Emphasis on agri-business exports puts small-scale producers at risk
Women have dominated shea production and sales for centuries in West Africa, managing trees, gathering nuts, roasting and crushing kernels to create rich butter used in cooking, cosmetics and medicines.
This women-led shea market value chain now faces increasing uncertainties on various fronts, exacerbated by the COVID-19 pandemic.
A deteriorating security situation in Burkina Faso has seen the country “replace Mali at the epicenter of the Sahel’s security crisis” over the past year, as countries in the semi-arid region engage in increasingly volatile battles against insurgencies with links to al Qaeda and Islamic State.
To explore the potential impact of multiple changes affecting domestic and international trade in shea, the Global Shea Alliance (GSA) – a multi-stakeholder platform comprised of government, private sector, non-governmental organizations, civil society organizations, research and women’s shea producer associations – recently organized three online sessions for a “Virtual Shea Lab.”
The shea trade has been seen by Europeans as a potentially lucrative investment opportunity from at least the early 20th century, said Andrew Wardell, a principal scientist with the Center for International Research (CIFOR), who delivered one of the presentations during the event.
“Various historical, political, economic and social threads are becoming entangled and should be addressed to protect the industry as the region confronts a confluence of significant crises and changes,” he said.
The first significant European incursions into the shea sector involved so-called Treaties of Friendship and Trade that were negotiated with local chiefs by the French, British and Germans as early as the 1890s.
In 1924, a colonial superintendent of agriculture and forestry in the Gold Coast Colony – now Ghana – observed that the collecting of shea kernels was entirely done by women, but anticipated that would change “…when it was found out there was money to be made from shea kernels,” Wardell said.
The most significant growth in shea demand in Burkina Faso has occurred over the past 20 years as large agri-business firms producing Cocoa Butter Equivalents (CBEs) have established trading bases and crushing facilities in the south-west of the country.
Although prices and the volume of trade in shea nuts have both increased, profit margins for women shea nut producers have been reduced as an oligarchy of wholesalers in Bobo Dioulasso — the country’s second largest city after the capital Ouagadougou — continue to act as intermediaries in bulking-up for the large transnational corporations, said Wardell, who has studied the sector for 20 years.
“In Burkina Faso, where 94 percent of households collect shea nuts and 60 percent of households sell shea nuts or butter, shea is the fourth largest source of government revenues after gold, cotton and livestock,” he said. “Not only is it the most significant source of household revenues and subsistence use for women, but it remains a staple food oil for more than 200 million people across sub-Saharan Africa.”
The CBE technology was developed in the 1960s, although the main CBE manufacturers, including the Danish-Swedish speciality fats producer AAK AB., Indian fats and cosmetics company 3F Industries Ltd. and the U.S. agricultural commodities trader Bunge Ltd. did not establish trading bases or crushing facilities in the country until after 2005. Previously, they operated out of West African ports such as Abidjan, Tema and Cotonou and hence, depended on in-country wholesalers.
“Since global demand in chocolate products grew in the BRICS countries – Brazil, Russia, India, China and South Africa – we’ve seen a big growth in demand for shea nuts for use in chocolate manufacture because it’s much less expensive as a raw material,” Wardell said, explaining that cocoa butter can now be substituted up to 5 percent by a so-called equivalent.
Although the CBE manufacturers have recently initiated direct purchasing from women’s shea producer associations, they remain dependent on a complex pyramidal purchasing network established by Bobo Dioulasso wholesalers during the colonial period.
The network trading is based on trust, distant kinships, “apprenticeship” of wholesaler family members and an intimate knowledge of local units of sale — yoruba and cocotassa — and weight loss associated with the drying of shea nuts, he said.
The shea trade in Burkina Faso is now divided into two basic strands, Wardell added. The smaller strand, which represents about 10 percent of trade, is a classic agri-food, vertically-integrated value chain, driven by buyers and increasingly governed by trading standards. This is similar to the horticultural trade from other sub-Saharan African countries such as Kenya with European supermarkets. In this scenario, shea is typically traded as butter to supply the cosmetics industry.
The second strand is where 90 percent of the trade now occurs; it involves the unprocessed nuts or semi-processed nuts. The nuts are crushed, then they are fractionated to separate the different oils, the latter occurring outside the country.
Now, the coronavirus pandemic poses new threats due to lockdowns, which have limited business activities, led to unemployment and reduced incomes, and limited mobility while creating obstacles to free trade, even as the African Continental Free Trade Area agreement (AfCFTA) moves ever closer to implementation.
“COVID-19 has made the 16 million women throughout sub-Saharan Africa who rely on revenues from shea nuts and shea butter increasingly vulnerable,” Wardell said.
The U.N. Economic Commission for Africa estimates that the African continent will face an immediate decline in gross domestic product growth from 3.2 percent to 1.8 percent in 2020 due to COVID-19, but with a further adverse impact if it is not contained in the short-term, said Ify Ogo, regional coordination specialist for AfCFTA at the U.N. Development Programme and a speaker at the GSA Africa Conference 2020.
“Trade is a significant conduit for this negative impact through three transmission channels,” she said, explaining that compressed demand related to Africa’s most important trading partners — including the European Union, China, the United States and India — are undergoing simultaneous crises and reducing imports.
Additionally, prices for many of the commodity exports on which Africa depends are dropping. Finally, disrupted supply chains are taking a toll, more than half of Africa’s exports go to countries that are significantly affected by COVID-19, while 53 percent of its imports originate from such significantly affected countries, she said, adding that quarantines and movement restrictions further frustrate supply chains.
GSA could see financial gains through AfCFTA, which came into effect in 2019, Ogo said.
But it remains unclear if women shea butter producers will see economic benefits when the free trade agreement — which was originally to be launched on July 1, but has now been put on hold due to coronavirus — is eventually implemented.
While negotiations are still underway, 55 member countries would remove tariffs from 90 percent of goods, with the goal of boosting trade on a continent-wide free trade market valued at more than $3 trillion, which would serve 1.2 billion people.
Under the agreement, shea exports could increase due to the removal of trade tariffs on shea products. Currently, tariffs on raw shea butter are between 10 and 40 percent in African countries, Ogo said. Other benefits would include the increase in productive capacity and enhancing trade readiness, she said.
Through the agreement, trade has a key role to play as a driver of economic recovery and development, therefore, for Africa, the post-COVID-19 stimulus package is the actual AfCFTA and the implementation of this agreement, she said, citing Wamkele Mene, secretary general of the AfCFTA secretariat.
“Under this scenario, trade routes must be open, so as yet it’s unclear how the single market would benefit women involved in the shea industry,” Wardell said. “As well, due to much of the work occurring in women’s collectives and associations, physical distancing makes production untenable.”
AfCFTA does not necessarily take into account historical trade routes, which are not always reflected in official country borders. Although it may be beneficial over the long term, it is still unclear how AfCFTA will help women shea producers in the short term, even without factoring in COVID complications.
“There is only so far the sector can expand,” Wardell said. “Women clearly get greater financial benefits from value-added processing of shea nuts into shea butter, then selling the unprocessed nuts. Even though there are greater volumes involved, the women are still getting proportionately very little from the trade in shea nuts.”
Research into this area continues at CIFOR through Globalizations in a nutshell: Opportunities and risks for women shea producers in West African shea parklands. The project, which is supported by Canada’s International Development Research Centre (IDRC) and the CGIAR Research Program on Forests, Trees and Agroforestry (FTA), has so far supported three master’s students from Nazi Boni University’s Institute of Rural Development in Burkina Faso.
“Three draft theses are under review, one by a student studying the costs and benefits of certification of shea butter as a way of increasing the revenues of women shea producers,” Wardell said.
By Julie Mollins. FTA is the world’s largest research for development program to enhance the role of forests, trees and agroforestry in sustainable development and food security and to address climate change. CIFOR leads FTA in partnership with Bioversity International, CATIE, CIRAD, INBAR, ICRAF and TBI. FTA’s work is supported by the CGIAR Trust Fund.