Abstract

This study examines supply chain risk management at Telcar Cocoa Ltd., focusing on the interplay between agroforestry, labor practices, financial tools, technology, and internal governance reforms. Utilizing a mixed-method approach with a sample size of 40 respondents, the research investigates the role of climate-smart practices in mitigating environmental risks, the impact of labor practices on compliance with Fairtrade and EUDR standards, and the effectiveness of financial mechanisms in stabilizing farmer incomes amid cocoa price fluctuations. Findings reveal that agroforestry significantly contributes to environmental resilience, while labor practices are crucial for maintaining compliance with sustainability standards. Additionally, financial tools such as forward contracts and price stabilization funds are recognized for their potential to support farmers during market volatility. The study further highlights the importance of technology in enhancing traceability within the supply chain, with stakeholders emphasizing the need for improved data accuracy and accessibility. Governance reforms are identified as essential for aligning incentives with sustainability goals, recommending stronger farmer incentive programs and transparent reporting systems to foster trust and accountability. Overall, this research provides useful findings for Telcar Cocoa Ltd. to enhance its supply chain resilience, promote sustainable practices, and fulfill its commitment to ethical cocoa production. The recommendations aim to strengthen internal governance, leverage technology, and ensure financial stability for farmers, ultimately contributing to a more sustainable cocoa industry.

Keywords: Supply chain risk management, Telcar Cocoa Ltd., agroforestry, climate-smart practices, Fairtrade compliance, EUDR standards, financial tools, traceability, internal governance, sustainability.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Supply chain risk management (SCRM) is pivotal for ensuring the resilience and sustainability of global agricultural value chains, particularly in sectors like cocoa, where environmental, social, and economic vulnerabilities intersect.The cocoa supply chain is a critical global economic driver, valued at over $11.8 billion annually, with 70% of production concentrated in West Africa . However, this sector faces systemic risks spanning climate change, price volatility, logistical inefficiencies, and socio-economic disparities. These challenges threaten the livelihoods of 5–6 million smallholder farmers and disrupt global chocolate markets, which are projected to grow at a CAGR of 2.3% through 2025 .

The cocoa supply chain’s fragility demands integrated risk management strategies that address climate, economic, and social vulnerabilities. While global initiatives like blockchain traceability and EU regulations set frameworks, localized solutions—such as Cameroon’s road infrastructure projects and agroforestry—are equally vital. Collaborative efforts among governments, NGOs, and private stakeholders is important.

The cocoa supply chain in Africa is a cornerstone of the global chocolate industry, with West Africa producing over 70% of the world’s cocoa beans, primarily from Côte d’Ivoire and Ghana . However, this critical supply chain faces systemic risks that threaten its sustainability, resilience, and ethical integrity. These risks stem from environmental, social, economic, and infrastructural challenges, exacerbated by climate change, deforestation, and inequitable value distribution. Addressing these issues is vital for ensuring the livelihoods of millions of smallholder farmers, protecting ecosystems, and stabilizing global chocolate markets.

Africa’s cocoa sector epitomizes the complex interplay of globalization, sustainability, and equity. Mitigating its risks requires systemic changes—from agroecological innovation to equitable value redistribution. By adopting integrated strategies that prioritize farmer livelihoods, environmental stewardship, and technological advancement, stakeholders can transform cocoa supply chains into models of resilience and ethical production. Failure to act risks collapsing an industry vital to both local economies and global consumers. 

Cameroon exported more than 292,000 metric tons of cocoa during the 2020-2021 season, making it the 4th largest cocoa exporter in the world, and the 3rd largest producer in Africa after Ghana and Côte d’Ivoire. So far, Cameroon has distinguished itself from these countries by preserving its forest resources. The forest cover of Côte d’Ivoire has declined by 50%, Ghana by 22% and Cameroon by 11% from 1990 to 2020, yet in 2020, Cameroon still has 40% of its territory covered by forests.A number of macroeconomic and political factors point toward accelerated growth in Cameroonian production over the next 20 years. There are three major factors driving the global cocoa market: the increasing demand (an average of 3% growth per year over the last 20 years, including 6% growth per year in Asia according to ICCO data2 ), the limits reached by Côte d’Ivoire and Ghana (land pressure and production stabilization policies) and the Cameroonian government’s desire to double national production (in 2025, 640,000 tons are provided as a target in the National Agricultural Investment Plan).

Following these conditions, there is an apparent risk of a cocoa ‘booming’ in Cameroon, and more generally in Central Africa, based on the model of successive cocoa booming theorized by a CIRAD researcher François RUF3. In this case, Cameroon’s important “forest reserve” could then be threatened.

The rules of international trade are changing, with stricter requirements in terms of supply chain management. The European Union, for instance, targets cocoa as one of six agricultural commodities of priority in the European Commission’s Proposal for a Regulation to Limit Imported Deforestation (ECPR).

The purpose of this proposal is to limit the contribution of EU imports to the deforestation through the introduction of a due diligence procedure.

Nitidæ was commissioned by the European Forest Institute (EFI) to undertake this research on the cocoa sector in Cameroon as part of the European Union’s Sustainable Cocoa Initiative. This report analyses the current level of traceability in the Cameroonian cocoa sector, the transparency of data available, the sustainability risks the sector faces, and existing initiatives to improve sustainability both in public and private sectors.

   Telcar Cocoa Ltd is the Cameroonian leader in the exportation of Cocoa internationally. Telcar is one of the main promoters of certified Cocoa production in Cameroon. Telcar Cocoa is based in the Bonaberi district of Douala

Here is a general introduction to an analysis of the risks involved in the supply chain of Telcar Cocoa Ltd:

Telcar Cocoa Ltd, a leading cocoa processing and exporting company, operates in a complex and dynamic supply chain environment. The company’s supply chain spans multiple countries, involving various stakeholders, including farmers, suppliers, logistics providers, and customers. While the company has established a robust supply chain network, it is not immune to various risks that can impact its operations, reputation, and bottom line.

Supply chain risks can be categorized into several types, including operational, financial, reputational, strategic, and environmental risks (Christopher, 2016). These risks can arise from various sources, such as natural disasters, supplier insolvency, logistics disruptions, regulatory changes, and cybersecurity threats.

In the context of Telcar Cocoa Ltd, some specific supply chain risks that may be relevant include:

– Weather-related risks, such as droughts or floods, that can impact cocoa yields and quality (Läderach et al., 2013)

– Supplier-related risks, such as non-compliance with sustainability standards or labor laws (Utting, 2015)

– Logistics-related risks, such as transportation disruptions or warehouse management issues (Bhatnagar et al., 2016)

– Market-related risks, such as fluctuations in cocoa prices or changes in consumer demand (Leiss, 2017)

This analysis aims to identify, assess, and prioritize the supply chain risks facing Telcar Cocoa Ltd, with a view to developing strategies to mitigate or manage these risks.

1.2 Statement of the Problem

Telcar Cocoa Ltd’s supply chain is under threat from multifaceted risks that jeopardize its operational sustainability and ethical compliance. Environmental degradation, driven by deforestation and climate change, reduces crop yields and destabilizes farmer livelihoods. Social risks, including exploitative labor practices and gender disparities, undermine compliance with certifications like Fairtrade. Economically, price volatility in Cameroon’s liberalized market and high logistics costs (3–4 times higher than global averages) erode profitability. Internally, Telcar’s inconsistent employee incentive systems exacerbate inefficiencies, while weak traceability mechanisms hinder adherence to EUDR standards. Without addressing these interconnected risks, Telcar risks losing market access, destabilizing farmer incomes, and compromising its role in Cameroon’s cocoa sector. 

1.3 Research Questions

1.3.1 Main Research Question

How can Telcar Cocoa Ltd mitigate supply chain risks to achieve sustainable, ethical, and resilient operations? 

1.3.2 Specific Research Questions

1. What role do agroforestry and climate-smart practices play in reducing environmental risks?
2. How do labor practices impact Telcar’s compliance with Fairtrade and EUDR standards?
3. What financial tools can stabilize incomes amid cocoa price fluctuations?
4. How can technology improve traceability in Telcar’s supply chain?
5. What reforms are needed in Telcar’s internal governance to align incentives with sustainability goals?

1.4 Research Objectives

1.4.1 Main Research Objective

To analyze the risk involved in the supply chain of Telcar .

1.4.2 Specific Research Objectives

1. To identify the common risks in supply chain of Telcar
2. How the identified risks affect the supply chain of Telcar
3. To identify strategies for mitigating supply chain risks.
4. Make suggestions and recommendations .