ 14 GHANA NUTS LIMITED (LARGE SHEA BUTTER PROCESSOR) ........................................................................ 14 SEKAF GHANA LTD AND SAVANNAH FRUITS COMPANY (MEDIUM SHEA BUTTER PROCESSORS).......... 15 INDIVIDUALS AND ORGANIZATIONS (TRADITIONAL SHEA BUTTER PROCESSORS) ................................... 16 SHEANUT PICKERS.................................................................................................................................................. 16 BEYOND THE SUPPLY CHAIN: A STAKEHOLDER OVERVIEW................................................ 18 CURRENT GOVERNMENT ADMINISTRATION...................................................................................................... 18 THE GHANA TRADE AND LIVELIHOODS COALITION ........................................................................................ 18 THE GHANA COCOA BOARD (A.K.A. COCOBOD)................................................................................................ 19 PRODUCE BUYING COMPANY LTD (PBC) .......................................................................................................... 19 PBC-­‐SHEA LTD ....................................................................................................................................................... 19 SAVANNAH ACCELERATED DEVELOPMENT AUTHORITY (SADA) ................................................................ 20 COCO COFFEE AND SHEANUT FARMERS ASSOCIATION (CCSNFA, A.K.A. COCOSHE) ............................... 20 NATIONAL ASSOCIATION OF SHEANUT FARMERS, PROCESSORS AND BUYERS OF GHANA (NASFPB) . 21 RESEARCH INSTITUTIONS ..................................................................................................................................... 21 ADDRESSING THE ISSUES ................................................................................................................. 22 SHEA TREE ENHANCEMENT: DOMESTICATION AND REDUCED MATURATION PERIOD ............................ 22 INCLUSION OF TRADITIONAL PROCESSORS........................................................................................................ 23 SHEANUT PICKER PRICING ................................................................................................................................... 24 SCENARIOS ............................................................................................................................................ 25 BUSINESS AS USUAL ............................................................................................................................................... 25 GOVERNMENT REGULATION ................................................................................................................................. 25 PRIVATE SECTOR REGULATION ........................................................................................................................... 26

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SHEANUT PICKERS ORGANIZATION .................................................................................................................... 26 SHEA TREE ENHANCEMENT ................................................................................................................................. 27 Table 2: Scenarios Summary Matrix..........................................................................................................28 CONCLUSION ......................................................................................................................................... 29 RECOMMENDATIONS .............................................................................................................................................. 30 THE LAST WORD .................................................................................................................................................... 30 APPENDIX 1........................................................................................................................................... 31 PRICE COMPARISON ................................................................................................................................................ 31 APPENDIX 2........................................................................................................................................... 33 FIGURE 1: THE SHEA TREE................................................................................................................................... 33 FIGURE 2: THE SHEA BELT OF AFRICA............................................................................................................... 33 FIGURE 3: MAP OF GHANA ................................................................................................................................... 34 FIGURE 4: MAP OF GHANA’S 10 REGIONS ......................................................................................................... 34 FIGURE 5A: SHEA FRUIT RIPENING ON TREE ..................................................................................................... 35 FIGURE 5B: CHILDREN SELLING RIPENED SHEA FRUIT ON THE ROADSIDE .................................................. 35 FIGURE 6: SHEANUTS............................................................................................................................................. 36 FIGURE 7: SHEA BUTTER ...................................................................................................................................... 36 APPENDIX 3........................................................................................................................................... 37 SUPPLY CHAIN EXPANDED .................................................................................................................................... 37 APPENDIX 4........................................................................................................................................... 38 FIGURE 1: GATHERING SHEANUTS ...................................................................................................................... 38 FIGURE 2: JUTE SACK OF SHEANUTS ................................................................................................................... 38 FIGURE 3: MANUAL SHEANUT GRINDING PROCESS......................................................................................... 39 FIGURE 4: CARRYING SHEANUTS ......................................................................................................................... 39 FIGURE 5: IMAGE OF NORTHERN GHANA .......................................................................................................... 40 APPENDIX 5........................................................................................................................................... 41 PRESIDENT JOHN ATTA MILLS AND VICE PRESIDENT JOHN MAHAMA ........................................................ 41 APPENDIX 6 ……………………………………………………………………………………………………………..42

BIBLIOGRAPHY

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Executive Summary On the surface, the shea butter industry appears healthy. The market for shea butter is growing and the future looks bright. However, this does not mean that all links in the supply chain are prospering. In fact, those who make up the first link in the supply chain, the sheanut pickers, work hard for meager rewards. If the price paid to sheanut pickers for their sheanuts does not increase, pickers may exercise the only power they have over the industry by chopping down the shea tree to use as firewood. This would not be done out of spite, but for survival. Ramifications of this action include disrupting the industry, long-term loss of a local resource and the spread of desertification.

Graph 1 on the following page illustrates the price difference between a 200-lbs jute sack of shea nuts (which yields approximately 67 lbs of shea butter), 67 lbs of raw village shea butter, and the same amount of shea butter sold in the US, as well as two mainstream cosmetic products that tout shea butter as the main ingredient - L’Occitane’s Ultra Rich Body Cream and The Body Shop’s Shea Lip Butter.

The Ghanaian government has begun to act on promises to support the shea industry as a means of addressing poverty in the north of the country where the shea tree thrives.

However, not everyone is convinced that government involvement is the answer. In the meantime, sheanut pickers continue to receive extremely low prices for nuts picked and processed in relation to the amount of labor required to perform those tasks.

This paper presents an overview of today’s shea butter industry in Ghana, West Africa. It explores the shea butter supply chain with a focus on the sheanut pickers - generally rural African women who form the least powerful and most vulnerable link in the chain.

Furthermore, this paper is intended to serve as a starting point for discussions on the industry’s potential for both growth and poverty alleviation in West Africa.

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Graph 1: Shea Butter Price Comparison (See Appendix 1 for more details):

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Introduction A Day in the Life of a Sheanut Picker It’s three in the morning and Rashida lights a candle to illuminate her one-room mud hut.

She is preparing her sixth trek in a row in search of ripened shea fruit, which bears the large sheanut. Rashida almost has enough sheanuts to fill her burlap sack that will weigh nearly 200 pounds. When it is full, she will take it to sell in the local market. She is anxious to go as soon as possible since the family’s food reserves are nearly gone. This is no surprise - it happens almost every year at this time during the lean season, when food supplies are lowest. The responsibility to feed her family rests heavily on Rashida’s shoulders, as does her four-month-old son, Moussa, who is wrapped securely on her back with a long piece of cloth. Rashida finishes preparing and walks outside to meet the other women who will join her this morning. They are heading far away from their village because they know of a place with ripe shea fruit that has not yet been harvested by neighboring communities - but if they don’t go this morning, another group of women will reap the bounty.

Rashida and companions, with large metal bowls on top of their heads, begin the threemile trek into the bush with caution. They travel together not because they will share their harvest, but because they must keep an eye out for one another in case of accidents.

Last season, one of the women was bitten by a poisonous snake and would have died if she didn’t have the help of her sisters. Fortunately, the night’s full moon minimizes the dangers.

After hours of searching and gathering, the women head back to their village. Despite the 80-pound load of sheanuts resting on her head and a sleeping baby on her back, there is relief in Rashida’s voice as she walks, talks and laughs with her friends. The long journey was successful and now she can start thinking about preparing the nuts for market when she returns. First, she will need to collect firewood and water in order to boil all the nuts she has gathered. After boiling, she will lay them out to dry in the sun.

When they are dry, she will crack the shells off the nuts. Drying the nuts takes about a week or two, barring clouds or seasonal rains. Finally, she will put them into her giant burlap sack and bring them to market. She believes that if the weather holds she can have these nuts sold before her family’s food stores are gone. Even though she won’t get much for her nuts this early in the season because supply is high, she urgently needs the income to support her family.

Rashida thanks God for these nuts that grow during the lean season, but wonders if there is a better way to feed her family, since sheanut prices are so low during this time of year.

If there were, she might chop down the shea trees and use the wood for fuel, because firewood is hard to come by and shea wood burns long and hot. Or if sheanuts prices were higher she would even try to protect the tree from such a fate. For now, however, she must make ends meet by picking and selling sheanuts at whatever price she can get.

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A Brief Background The Shea Tree Vitellaria paradoxa12, common name “shea tree,” (Appendix 2, Figure 1) is a wild tree indigenous to the 3,500 mile-wide semi-arid zone of sub-Saharan Africa. This area, encompassing 20 countries, forms a triangle with Senegal, Ethiopia, and the Democratic Republic of the Congo as its corners (Appendix 2, Figure 2). Within this zone there are approximately 500 million fruiting trees producing 2.5 million metric tons (mt) of sheanuts3 of which approximately 600,000 are harvested today. Ghana has roughly 10 million fruiting shea trees that yield an estimated 200,000 mt4 of sheanuts, about half of which are collected. Of these, close to 65,000 mt are exported, with the remainder consumed domestically5. The shea tree thrives primarily in three northern regions (Appendix 2, Figures 3 and 4), which cover about “two-thirds of the country’s land space and [otherwise] has virtually no natural endowment.”6 The tree can grow to a mature height of approximately 15 to 50 feet, live over 200 years and take up to 30 years to bear quality fruit about the size of golf ball or avocado pit. The fruit is green in color and has a thin, fleshy pulp (Appendix 2, Figures 5a & 5b). The fruit ripens between June and September and drops from the tree. Harvest is primarily the responsibility of women and children, who collect the fruit from their husband’s farms and in community spaces.

Traditionally, the shea tree has been used over the centuries for survival in Africa. The wood makes excellent fuel, the bark is known to have medicinal properties, and the fruit is nutritious. However, economically and culturally, the fat, or shea butter, derived from the fruit’s pit (Appendix 2, Figure 6) is most important. Shea butter (Appendix 2, Figure 7) has been a staple food, moisturizer, and skin-healing agent for Africans for at least 1,000 years; in fact, it has been reported that Cleopatra enjoyed shea butter during her reign in Egypt over 2,000 years ago.7 In 1348, as interest in shea butter spread across the African continent, a Moroccan traveler and scholar named Ibn Battuta penned a written account of the tree. The man credited with the Western world’s discovery was Scottish explorer Mungo Park. Park wrote about shea butter in his 1824 book entitled, “Travels in the Interior Districts of Africa.”

The Modern Market and Market Factors Today, shea butter is an internationally traded commodity. The industry was valued at $100 million in 2008 and is expected to grow to $500 million by 20148 with much of the demand stemming from the U.S. and Europe for affordable vegetable fats and natural cosmetics. Since only one-third of continental nuts and one-half of Ghanaian nuts are collected today, there is room to support this growth. The countries that are in the best position to take advantage of this upward trend are those with established shea export markets and include the western African nations of Mali, Burkina Faso, and Ghana.

Long time resident, shea expert, consultant, and businessman Dr. Peter Lovett sees potential export market growth exceeding 1,000,000 mt per year by 2020.9 9

Vegetable Fats Shea butter’s primary international use is as an additive in chocolate, thanks to a 2003 European Union decision permitting up to 5% shea butter in chocolate.10 Dr. Lovett expects the chocolate industry to grow by 4% per year and the chocolate additive market industry to grow by around 10% per year.11 These additives are called Cocoa Butter Equivalents (CBEs) and Cocoa Butter Improvers (CBIs). As a CBE, shea butter is added to chocolate as a partial substitute for cocoa butter, which is ten times as costly as shea butter, thereby reducing the overall cost of chocolate. As a CBI, shea butter is added to chocolate because its high melting point makes a chocolate product less likely to melt under warmer conditions. The benefits of CBEs and CBIs result in more affordable and durable chocolate products, thus opening up new market opportunities. Shea butter is also used as a food ingredient in other products, such as biscuits and pastries.

Cosmetics Today, the cosmetics market in the United States is a $200 billion industry and shea butter has recently become a popular ingredient in many cosmetic products, including moisturizers and soaps, due to its skin moisturizing and healing properties.12 As interest rises in shea butter as a natural cosmetic, the market for cosmetic shea butter grows by 15-25% per year and should hit $10 billion by the end of 2010.13 The cosmetics industry also showcases the potential of shea butter for developing sustainable business practices. The Body Shop is one such exmaple. This $420 million retail cosmetics company makes a difference by selling such products through 2,550 stores based in 60 countries.14 Its community trade initiative has established a trading relationship with 476 female Ghanaian shea producers in 11 villages, now called the Tungteiya Shea Butter Association.15 This business relationship has not only provided the women with fair market prices, it has also enabled them to achieve independence and self-respect. The profits the women have made have gone back into their communities to create wells and water pipes. They have also built ten nursery schools and continue to provide funds for teacher’s salaries along with learning materials. The Body Shop, among a handful of other firms, is helping to show the corporate world that there are effective models for ethical and sustainable trade partnerships.16

Expert Support Dr. Peter Lovett has over a decade of experience in the shea industry. He earned a bachelor’s degree in biochemistry at Oxford and went on to receive his doctorate in 2000 on “The genetic diversity of the sheanut tree.” Dr. Lovett resides in the heart of Ghana’s shea industry, but travels all over Africa researching, consulting, and assessing business opportunities concerning shea. Currently he is advocating for U.S. legislation that would 10

allow U.S. businesses to use shea butter in chocolate, as is done in the European Union.

If approved, this could lead to a dramatic increase in US demand for shea butter.17

Institutional Support Since 2003, the West Africa Trade Hub, a USAID funded organization, has supported West African businesses in six industries including shea by providing services and trainings designed to help them compete in global markets. As noted in a 2008 Ghana Business News article, the Trade Hub is “working towards increasing exports of regional products to stimulate [local] job creation. Using the AGOA (African Growth and Opportunities Act) platform, the Hub has helped support Ghanaian businesses that produce both bulk shea butter and finished shea cosmetics in line with international quality standards. Most of these products are packaged and shipped to meet rigorous demands of the US cosmetic market.”18 The Trade Hub has a presence in 21 countries and has worked with thousands of businesses, government offices, banks, and bilateral and multilateral organizations “to solve the problems hindering competition.”19 For example, one industry challenge lies in the quality of shea butter produced by local processors. By providing technical assistance to over 40 African companies, the Trade Hub has helped these businesses improve quality in order to meet international standards through enhanced sheanut drying techniques and process improvement. The Trade Hub also consults with these companies to create finished cosmetic products that will be desirable in international markets and provides financial aid so that businesses in need may attend international trade shows to promote their products abroad.

Ghanaian Federal Government Support After the NDC (National Democratic Congress ruling party) won the presidential election of 2008, Vice President John Dramani Mahama publicly announced at the 2009 shea conference in Ouagadougou, Burkina Faso, the NDC’s commitment to “overhauling the industry…[to] enable it to tap into the fast expanding global shea trade.”20 In addition, he recognizes the sector’s potential to help alleviate poverty. The VP vowed “…to make the shea industry the major driving force in the accelerated development of the savannah areas of Ghana.”21 To this end, Mahama recently broke ground on the construction site of a $10 million sheanut processing plant in the town of Buipe, Northern Region, further demonstrating the NDC’s commitment to support the shea industry and fight poverty.22

Market Factor Summary These factors and more are improving the prospects of the sheanut industry and giving hope to all players in the supply chain. However, pickers, who are at the bottom of the supply chain, have yet to see the benefits of this growing industry. Will they be left behind? Or will the industry organize itself to help everyone, including the pickers, reap the rewards of industry development? To better understand this situation it will benefit 11

the reader to learn about players in the supply chain, the stakeholders, and the relation each has to the other. With this knowledge it will be easier to pinpoint problems and potential solutions for moving forward.

The Supply Chain: A Snapshot The local supply chain consists of rural farming women picking or gathering the nutbearing fruit, curing them, and either selling the nuts in the local market or using them to make shea butter, which is then consumed within the household or sold locally.

The international supply chain starts the same way, with rural farming women collecting shea fruit. The women then sell the nuts in local markets to bulkers (those who aggregate the nuts) or directly to processors. The nuts either are processed in Ghana at a large facility or exported and processed abroad. In some cases, the women are contracted to manufacture the sheanuts into shea butter, but this is by no means the norm. Eventually the butter is used in final consumer products, such as body creams and candy bars.

Figure 1 below shows a simple international supply chain. For a more detailed version of the supply chain see Appendix 3.

Figure 1: Simple Supply Chain23

Today, there are many players in the shea industry, but power tends to be concentrated near the end of the chain. Table 1 and Figure 2 on the following page represent actual players within the international supply chain. The table shows players roughly in descending order of influence. The remainder of this section describes these players in more detail in order to give the reader a better sense of the supply chain and the role of each player within the industry.

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Table 1: Supply Chain Summary Supply Chain Player AAK Loders Croklaan Olam International Ghana Nuts Limited (GNL) The Body Shop, Sekaf Ghana Limited, Savannah Fruits Co. Bulkers Kalpohin Shea Butter Extractors Assoc. and individual rural processors Individual pickers

Supply Chain Role Top exporter of sheanuts Large exporter of sheanuts Large processor and exporter of shea butter Large Ghanaian processor of shea butter Medium-sized exporter of shea butter Local sheanut aggregators Small processors Sheanut pickers

Figure 2: Supply Chain Enhanced

AarhusKarlshamn or AAK (Large Sheanut Exporter) AAK is a publicly traded Swedish firm that is “one of the world’s leading manufacturers of value-added specialty vegetable fats,” with revenues exceeding $2 billion in 2008 (a 10% increase from 2007).24 Industry experts estimate that AAK purchases the bulk of nuts exported from Africa, perhaps as much as 57% or 175,000 mt. However, this is only an estimate as the industry is not formally regulated and documentation is difficult to acquire. In addition, AAK manages most of its shea supply chain (in fact, they recently purchased Casa John, a regional sheanut buyer and trader base in Ghana) and ships nuts abroad for processing. Of all players in the shea industry, AAK has the most power and influences market prices.

Their Corporate Social Responsibility Strategy maintains that it “supports in its actions the ten principles of United Nations Global Compact (UNGC) in areas of human and

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labor rights, environment and anticorruption, and we perceive the principles as a powerful platform for activities within sustainability.”25

Loders Croklaan, an IOI Corporation (Large Sheanut Exporter) Loders Croklaan is “a key global producer of oils, fats, and nutritional ingredients” with a track record going back 110 years.26 It is based in the Netherlands and is owned by IOI Corporation, a Malaysian firm with over $4 billion in annual revenue. While it is one of the major purchasers of sheanuts in West Africa for use as an alternative vegetable fat, its main specialization is in palm oil. To highlight the contrast in market sizes of shea butter and palm oil, shea exports were approximately 300,000 mt in 2008 while palm oil exports were conservatively 37,000,000 mt in the same year.27 While shea is growing it is still a comparatively small industry, and thus struggles to compete for the attention of larger firms that focus on more recognized commodities.

IOI Corporation is a founding member of a 2004 multi-stakeholder global initiative called Roundtable on Sustainable Palm Oil (RSPO) designed to promote ethical and sustainable production, as mentioned in the Chairman’s Report under “Corporate Social Responsibility.” RSPO is a non-profit, multi-level stakeholder organization for the palm oil industry and includes representation from producers, processors and traders, consumer goods manufacturers, retailers, banks and investors, and NGOs (non-governmental organizations) focused on such issues as the environment and economic development.

The goal of the organization is to create and implement international standards for sustainable palm oil production.28

Olam International (Large Sheanut Processor) Olam International, headquartered in Singapore with facilities throughout the world, had nearly $6 billion in sales in 2009 and produces 25% of the world’s cashews. The founder and CEO, Sunny Verghese, has built his company on value-added services creating “stickiness” (added value) from customer services, which include traceability and organic certification.29 They are currently one of the largest shippers of sheanuts in the world, specializing in procurement and drying for companies such as Loders Croklaan. In addition, they have future plans that include processing sheanuts into butter. Their plants span West Africa, with the largest processing plant located in Ghana.

Olam’s procurement operations source nuts directly from the pickers. However, if local market prices rise from government intervention or other causes, Olam can easily cross borders to neighboring countries such as Burkina Faso to secure cheap nuts. 30

Ghana Nuts Limited (Large Shea Butter Processor) Ghana Nuts Limited (GNL) is a domestically owned and operated large processing plant that began in 2001. It sits on a 20-hector plot of land and exports 20,000 mt per year 14

(with a capacity of 30,000 mt) of various commodities including soya, sesame, and shea.

Its facilities can store up to 10,000 mt of nuts and 500 tons of oil. GNL provides as many as 1,000 jobs to locals in the community by processing sheanuts into CBE-grade butter for companies such as Loders Croklaan. GNL does not operate in all links of the supply chain, generally acting as a middleman with constraints to match. In essence, the company is an order taker and processor for larger firms. Additional large-scale capacity processing plants could threaten GNL’s preeminence as a processor (in fact, there was a recent ground breaking ceremony in town of Buipe, Northern Region for a processing plant with the capacity of 40,000 mt annually - see below under “Current Government Administration”). In order to establish a more independent business model GNL is considering directly acquiring nuts from remote villages by providing pickers with donkeys with carts to carry the nuts to trading points. This move could provide opportunities to more sheanut pickers as well as ensure that GNL acquires nuts at a competitive price. The company strategy for addressing processing competition from other plants, such as the one in Buipe, remains to be seen.31

Sekaf Ghana Ltd and Savannah Fruits Company (Medium Shea Butter Processors) As consumers demand higher quality shea butter, locally produced butter is generally unacceptable since it does not meet international standards. Therefore, large firms (e.g., AAK and Loders Croklaan) tend to buy the sheanuts in bulk and export them for processing abroad.

In 2008, Sekaf, an African commodities processor, established the Shea Butter Village near Tamale, Ghana, which employs and trains over 250 local women producers to meet international standards.32 Senyo Kpelly, co-founder and Managing Director of Sekaf, says the process is highly efficient, averaging a 44% shea butter yield from nuts (industry average is between 28 – 32%). The Shea Butter Village produces high-quality butter while contributing to regional economic development. Dr. Joshua Yidana, senior lecturer in the Department of Horticulture at University Development Studies, Tamale, Ghana, has been studying shea for decades and endorses Sekaf as a “good model” for the industry.33 A similar model that incorporates traditionally-made shea butter, but provides training to women directly within their villages, is spearhead by a local Tamale business called Savannah Fruits Company (SFC). It has established relationships with multiple villages and ships approximately 7,000 mt of shea butter abroad per year. SFC has been responsible for training hundreds of local women on export quality standards and has even provided production facilities within villages to accommodate the needs of local producers.

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Individuals and Organizations (Traditional Shea Butter Processors) Local processors, including individuals and organized groups such as the Kalpohin Shea Butter Extractors Association (KSBEA) in Tamale, Northern Region, find it hard to compete internationally with industrialized production. Therefore their markets are domestic and their production standards are based on local expectations. Challenges lie partially in quality control, in bulk manufacturing, and in access to markets. However, organizations like the Peace Corps and businesses such as Sekaf, SFC, and The Body Shop are all helping to organize and train such women’s groups to make high quality, exportable shea butter. Because of these types of concerted efforts, KSBEA has been able to connect with an exporting firm, thus receiving quality control training for an order to be fulfilled for shipment abroad.

Sheanut Pickers Since the shea tree is not domesticated and grows wild throughout Africa, there are no shea tree plantations. Therefore, sheanut picking is left to locals, as has been the case for centuries. As mentioned in the introduction, those who gather the nut-bearing fruit are traditionally women of farming families and are among the poorest of Ghana (Appendix 4, Figure 1).

The sheanut harvesting season is approximately two months long, including the full months of May and June with a long season encompassing April and August. The main farming season (June – December) finishes near the end of the rainy season, around December, and the shea harvest begins during the dry season when food stocks are lowest and workloads are heaviest (preparing land, sowing, weeding).34 The timing of the ripened shea fruit dramatically helps to offset food deficiencies either by directly providing a food source or indirectly from monetary income of nut and butter sales.

Since women are responsible for feeding their families, sheanuts are often sold immediately after filling a large burlap sack, called a jute sack (Appendix 4, Figure 2), which when full weighs approximately 200 lbs and takes one week to one month to fill.

Because the women generally cannot afford to store the nuts and wait for higher market prices they receive a minimal amount for their efforts early in the season – approximately $7.00 - $10.00 US per 200-lbs jute bag of nuts.35 Later in the season a woman might be able to fetch as much as $40.00 per bag, which some pickers consider a decent price. The time required to fill this bag takes about 49 hours and translates to less than a dollar per hour: 14 cents per hour on the low end to 81 cents per hour on the high end. (An additional factor that affects sheanut prices is seasonal rainfall totals – a moderate amount of rainfall yields more and better nuts. Seasons that are too low or too high in rainfall totals render less desirable nuts, thus driving up the price for quality nuts due to lack of good nuts).36 The effort required of harvesters is impressive. The women whose husbands own farmland with shea trees can wait to pick those nuts. However, to be first to gather nuts 16

on community property is a competition - one must get up as early as 3:00 a.m. and embark on a journey in search of ripe shea fruit. This could be as long as eight to ten miles roundtrip and last up to seven hours. Hopefully, the payoff of one excursion will be a large metal bowl full of nuts weighing about 30-lbs, or in some cases as much as 100-lbs, but there are no guarantees.

In addition to the grueling work, dangers include snakebites, scorpion stings, and foot piercings from sharp objects on the ground, such as thorns. Some NGOs have attempted to help alleviate these hazards by providing rubber boots and gloves, but they have proven a hindrance to efficiencies in walking distances and picking fruit according to the women interviewed and confirmed by Brenda Chalfin in her book “Shea Butter Republic.”37 The process does not stop after the nuts are gathered; they must be parboiled38 in water so they do not continue to germinate, which spoils the quality and diminishes the quantity of shea butter extracted.39 However, when nuts are gathered they are generally stored until a sufficient amount is collected to justify the wood, water and time required for parboiling. If too much time passes, germination could begin, spoiling the quality of the nuts. Once the nuts are parboiled they are then dried by placing them in the direct sun on the ground or on a tin roof. If the sun is direct and hot, then this process can take as little as one week. When the nuts are dried, the husks are removed and the drying process begins again. After they are dried for the final time the nuts are either ground (Appendix 4, Figure 3) and further processed into shea butter, or they are bagged and sold in the market. To sell the nuts in the local market, the women of Kpawmo Village near Tamale, for example, must carry nuts or butter in large metal bowls or calabashes on top of their head and walk 2-½ hours to the Tamale market (Appendix 4, Figure 4). 40 If a seller is desperate to buy food for her family, she will sell her nuts early in the season at extremely low prices. International buyers or local bulkers are keenly aware that this is the best time to buy and since they have the means of storing the nuts, they scour the markets and villages early in the season for nuts at the best prices. This is not a win-win situation. The women who pick the nuts work extremely hard to gather the nuts and are often not compensated equitably for their time and efforts because they have no bargaining power. They understand that if they hold on to their sheanuts longer they would be able to fetch higher prices, but when living on already meager incomes, waiting for higher prices is often not an option.

Pickers are vital to the supply chain, as they are the only ones gathering the nuts from this undomesticated tree. They endure long, arduous, and hazardous days gathering sheanuts for minimal returns, but do so because the food and income it produces is crucial to their families’ survival. However, as prices for sheanuts and shea butter drop, the shea tree in some cases is chopped down and used as firewood. This deforestation has become a concern in a part of the world already struggling against desertification (Appendix 4, Figure 5). In addition, as the value of nuts drops for businesses, there is a trend to remove shea trees and replace them with more valuable crops such as mango and jatropha (an oil-bearing plant).

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Beyond the Supply Chain: A Stakeholder Overview The issues facing shea are probably not unique, but with rising general interest in fair trade it is worth highlighting them in order to focus on equitable solutions within the entire supply chain. This begs the question, “Is anything being done to address the issues of equitable compensation and continued inclusion of the impoverished women at the bottom of the supply chain, and if so, what?” The answer is yes, but who is involved and is there sufficient progress?

Current Government Administration Government control of the shea industry since the 1950’s has moved between full, partial, and no control more than once. Trust in a stable system and policy framework is probably tenuous. However, there is renewed government involvement and support that does seem promising.

As mentioned in the subsection entitled “Market Momentum,” under the section “A Brief Background,” the NDC Party, headed by President John Atta Mills and Vice President John Mahama, is supporting the growth of the shea sector as a tool to address poverty in the northern regions (Appendix 5). They are making public commitments to leverage the growth of the industry, most notably VP Mahama’s statement at the groundbreaking of the Buipe plant on November 14th, 2009, during which he declared, “The Buipe sheanut plant will be duplicated in other Savannah Regions to ensure a balanced development of our country and give meaning to our Savannah Accelerated Development Authority (SADA).” Mahama added that, “Transformation of our savannah lands for efficient agricultural utilization leading to domestic food security and enhanced export earnings remains a key objective to the NDC government with the siting [sic] of this project and others in the pipeline within the Savannah Belt of our country under the NDC’s SADA program.” Currently, the government-run Cocoa Board (described below) has been directed to financially assist the Produce Buying Company Ltd (a public company that was formerly government-run and also described below) “to implement policies that would lead to maximization of sheanut picking and collection and to ensure value addition through processing. This is aimed at opening employment opportunities to those in the rural areas.”41

The Ghana Trade and Livelihoods Coalition The Ghana Trade and Livelihoods Coalition (GTLC), an agriculture and trade policy advocacy organization has composed a shea industry report (entitled Study Report: Unleashing the Shea Potential – A Baseline Study Data Analysis) examining shea tree sustainability, tree ownership rights, and the impact on pickers and local processors. The conclusion of the report underscores the need for better benefits for the women pickers 18

and processors, an established ownership designation for shea trees that would reduce or eliminate the competition for free-range trees, and enhancement of trees to ensure protection and maximization of benefits. Below are organizations mentioned by the GTLC report.42

The Ghana Cocoa Board (a.k.a. Cocobod) Due to cries from farmers about unfair prices in the 1930’s, a state-run marketing board was formed in 1940 called West African Produce Control Board. Another iteration in 1947 took the name of the Cocoa Marketing Board, which eventually was renamed the Ghana Cocoa Board and nicknamed Cocobod.43 Originally set up and run by the government to protect farmers from price fluctuations by controlling cocoa prices, it took on additional responsibilities including scientific research to improve yields. Eventually, coffee and shea were added to the Cocoa Board’s responsibilities, but not all the objectives applied to cocoa are applied to coffee and shea. For example, shea prices are not regulated by the Cocoa Board, as are those of cocoa. While the organization is responsible for overseeing production, research, licensing and monitoring of operations in the shea sector, it does not always fully follow-through on these obligations. The Cocoa Board has had its share of financial ups and downs over the years, likely accounting for much of its less-than-robust involvement in shea. With the recent rise in shea exports, the Cocoa Board has shown a renewed interest in shea, but this has been met with skepticism by industry players who have been disappointed by the Cocoa Board’s marginal and inconsistent past contributions.

Produce Buying Company Ltd (PBC) PBC’s roots began when the Cocoa Purchasing Company (Cocoa Board) was established in 1947. After 1966, the Cocoa Board had 11 buying agents including PBC, which was a wholly owned subsidiary of the Cocoa Board up until 1999 when it was eventually privatized. In May 2000 it went public on the Ghana Stock Exchange, but the government remains a majority stakeholder. According to GTLC, PBC’s focus is on purchase, storage and delivery of such commodities as sheanuts, but its engagement within the shea sector has been historically erratic, as has been the case with the Cocoa Board. However, action to support the shea sector was manifest in their $10 million investment in the Buipe processing plant.44 Additionally, PBC’s recent creation of a subsidiary, PBC-Shea Ltd, designed to focus solely on shea and run the Buipe plant, appear to be encouraging commitments.45 While the PBC has the opportunity to help provide fair wages to pickers and stabilize prices in the area, industry and stakeholder trust of the PBC is low.

PBC-Shea Ltd PBC-Shea Ltd is a newly formed subsidiary of PBC Ltd and is reported to be the first commercial scale shea processing plant in Buipe, Ghana. The resolution within PBC Ltd 19

to move forward with this venture was met with some internal resistance since PBC-Shea Ltd will require new management and a new board of directors. Proponents argue that since there will be a more directed focus on shea, it will allow the company to better maximize shareholder’s profits. PBC-Shea Ltd will be in charge of the Buipe shea processing plant in a joint venture with Brazilian firm Sysgate Brazil Limitada, which agrees to export the production.46 Once the plant is operational, PBC Ltd expects to earn $40 million in revenue per year and double the country’s current output from 50% of total available sheanuts to 75%.47 The implications of this venture are increased government involvement, price stabilization, and more local jobs.48

Savannah Accelerated Development Authority (SADA) SADA is a policy spearheaded by the NDC government aimed at poverty alleviation in northern Ghana.

Under this plan the government will spend approximately US$142,000,000 in the northern part of the country for economic and social programs.49 As alluded to by VP Mahama (see subsection on “Current Government Administration” above), the new Buipe shea plant is a result of the SADA initiative. The Buipe factory would employ 50 technical and administrative staff and engage about 2,000 pickers.

They have also committed to providing 2,000 solar streetlights at Buipe and other areas of the Savannah belts as part of the Poverty Alleviation Strategies. In addition, a solar water treatment plant will be installed to provide potable water for people in the northern parts of the country.50 Skeptics of this initiative note that despite past initiatives poverty levels remain high in the three northern regions; Upper East, Upper West, and Northern (Appendix 2, Figure 4). Under previous programs such as the HIPC (Highly Indebted Poor Countries) Initiative the 3 northern regions only received 18% of disbursements while the area around the capital city of Accra, in the south, received most of the funds. Another scheme called the Millennium Challenge Account (MCA) allocated US$540 million for development projects from the United States through 2015. However, of the 23 districts selected to benefit from this project, only 5 districts are in the 3 northern regions.

Nonetheless, SADA is seen as the most comprehensive policy initiative in the country’s history and the two men behind this program are northerners and thus, there is favorable speculation that the northern regions will finally receive due attention.

Coco Coffee and Sheanut Farmers Association (CCSNFA, a.k.a. Cocoshe) This government organization was mentioned in the GTLC report, but as information about this association appears limited, it is unclear how much influence it wields.

According to the GTLC report, Cocoshe was formed in 1982 and has representation in all 10 regions of Ghana. A farmer heads the national association along with a coordinator for each commodity; cocoa, coffee, and shea. Members include pickers and processors.

Cocoshe claims it “promotes the production, picking and processing of sheanut” and 20

seeks “to improve the economic situation of stakeholders, particularly women.”51 However, in a July 2004 article published by the Ghana News Agency entitled, “Farmer decries the lack of transparency in Cocoshe,” a “Chief Farmer” of the association accused Cocoshe of overcharging for insecticides at one of the shops operated by the organization. In addition, he stated that the profits from these shops along with operating funds from the Cocoa Board are never publically accounted for or explained. As stated by Cocoshe in the GTLC report, the organization’s challenges include stakeholder mistrust, lack of funding, lack of government policy support for the industry, lack of collaboration among related associations, and no product price stability for shea.

National Association of Sheanut Farmers, Processors and Buyers of Ghana (NASFPB) This association began in February of 2004 and is not government funded, but generates contributions voluntarily from its 220 members. As with Cocoshe, it operates in all 10 regions of the country, but the NASFPB focuses on the three northern regions where shea is mostly grown. Its mission is to address the issues arising from non-regulation. In doing so, the Association tries to “access credit to support its members, intermediate between international buyers and local providers, [and] enforce environmental laws to protect the shea tree.” However, it faces severe challenges including low literacy among members, lack of community support, and lack of funding. Other challenges echo those of other organizations and include lack of stable industry pricing, lack of government policy support for the shea industry, need for domestication of the shea tree, and adequate research to reduce the trees’ maturation period.

Research Institutions In a 1977 session with The FAO (Food and Agriculture Organization of the United Nations) Panel of Experts on Forest Genetic Research included shea as a resource priority for its importance of non-wood products. Additionally, the shea tree is a unique crop in that farmers have maintained it for hundreds of years, but it has never been fully domesticated. One reason may be that African tradition dictates that the tree not be planted – that it should be left to propagate naturally.52 The main issues regarding domestication are the trees inability to be planted in a controlled environment (such as plantations) and its lengthy time to mature and bear quality fruit; depending upon the information source, the maturation period can be from 15 – 30 years. The importance of the shea tree in Africa combined with its enhancement issues warrants research to find solutions in order to support this growing industry. In addition, an effective communication campaign targeted at villagers to change traditional beliefs regarding domestication will also likely need to be implemented.

Today there are a number of agricultural research institutions, but direct funding and cooperation between institutions has been disappointing. There is an argument that since the current administration is in support of the shea sector and is stepping up financial and 21

policy efforts, it should therefore include funding specifically for shea research in order to help ensure a social and economic return on investment.

The following is a brief summary of various research institutions in Ghana and their level of involvement in shea research.

University For Development Studies (UDS): UDS is a public university in Tamale, Northern Region, Ghana. According to the UDS website on their “About Us” page entitled “Profile of University for Development Studies,” the University is at least partially funded by the government of Ghana.53 UDS has various faculty departments that focus on disciplines such as medicine, development, and agriculture. Dr. Joshua Yidana, research scientist and lecturer at UDS, is a leading expert on shea who advocates for domestication of the shea tree. Research initiatives conducted by UDS include studies on the value chain of shea, the “environmental change of the sheanut,” reduced shea tree maturation period, and local process improvement.

The Cocoa Research Institute (CRIG): CRIG is located at Bole, Northern Region, Ghana near the Cote D’Ivoire border. While CRIG has performed research on maturation reduction and grafting, as well as conducted community outreach that focuses on shea tree protection, the Institute lacks sufficient funding. Currently, funding is provided by the African Development Bank research on cashew crops. When there are any remaining funds from cashew research they are sometimes used for shea research.

Council for Scientific and Industrial Research (CSIR): CSIR is a governmental research institute in Ghana whose mandate includes the implementation of government policies on scientific research and development, advising the “Minister” (not defined on the CSIR website) on issues important to national development, and conservation of Ghana’s natural resources.54 However, according to the GTLC report, CSIR lacks focus and funding on shea, but has the manpower to do so within the Savanna Agricultural Research Institute, one of its many research organizations.

Addressing the Issues In terms of the shea industry, there are three strategic issues that need to be addressed to generate long-term prosperity for all players in the shea industry. These include shea tree research and development that focus on tree enhancement (domestication and reduced maturation period), inclusion of traditional processors in the international supply chain, and sheanut pricing for pickers.

Shea Tree Enhancement: Domestication and Reduced Maturation Period As mentioned previously under Research Institutions, there exist organizations with the ability to tackle the issues of enhancement. Although the shea industry is relatively small and may not warrant as much focus as other industries at present, the market for shea is 22

growing rapidly with the help of the cosmetics industry, and has the potential to alleviate poverty in some of the poorest regions in Ghana by providing needed income to thousands of families. The only way for these institutions to address enhancement is for them to receive direct funding for shea tree research and development. To date, there is no support from the government nor from the private sector, but with the outspoken commitment of President Mills and Vice President Mahama, it seems logical that the federal government would consider research and development funding as well.

However, the Ghana government has historically lacked commitment and follow-through in regards to shea. Its other initiative, SADA, is already under scrutiny in terms of tackling the issue of poverty in the poorest regions of Ghana. In fact, the Upper East Region, one of the three northern regions, which, according to IFAD (International Fund for Agricultural Development) is the poorest region in Ghana and received no Millennium Challenge Account funding.55 Thus, critics note that the SADA program, mentioned above, is aimed at not only the three northern regions but also the Volta, Brong Ahafo, and parts of the Ashanti Regions. Therefore, there is concern that the three northern regions will be neglected once again. So far, there is reason for skepticism and mistrust with the current government’s policy as it relates to poverty alleviation and the shea industry. However, positive signs include the fact that the SADA initiative was created by influential northerners, President Mills and Vice President Mahama, and is seen as the most comprehensive initiative in Ghana’s history. Hopefully they will consider the much-needed research and development support, as well.

Inclusion of Traditional Processors The second issue facing the industry concerns village production versus large-scale mechanized production.

Process mechanization has helped create mass produced products at affordable prices since the industrial revolution. Low prices have been good for consumers, especially in the developed world, but the elimination of jobs traditional done by hand due to industrial mass-production creates a dilemma; less people are employed and thus less people can afford businesses’ output. On the flip side, if an industry can employ local workers at various skill levels, this could translate into lower unemployment rates and lower poverty levels. As mentioned in the previous examples, such as The Body Shop, local processors have proven to be a viable component to international businesses.

Obviously rural African women have the ability and intelligence to manufacture high quality shea butter that affordably meets international standards, and businesses can pay them a fair wage while remaining competitive. This seems like an excellent opportunity to provide more jobs while helping end the cycle of extreme poverty in developing countries. Additionally, employing local processors to manufacture shea butter for the international market could address the issue of sheanut pricing since the women may be both pickers and processors.

Why aren’t more businesses working with traditional processors? Perhaps there is a hesitancy to engage poorer members of traditional African cultures, as businesses may not have the ability or resources to do so. However, now may be a good time to invest in 23

new strategies that more fully incorporate the intentions of businesses’ Corporate Social Responsibility initiatives. As author Stuart Hart of the Johnson Graduate School of Management at Cornell University notes in his 2005 book, “Capitalism at the Crossroads,” “They [multi-national corporations] must come to understand and nurture local markets and cultures, leverage local solutions, and generate wealth at the lowest points on the pyramid. Producing in rather than extracting wealth from these communities will be the guiding principle.”

Sheanut Picker Pricing The final issue concerns the income of sheanut pickers. Due to a lack of regulation and a weak bargaining position, pickers generally receive a very low price for the nuts they sell.

It is believed that AAK actually sets the market price due to the vast amount of nuts they purchase every year, a price which is negotiated to heavily favor the buyer. However, as mentioned above, AAK’s Corporate Social Responsibility Strategy maintains that the company has an outstanding commitment to human and labor rights, which will hopefully translate into a commitment to give pickers a more equitable wage for their labor.56 Furthermore, under the UNGC, AAK is obligated to “comply at least with local and international legal minimum standards concerning wages and benefits…”57 The market is so informal at the picker level that it is easy to take advantage the situation.

AAK is certainly not the only player in the supply chain guilty of perpetuating extremely low prices, but one that is highly influential in this industry and publicly committed to the UNGC’s policy initiatives focusing on human rights, labor, environment, and corruption.58 To maintain competitive pricing for all firms, a solution may be for the industry to regulate itself. As a founding member of the RSPO, Loders Croklaan in particular understands what it means to support ethical and sustainable production through internal regulation. This is not to say that the RSPO is the model for the shea industry, as it has faced major criticisms, including suggestions that it enables environmental degradation in tropical rainforests.59 The general concept does provide some framework for the shea industry, and since Loders Croklaan has demonstrated concern for issues of social responsibility, there may be an opportunity for it to tackle the challenges facing the shea industry by proactively pursuing some level of self-regulation through an industry coalition, like the RSPO, while improving the model at the same time. Together, firms such as AAK, who are also publically committed to Corporate Social Responsibility, and Loders Croklaan, can mobilize industry stakeholders in order to create an industryregulated approach to shea. Initiating action, sooner rather than later, will help businesses control their destiny, stabilize the industry for all supply chain members, provide fair trade pricing for pickers, incorporate traditional processors, and help to enhance the shea tree in order to meet future demand.

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Scenarios Given the plethora of supply chain and stakeholder players and taking into consideration that the market is at a crossroads, predicting the future of the shea butter industry is virtually impossible. However, a good understanding of the industry does permit the creation of scenarios describing possible futures. The following scenarios are not exhaustive and reality will likely consist of combinations of potential outcomes.

Business as Usual If neither the government nor businesses take action to create a fairer playing field for the sheanut pickers, then the likelihood that pickers will choose to chop down the shea tree will likely increase. A government response may be to simply create a regulation stating that these trees should not be cut down. This would likely be unenforceable due to lack of government resources in rural areas where the tree grows.

It seems possible that if the government or business takes no action and the demand for shea butter continues to increase, the price of nuts should also increase. However, in the case of coffee, the industry grew substantially, but prices for those at the bottom of the supply chain actually fell.60 Even if nut prices do increase, will the prices ever be high enough to be considered equitable and actually reduce poverty?

Government Regulation Government regulation may include a price floor (minimum price) for sheanuts. On the surface, this seems like a good way for pickers to receive a fair price. It would mean creating and supporting organizations tasked with purchasing all nuts at a certain minimum price as well as providing law enforcement with resources for enforcing the price floor. The issue here would be whether the regulation will drive existing businesses across borders to other countries where the shea tree grows, such as the established markets of Burkina Faso and Mali. Therefore, it may be necessary that all nations where the shea tree grows should be involved in setting and enforcing any price floor so that businesses would not be able to simply move across boarders in order to acquire nuts below a minimum price. How will these nations’ governments and businesses afford these institutional structures? Would the implied taxation be directed at sheanut pickers or at businesses? Any price floor that does not appease all parties could have an adverse affect on the market.

Another possible regulation might mandate that a certain percentage of locally and traditionally produced butter must be purchased by businesses for the export market.

This would mean that traditionally made shea butter must meet international quality standards. The implication is that these processors would need to be trained to produce such butter and that butter quality would need to be monitored some point in the supply chain. Who would pay to implement and monitor such processes? Currently, businesses 25

following this model are successfully doing it themselves. If nothing is done to insure the inclusion of traditionally processed shea butter on a larger scale, the local women could be altogether forced out of the export shea butter market, reducing hopes of utilizing the shea industry to alleviate poverty.

Private Sector Regulation Private sector price regulation might be established for businesses to maintain control of the industry and to help insure that those at the bottom of the supply chain receive a living wage, among other considerations. It only takes one firm, such as AAK or Loders Croklaan, to spearhead this challenge, but eventually all stakeholders will need to be involved. A similar model in a similar industry already exists for palm oil through the RSPO, mentioned previously. If there were an RSSB (roundtable for sustainable shea butter), this entity would be able to set socially responsible practices largely void of government control, create a healthier supply chain, and enhance product marketability.

One version of a socially responsible business model could include a combination of traditional shea producers as well as localized larger facilities that employ Ghanaian workers instead of shipping the sheanuts abroad for processing. This could bring jobs to Ghana, maintain culture and tradition, and alleviate the issues associated with sheanut pricing, especially if the local pickers are also employed as processors and receive fair wages for the butter they produce.

Sheanut Pickers Organization In general, a sheanut picker does not have the means to rally hundreds of thousands of other pickers together to strengthen their collective bargaining power. Pickers do not have experience bargaining with big businesses such as AAK and Loders Croklaan.

However, if they were able to organize effectively, they may generate the leverage necessary to demand a fair wage. The most likely way for these women to organize would require the assistance of a third party such as an NGO to facilitate and maintain the organization. This third party could organize the shea pickers of Ghana, help them create selling terms, work with micro-finance organizations to secure loans so that they may be able to store the nuts and wait for a higher price. The NGO could also help fashion a legal agreement among the pickers and certain buyers in order to strengthen their longterm positions. At this moment, there are picker organizations, but they lack effectiveness. If there were an effective and influential sheanut pickers organization, they may run the risk of alienating the private sector. Therefore, it would be imperative to design and implement an organization that focuses on balancing the interests of the pickers with those of the buyers through effective communication. The organization should likely be multinational and include as many African shea pickers as possible.

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Shea Tree Enhancement As previously noted, the shea tree cannot be farmed on plantations and the time to bear fruit is lengthy. If the shea tree were enhanced then plantations could be developed to produce relatively fast growing, high yield shea crops. These plantations may be run by businesses and those businesses should be responsible for paying a fair wage to pickers.

However, those who pick the shea fruit would not be able to take the fruit back to their village in order to produce shea butter traditionally, as pickers have done for centuries.

Enhancement could put the entire supply chain in the hands of businesses and could possibly take away this centuries old cultural tradition. On the other hand, it could stabilize production and pricing, as well as create industry and jobs for the nation.

Another possibility would be if locals owned and operated their own plantations, which could further reduce poverty while maintaining local traditions.

Moving in this direction seems reasonable as the industry grows and tries to meet international demand, but incorporating locals in production while attempting not to destroy traditional cultural practices should be a priority.

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Table 2: Scenarios Summary Matrix Scenario

Outcome – Positive

Outcome - Negative

Business as Usual

Limited industry growth and Continued poverty; erratic mostly affecting players further sheanut prices; deforestation; up in the supply chain inequitable supply chain

Government Regulation

Living wage for sheanut pickers; price stabilization; increased funding for shea related government projects

Backlash from private sector – moving across boarders, or product substitution; fall in exports; continued poverty; reduced shea tree resource

Private Sector Regulation

Living wage for sheanut pickers; price stabilization; private sector support for price increase; higher local processor involvement; increased local jobs; stakeholder harmony

Regulation as marketing tactic rather than comprehensive and effective plan; neglect of local traditions with focus only on jobs for middle class Ghanaians versus nurturing jobs for local pickers and processors

Sheanut Pickers Organize

Improved picker control over nut sales; increased wages; price stabilization

Backlash from private sector – moving across boarders, or product substitution; fall in exports; continued poverty; reduced shea tree resource

Shea Tree Enhancement

Enhanced yields to help meet growing market demand; defined shea tree boundaries (such as owned plantations); resource protection; reduction of desertification

Loss of local jobs, culture, and tradition; continued poverty; inequitable supply chain

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Conclusion Shea butter is purely African. It has been processed in local villages for centuries and is seen as a valuable commodity for survival and luxury. Once the Western world took notice of shea butter, it wasn’t long before the commencement of overseas trade.

Eventually this new trade increased demand for shea butter and soon an imbalance of power within the supply chain emerged. Governments attempted to create a more equitable playing field, but consistent and strong political support has been lacking for decades to the detriment of the less powerful players in the supply chain.

Recently the industry has begun to grow at a more substantial rate and there is renewed interest and commitment on the part of the Ghana government to intervene on behalf of the least powerful players. With the momentum of fast growth pushing the shea industry into the international limelight, government has once again vowed support to the betterment of its people, but the public sector’s track record leads all stakeholders to be skeptical.

The government and some private firms are attempting to leverage the popularity of socially responsible business within the shea industry to help alleviate poverty in the areas where the tree grows and butter is produced, which happens to coincide with some of the poorest regions in Ghana. This gives the shea industry, the government, and businesses an opportunity to affect positive social change while bolstering market share and satisfying all stakeholders.

Will the Ghanaian government really be able to alleviate poverty in the northern regions by supporting the shea industry? That is quite a bold proposition for President Mills and Vice President Mahama. How will they accomplish this goal? Will they establish a price floor for the sheanut or encourage local processors to become more involved in the international supply chain? This has been discussed in the media, but there has been no action to date.61 However, Mills’ and Mahama’s words allude to creating jobs in shea factories, which will likely exclude the poorest of the poor – the pickers and traditional processors. Will established businesses turn away from the Ghanaian market in light of government regulation and move across boarders? Can the government afford much needed research toward enhancement of the shea tree? Financial commitment for such an effort has been lacking, but if the industry is to step into the 21st century, solving these issues seem mandatory. Furthermore, if these issues are resolved, will plantations destroy a centuries-old way of life? Perhaps the answer lies in local plantation ownership, and new jobs and economic prosperity for locals at larger processing plants.

Finally, will businesses such at the powerful AAK and Loders Croklaan establish industry self-regulation to ensure that the least powerful are treated fairly by ensuring a living wage? Many questions such as these will only be answered in time.

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Recommendations Certainly sheanut pickers deserve a higher wage, and for such a wage to be effective it would likely need to be determined by both the pickers and private sector. What is more, traditional shea processors must be included as a significant part of the international supply chain in order to maintain centuries-old traditions and alleviate poverty in Ghana. To accomplish this there should be effective representative bodies for pickers and traditional processors so that they may be able to have a voice at supply chain stakeholder meetings. These meetings should take place on a regular basis with the aim of providing self-regulation initiatives to the shea industry. The concept could be similar to that of the Roundtable for Sustainable Palm Oil, focusing on initiatives such as fair wage for those at the bottom of the supply chain, microfinance, price stabilization, and issues regarding tree enhancement. With all stakeholders involved within one organization, they can collectively determine the best approach to create prosperity at all levels of the supply chain, perhaps by establishing a quota system (Hubert Humphrey did this with coffee in 1962, and was highly effective at both establishing fair and stable prices for 3 decades).62 These recommendations stress the adage that the whole is greater than the sum of its parts. The entire supply chain should work together to set its own agenda for the betterment of all with those at the top of the supply chain that have the leverage taking the initiative, lest government involvement set the agenda. When this is done, more can be accomplished, including poverty alleviation, economic development, environmental sustainability, and improved consumer satisfaction. Now is the time for businesses in the shea industry to take a more strategic approach and make a positive difference.

The Last Word If appropriate actions are not taken now, the shea tree may be fated to become firewood.

The lower the value the commodity is to locals and competing markets, the more attractive the shea tree’s wood looks for other uses, perpetuating the vicious cycle of poverty and desertification. Government is showing increased involvement, and businesses such as The Body Shop are creating sustainable models that include, rather than exclude, local pickers and processors. But what is the best course of action that balances free market activity with social development? There is great potential for this industry to lead the way in creating a sustainable and socially responsible market approach that incorporates all stakeholders. Now is the time for bold, innovative action.

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Appendix 1 Price Comparison

Item Jute Sack of sheanuts = 200 lbs of nuts • 1 sack yields 67 lbs of butter • Based on field research

Local raw shea butter, Ghana, 67 lbs • Sold in local market63

Price $7.00 - $60.00

$28 - $45

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Bulk raw shea butter, USA, 67 lbs • Vermont Soap’s Bulk Raw Shea Butter64 • Based on the 59 lbs product size sold at $177.00 each

Commercial product with shea butter as main ingredient, 67 lbs • L’Occitane’s 7oz product size “Shea Butter Ultra Rich Body Cream” sold for $39.00 each • Sold at Nordstrom’s65 • 25% of this product is shea butter

$200

$5,972

Commercial product with shea butter as main ingredient, 67 lbs $28,586 • The Body Shop’s 0.3 oz product size “Shea Lip Butter” sold for $8.00 each • Sold at the Body Shop-USA66 • Shea is one of 18 ingredients in this product

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Appendix 2 Figure 1: The Shea Tree

Figure 2: The Shea Belt of Africa

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Figure 3: Map of Ghana

Figure 4: Map of Ghana’s 10 Regions

The northern regions, where the shea tree grows predominantly in Ghana, are composed of The Northern Region, Upper East Region, and Upper West Region

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Figure 5a: Shea fruit ripening on tree

Figure 5b: Children selling ripened shea fruit on the roadside

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Figure 6: Sheanuts

Figure 7: Shea Butter

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Appendix 3 Supply Chain Expanded

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Appendix 4 Figure 1: Gathering Sheanuts

Figure 2: Jute Sack of Sheanuts

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Figure 3: Manual Sheanut Grinding Process

Figure 4: Carrying Sheanuts

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Figure 5: Image of Northern Ghana

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Appendix 5 President John Atta (foreground) Mills and Vice President John Mahama

41

Bibliography 1 2

There are two sub-species: Vitellaria paradoxa paradoxa and Vitellaria paradoxa nilotica. The latter is found only in Uganda and Sudan, is much less abundant, and produces butter with slightly different characteristics. In addition, the Vitellaria paradoxa genus has at least two well known scientific synonyms, Butyrospermum parkii and Butyrospermum paradoxa, and many common names, such as bambouk-butter tree, galam-buttertree, Schibutterbaum, àrbol montequero, arbre à buerre, and karité 3 Lovett, Peter N.. "Shea Butter Industry Expanding in West Afric." Inform: Shea Butter 16 (5) 269-000, (May 2005).

4 “PBC ventures into shea-nuts export,” 28 Sept 2009, http://www.modernghana.com/news/240869/1/pbc-ventures-into-shea-nuts-export.html, (accessed 3 July 2010).

5 Dr. Peter Lovett, Industry Expert, Personal Interview, 24 Jan 2010.

6 "Research and development of the shea tree and its products,” Horizon Solution Site, <http://www.solutions-site.org/artman/publish/article_10.shtml>, (May 28, 2008).

7 Pobeda, M. & Sousselier L., “Shea Butter: The Revivial of an African Wonder,” <http://www.naturactiva.net/articles/>, african_wonder.doc, (accessed 29 June 2010).

8 Glover-Meni, Nathaniel. "Optimizing the value of Sheanuts in poverty alleviation in Ghana’s northern regions.” Ghana Business News (2009), http://www.ghanabusinessnews.com/2009/10/05/optimizing-the-value-of-sheanuts-in-povertyalleviation-in-ghana’s-northern-regions/print/. (accessed April 23, 2010).

9 Ibid 10 "Is your milk chocolate the genuine article?," 24 Dec 2009, http://www.eubusiness.com/topics/food/chocolate.jrc.01/, (accessed 27 Feb 2010).

11 Dr. Peter Lovett, Industry Expert, Personal Interview, 24 Jan 2010.

12 Dr. Peter Lovett, Industry Expert, Personal Interview, 24 Jan 2010.

13 Lovett, Dr. Peter, “Shea Today” presentation, 2010, (accessed 24 Jan, 2010) 14 Hoover’s, Body Shop Overview, <http://premium.hoovers.com.proxy.miis.edu/subscribe/co/overview.xhtml?ID=ffffcrxhjtrktssxfs >, (accessed 27 Feb 2010) 15 Peter Stedman, Industry Expert, Personal Interview, 13 Jan 2010.

16 Sayers, Ian & ITC Editorial Team, "Success through Shea," 3 April 2008, http://www.tradeforum.org/news/fullstory.php/aid/1368/Success_through_Shea.html, (accessed 1 Mar 2010).

17 Dr. Peter Lovett, Industry Expert, Personal Interview, 24 Jan 2010.

18 Glover-Meni, Nathaniel. "Optimizing the value of Sheanuts in poverty alleviation in Ghana’s northern regions," 7 Oct 2009, http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=169823, (accessed 26 Feb 2010).

19 "Making Trade Happen." West Africa Trade Hub Brochure: 2 (accessed 19 Mar 2010).

20 Ibid 21 Ibid 22 “ Marfo, A.K; Aklorbortu, M.D.; Donkor, Michael, "Mahama Cuts Sod For Expansion Of Thermal Plant," 19 Jan 2010, <http://www.graphicghana.com/news/page.php?news=6146 (accessed 2 Feb 2010)>.

23 Modeled after a graph from “Shea Butter: A Guide to Production and Marketing,” Peace Corps Ghana, Dave McNally, Version 1, March 2008, 28

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24

Hoover's, "AarhusKarlshamn AB Overview," http://premium.hoovers.com.proxy.miis.edu/subscribe/co/factsheet.xhtml?ID=sfsxtyhrjyhcsf, (accessed 2 Mar 2010).

25 Hartwall, Jerker, President & CEO, "AAK Group Policy: Corporate Social Responsibility," February 2009, (accessed 3 Mar 2010).

26 "Loders Croklaan- A Worldwide Leader," http://northamerica.croklaan.com/TheCompany/LodersCroklaan/, (accessed 3 Mar 2010).

27 Malin, Daniella, "Sustainable Palm Oil Emerges from Roundtable Process and Heads to Market." 17 June 2008, <http://www.sustainablefood.org/index.php?option=com_content&view=article&id=70:sustainab le-palm-oil-emerges-from-roundtable-process-and-heads-to-market&catid=13:biofuels&Itemid=22>, (accessed 2 Mar 2010).

28 Roundtable on Sustainable Palm Oil, “Who is RSPO?,” < http://www.rspo.org/?q=page/9>, (accessed 26 May 2010) 29 Day, Peter, "Global Branding," Audio Interview with Sunny Verghese, 11 Aug 2009, <http://www.bbc.co.uk/worldservice/business/2009/08/090810_globalbusiness_110809.shtml> (accessed 2 Mar 2010).

30 Das, Mritunjay, Profit Center Head, Personal interview, 27 Jan 2010.

31 Frimpong, Ata, GNL Purchasing Manager, Ghana Nuts Limited, Personal Interview, 22 January 2010.

32 Lamport, Joe, "Competitive shea industry continues to grow," 1 Nov 2009 http://www.watradehub.com/node/651, (accessed 4 Mar 2010).

33 Dr. Joseph Yidana, Presonal Interview, 20 January 2010 34 Decker, Karola, "Hunger in the lean season: Political and cultural implications of food insecurity in northern Ghana," 3 April 2008, http://www.gecafs.org/documents/PP10Decker.pdf, (accessed 7 Mar 2010).

35 Kunateh, Masahudu Ankiilu, “Government neglects shea-nut industry,” GhanaDot.com, http://www.ghanadot.com/news.ghanadot.kunateh.030409.html, 4 Mar 2009 36 Data derived from interviews with the pickers of Kpawmo village, Dr. Joshua Yidana, and Walisu Alhassan, Jan 2010.

37 Chalfin,Brenda. Shea Butter Republic. 1 ed. State Power, Global Markets, and the Making of an Indigenous Commodity. New York and London: Routledge, 2004:48 38 Parboil means to partially boil. When parboiling sheanuts, the process takes about 45 minutes – 1 hour of in a large kettle using locally gathered wood or homemade charcoal.

39 Industry average for quantity translates to about 1/3 of the weight of nuts. In other words, a 200 lbs bag of nuts yields approximately 67 lbs of shea butter. The higher quality nuts and better processes yield more, while lower quality and poorer processes yield less.

40 Personal Interview with pickers of Kpawmo Village, 19 Jan 2010 41 Agubretu, Christian, "Buipe Sheanut Processing Factory - A Dream Come True," 27 Nov 2009, http://weblogsafrica.com/ghana/economics-sheanut-factory-buipe-sheanut-processing-factory-adream-come-true/, (accessed 18 Mar 2010).

42 Ghana Trade and Livelihoods Coalition, "Study Report: Unleashing the Shea Potential - A Baseline Data Analysis." (2009) 43 Ghana Cocoa Marketing Co (UK), "Our History," <2008.http://www.cocoamarketing.com/50th_anniversary.php >, (accessed 19 Mar 2010).

44 Business & Financial Times, "PBC Ventures into sheanut industry," 18 Feb <2009.http://topics.myjoyonline.com/business/200902/26503.asp>, (accessed 25 Mar 2010).

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Ghana News Agency, "GNA PBC sets up subsidiary company to deal in Shea butter," 25 Sept 2009, http://www.ghanaweb.com/GhanaHomePage/economy/artikel.php?ID=169327, (accessed 25 Mar 2010).

47 Ghanaian Chronicle, "Optimizing the value of shea nut [sic] in poverty alleviation," 6 Oct 2009, http://www.modernghana.com/news2/242249/7/optimizing-the-value-of-shea-nut-inpoverty-allevi.html, (accessed 25 Mar 2010).

48 Agubretu, Christian, "Buipe Sheanut Processing Factory - A Dream Come True," 27 Nov 2009, http://weblogsafrica.com/ghana/economics-sheanut-factory-buipe-sheanut-processing-factory-adream-come-true/, (accessed 18 Mar 2010).

49 Ghana News Agency, "Gov’t To Spend Over GH¢200 million On SADA," 16 April 2009, <http://inc.com.gh/business/govt-to-spend-over-gh¢200-million-on-sada.html>, (accessed 30 March 2010).

50 Agubretu, Christian, "Buipe Sheanut Processing Factory - A Dream Come True," 27 Nov 2009, http://weblogsafrica.com/ghana/economics-sheanut-factory-buipe-sheanut-processing-factory-adream-come-true/, (accessed 18 Mar 2010).

51 Ghana Trade and Livelihoods Coalition, "Study Report: Unleashing the Shea Potential - A Baseline Data Analysis." (2009) 52 Lovett, P.N. & Haq, N., "Evidence for anthropic selection of the sheanut tree (Vitellaria paradoxa)." Agroforestry Systems (2000): 274 53 http://www.uds.edu.gh/profile.php (accessed 16 May 2010).

54 For a list of the Ministers of Ghana visit: http://www.ghanaweb.com/GhanaHomePage/republic/ministers.php (accessed 26 May 2010).

55 International Fund for Agricultural Development, "Ghana," http://www.ifad.org/media/success/ghana.htm, (accessed 7 April 2010).

56 Hartwall, Jerker, President & CEO, "AAK Group Policy: Corporate Social Responsibility," February 2009, (accessed 3 Mar 2010).

57 Ibid 58 United Nations Global Compact, “What is the Global Compact,” <http://www.unglobalcompact.org/>, (accessed 3 March 2010).

59 Ibid 60 Clark, Taylor. Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture. 1 ed. (New York: Little, Brown, and Company, 2007), 172.

61 Agubretu, Christian, "Buipe Sheanut Processing Factory - A Dream Come True," 27 Nov 2009, http://weblogsafrica.com/ghana/economics-sheanut-factory-buipe-sheanut-processing-factory-adream-come-true/, (accessed 18 Mar 2010).

61 International Fund for Agricultural Development , "Ghana," 62 Clark, Taylor. Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture. 1 ed. (New York: Little, Brown, and Company, 2007), 183.

63 Based on the Peace Corps manual, “Shea Butter, A Guide to Production and Marketing,” by Dave McNally, March 2008 64 http://www.vermontsoap.com/wholesale/whshea.shtml 65 http://shop.nordstrom.com/S/2885808?cm_cat=datafeed&cm_pla=skin%2Fbody_treatment:han d_%26_body&cm_ite=l'occitane_ultra_rich_body_cream:6786&cm_ven=Froogle&mr:trackingC ode=23DFCFFD-D981-DE11-B712-001422107090&mr:referralID=NA 66 http://www.thebodyshop-usa.com/lip-treatments/prod6400003

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