On the road from Kumasi to New Edubiase, home of the bewitchingly photogenic Ghanaian Adansi tribe, you are unlikely to see a pothole. The entire road is a pothole - a red-earth track with occasional rafts of Tarmac which drivers avoid at all costs for fear of wrecking their suspension. As we climb a gentle gradient past the Mountain Slope Guesthouse and the Glory Nursery, the road ahead swarms with vehicles criss-crossing and meandering in our path, slewing across two lanes into the face of oncoming traffic to avoid a slightly raised road surface. In the heat mirage, it is hard to tell which cars are real and which are not, and the roadside wrecks, crushed flat like compacted drinks cans, are testimony to many a fatal illusion.

Between Komfokorum and Dompoase, a man dangles a rat the size of a rabbit in front of our windscreen, trying to sell us bush meat; beneath his tarpaulin, I can see the brushy quills of something resembling a porcupine. At a police roadblock to stop illegal loggers, we are besieged by young women selling plantain, yams, cassava crisps, bananas, water - anything just for a few cedis (there are 14,000 to the pound). This harsh, impoverished district is the heart of Ghana's cocoa industry, though you wouldn't guess it from the landscape. Beyond the road and the red dust clouds, the vegetation may be lushly exotic, a vista of umbrella-like banana leaves and emerald-green oil palms - but there is nothing as imposing as a plantation or as organised as a farm.

'The village we want to show you is here,' says Fred Amponsah, area manager for Kuapa Kokoo, the co-operative hosting our day in the Adansi kingdom. Since its inception 10 years ago, the company has been buying cocoa from its members (who now number 45,000), weighing it honestly, paying the farmers promptly and giving them a bonus based on end-of-harvest profits. In the days before Kuapa, none of this was guaranteed. Part of the crop is sold under the Fairtrade initiative, which not only pays the farmers a fixed price for their cocoa beans, regardless of fluctuating market prices, but a 'social premium' of US$150 (£97) a tonne which helps fund health and community projects.

We are passing a sign for one of them now - 'Hand Dug Well and Pump, a Kuapa Kokoo Project' - and here we swing left on to a rutted track that makes the unmetalled Kumasi highway look like the M25. Before long, our vehicle is pitching and yawing like a boat in high seas and I can feel the mud ridges and boulders under my feet, pushing up through the floor. 'We are in the plantation now,' says Fred, pointing out the low, shady trees on either side of us. They are heavy with cocoa pods of every hue, some red or russet, others mottled green and yellow like papaya. The boundaries between the small plots of land are marked with exotic flowers. 'How many individual farms are there?' I ask, and Fred shrugs and says, 'I don't know. Thousands.'

As far as the eye can see, there are cocoa trees. After a 20-minute Big Dipper ride we pass the hand-dug well and gleaming silver pump bestowed by Kuapa Kokoo (which means 'good cocoa growers'), then turn a corner into Adansi Koforidua village and step out into a palaeolithic timewarp.

In a sand clearing, a cluster of mud huts recalls a Stone Age settlement. The primitive wattle-and-daub dwellings have no running water or electricity and food is cooked on a bucchia - three squat columns of baked mud, forming a tripod on which broken iron cooking pots sit with a fire burning beneath. One shack comprises a shared kitchen, with a larger fire, a chimney of sorts, a wider range of pots and a henhouse next door, its straw studded with gleaming white eggs. 'This is a grinding stone for medicinal herbs, used for first aid,' one villager tells me. 'The hospital is five miles away,' she says, her seven-month-old baby bound to her back with vibrant emerald-and-orange Kente cloth. 'It's about a one-hour walk.'

The only twenty-first-century structure I see is the breeze-block shed where dried cocoa beans are bagged, weighed (on reliable scales) and stored ready for collection; it's a strong indication of the villagers' sense of priorities. In a sun-dappled clearing under a cocoa tree - what else? - I sit down with children from the village and ask them how the Kuapa Kokoo co-operative has changed their lives. 'When money is short,' says Kwaa Isaac, 13, 'you can come to the farmers' meeting and make people aware straight away that you are financially handicapped. It's someone to talk to when things are hard.'

Janet Kwa-kye, 15, says the regular income from Kuapa has made her parents less worried about sending her to the nearest school - a 1km walk away - to which she often carries firewood requested by the teachers. 'Before, my father had to make sacrifices to send me to school,' she says, 'by taking money away from the business to pay for books and uniforms. Now, we can afford both.' Before Kuapa, says Kwaa, there was less food: 'My parents made sure they cooked a meal before I went to school because I wouldn't eat again until evening. We ate twice a day. When Kuapa pays the farmers, I am given money to take to school and buy rice. We eat three times a day.'

While the money in their pockets is a direct result of Kuapa's prompt payment system and its supervision by trust-worthy elected officials, the supply of drinking water is down to Fairtrade sales. Though they account for just two per cent of the Kuapa farmers' total business, the $150 premium goes a long way in Ghana where the cedi is so devalued. When the weakness of Ghana's currency is taken into account, the average cocoa farmer here earns £150 a year - roughly what the average British family spends on chocolate in the same period. Few children here have ever tasted chocolate. Nor is the standpipe, where the villagers now gather in an atmosphere of celebration, the only fruit of Fairtrade. There is a privately run school for 360 farmers' children, agricultural training and the High-Tech initiative which funds crop spraying and pest control in the Adansi and Ashanti regions.

With Kuapa funding, newly qualified medical students now visit Adansi Koforidua and other villages every few weeks, dispensing medicines and treating the sick. 'In the old days,' one farmer tells me, 'people used to die of TB in the hospital if they had no money. Now, the government is introducing health insurance - and part of the social fund buys insurance for farmers.'

The doctors' visits have inspired Janet Kwakye to contemplate a career in medicine. 'She wants to be a nurse,' Fred Amponsah tells me, acting as interpreter - and I ask whether she wants to be a nurse in this village. 'Initially, she wants to stay in the city where she can get money,' he translates, 'but then she will open a clinic nearby so she can give nursing help back here in the village.' Kwaa Isaac, who is about to turn 14, is adamant he wants to be a mechanical engineer because he knows farming is hard.

It's a reality confirmed by Grace Lamptey, 22, whose small frame and reticent manner make her seem half her age. She has harvested cocoa all her adult life. 'Things aren't easy,' she says, 'but before Kuapa they were worse. If you had financial problems there was no way out.' Now, she explains, Kuapa encourages women to make extra money through diversification. Later, I am shown traditional alata soap (made from cocoa husks and used for washing clothes), cocoa vinegar, cocoa gin, cocoa jam and palm oil, all sold locally to make ends meet.

Richard Ampomah, 21, the son of a cocoa farmer, tends a plot near Adansi Koforidua. 'When you wake up early in the morning, you work,' he says. 'After sharpening your cutlass you go to the farm at six o'clock, unless it is a Wednesday - the owner of this land says you shouldn't work on Wednesdays.' During the main harvest, which begins in October and peaks in December, it is not unusual to cut down 3,000 cocoa pods a day. With such hard physical labour in the searing heat, what do the farmers do for food and water? 'Your wife, or maybe your mum, brings you food because she is at home,' says Richard. 'We eat fufu [cassava, plantain or yam mashed to a sticky pulp and submerged in soup or palm oil] or plantain and yam palaver. That is our traditional food in Ghana.'

Water is brought in containers from the well but it hasn't always been so. 'Before Kuapa,' Richard explains, 'we didn't have a pipe in this village. There was no water. We would drink from streams, or from the river Pra. In the dry season, the women would fetch it and carry it home in jars on their heads, or from dirty tanks which gave us diseases. Life is better now.'

In a clearing beyond the village meeting place, to a chorus of cockerel crows, he and other farmers give me a crash course in cocoa production. 'You plant the seeds yourself or buy a sapling from one of our research stations,' Fred Amponsah explains, 'and they thrive in the shade of orange or mango trees.' But the plant requires sunshine, too, so the canopy must be pruned. 'It takes two or three years for the tree to bear fruit,' he adds, 'and three to four months for it to reach this ripe, yellow stage.' Picking up a long pole with a hooked end, a farmer plucks down a pod and cleaves it open with a cutlass. The white, milky seeds (or beans) inside are wrapped in plantain leaves to ferment in the shade - the most crucial process in cocoa farming. 'In Ghana, we leave them for six days to develop a full flavour,' says Fred. 'That's what makes our cocoa the best.'

From there they are taken to giant tables made of rush matting to be dried in the sun. It is these dried beans, with their yeasty aroma, that are roasted and processed into chocolate. There are several tables in Adansi Koforidua, all laden with beans at different stages of maturity.

Small and blackened specimens are graded out during the drying period, which lasts several days more. 'When you break them open, they should be brown inside, the colour of chocolate,' Fred explains. They smell and taste like chocolate, too. Once dry, they are taken to the weighing shed to be stored in sacks. 'Quality control is crucial,' says Fred, 'so we use an electronic gauge, called an Aquaboy, to measure moisture content. It should be less than 10 per cent.'

In the shed, great care is taken to weigh the sacks of beans accurately. Before Kuapa was formed in 1993, middlemen buying on behalf of Cocobod (the government's cocoa marketing body) fixed the scales to cheat the farmers out of a fair price. Now a democratically elected recorder, an official trusted by the villagers, uses a 25kg weighing stone to check that the scales are right. 'Some of the cocoa producers' companies were not so good before,' Richard Ampomah confirms. 'When Kuapa came, everything was all right. They give us DDT pesticides to spray on our crops and orange T-shirts to show we are members of Kuapa.' Is it like a football team? I ask. Richard smiles broadly and says, 'Yes. Pa pa paa!'

Those three words, meaning 'best of the best' in Twi, the local language, have become a kind of mantra for Ghana's empowered cocoa farmers. When they meet, the farmers chant 'Pa pa paa!' and slap each others' hands in a high five. When they eat, they chant, 'Pa pa paa!' and thank God for their fufu. On the road, they hoot their horns three times (the closest they can get to the phrase) if they see a truck or 4x4 they recognise. Even the bumper stickers on cars have a quasi-spiritual, co-operative ring to them, promoting the values of patience and slow, steady growth that lie at the heart of the Kuapa philosophy. 'Easy money, easy trouble', one slogan reads, on the back of a pick-up near Kumasi.

Nowhere is the euphoria more apparent than at the tenth anniversary AGM of Kuapa Kokoo Ltd, a vast public meeting attended by 2,000 farmers - two from each of the 900 or so village societies. Along with other European representatives from Comic Relief, the Body Shop, the Co-op, Twin (the organisation behind Café Direct and other Fairtrade initiatives) and the Day Chocolate Company (which sources cocoa for its Divine and Dubble chocolate bars here), I am in Kumasi to celebrate more than the mere existence of Kuapa. This year, the co-operative - whose farmers also own one-third of the Day Chocolate Company in London - went into profit for the first time. At Jackson Park, a patch of waste ground in the centre of Kumasi, the atmosphere is part world music festival, part Gospel service, part political rally - and we 'whites' (as the speakers are only too happy and proud to call us) are unnerved by the experience.

At 9.30am, I find myself dancing the conga with 100 Ghanaian women. More incongruous, but arguably less uncomfortable, is Kord Budde - a massive German who runs Weinrich Schokolade in Herford, Westphalia, manufacturers for the Day Chocolate Company. Wearing a shirt and tie in spite of the oppressive heat, he is swaying rhythmically with the women and waving a white Kuapa Kokoo handkerchief - specially made, like the farmers' boldly printed Kuapa robes and dresses, for the occasion.

My interpreter, Pearl Kwakuyi - an account manager with Kuapa - gives me a handkerchief to wave as well. Her work is certainly cut out for her. Over the next six hours, she will translate an endless stream of introductions, acceptance speeches, keynote addresses, auditors' reports, votes of thanks and closing prayers from Twi into perfect English. Like Fred Amponsah (who has a degree in economics and once worked as a government analyst) and Kwabena Ohemeng Tinyase (Kuapa's charismatic MD, an economics graduate with a diploma in marketing), Pearl is a smart cookie. 'He's saying, "Chief, you carry yourself with such majesty",' she translates, as the chairman greets an Ashanti tribal leader slowly ascending the podium. 'Now he's saying, "You always look like a chief; the people here thank you for your most regal presence".'

In the stultifying heat, we watch a procession of psychedelically clad Ashanti elders - paramount chiefs, chiefs, sub-chiefs, chief farmers, local politicians - taking their seats beneath an awning decked with forlorn silk flowers. One arrives under a baroque umbrella with a boy car rying a gold cushion before him. Another crunches to a halt in a white Jeep driven by a bodyguard with 'Mobile Force Unit' embossed on his uniform. 'That is the honourable regional minister,' Pearl announces. The Ashanti king, Otumfuo Osei-Tutu II, isn't here but is represented by his son. Even the Ghanaian President, John Kufuor, who is addressing the United Nations in New York, sends his greetings to Kuapa by mobile phone.

As the speeches rumble on towards noon, vultures wheel overhead; a herd of goats, which passes this way at the same time every day, wanders across the park and the crowd suddenly becomes animated. It is time for the entertainers. A man dressed as a clown picks up a microphone and addresses the crowd like an MC. He is stooge to a dancer who lewdly shakes his booty at the assembled European guests, as the packed auditorium cheers. Around the park's perimeter, the entire population of Kumasi appears to have gathered, standing a dozen deep. The dancer's bottom has a life of its own, seemingly detached from the rest of her body, and she is almost sitting on my lap. The drum beats swell to a crescendo, an off-key trumpet sounds, the PA speakers pulverise the earth and the stadium is filled with people dancing, dancing for Kuapa as they might dance after the season's first rains.

In all this Kuapa'd-out, 'Pa pa paa' euphoria, one man grins more broadly than the rest. Kwabena Ohemeng Tinyase, known simply as Mr Ohemeng, has used every ounce of his energy to empower the cocoa farmers and lead them to this day. 'Tomorrow we will announce the end-of-year bonus,' he tells me, over lunch at the Mothers' Union hall in Kumasi, 'which will be 3,000 cedis [22p] a bag.' That comes from premiums paid by the Day Chocolate Company and other Fairtrade purchasers, who guarantee the farmers $1,600 (£1,040) per tonne regardless of the world market price. They also pay a social premium of $150 (£97) per tonne which goes into a trust fund and is allocated to projects that benefit entire villages, not just make a few individuals rich. Unlike aid programmes (of which Comic Relief and other Kuapa supporters disapprove), this route - with its emphasis on education, skills and technology - helps farmers in developing countries to help themselves, to become the engine of their own economic success.

The bold co-operative ethic has its downside, however. Because the social premium doesn't take the form of hard cash in the farmers' pockets (at least, not until the end of the year, when they receive their bonuses), some fail to see the more altruistic benefits of Fairtrade. Of Ghana's two million cocoa farmers, only 45,000 belong to Kuapa - and even they are occasionally sceptical. Because only two per cent of the Kuapa cocoa is sold to Fairtrade companies, Mr Ohemeng concedes, it isn't a lot of money. 'This makes it appear to some that they still need more,' he says. 'What we feel is that, if all cocoa marketed from these farmers was fairly traded, they would earn far more than they are talking about now.' In other words, if 10, 20 or even 50 per cent of cocoa were sold to Fairtrade companies, the benefits to farmers and their families would be huge. The UK chocolate market is worth £3.6 billion a year, so if only one-tenth of that was Fairtrade, it would pay for an awful lot of wells, pumps and schools. The average Brit0n spends £1.20 a week on chocolate - and switching to Fairtrade would be like donating to charity every day.

There is simply no reason for not buying Fairtrade. A Dubble bar (the Day Chocolate Company's novelty product for children) costs 39p, the same price as a Boost at Tesco. Granted, Divine milk chocolate costs more than twice as much as Cadbury's Dairy Milk or Galaxy (99p for 100g as opposed to 49p and 36p respectively) - but at the quality end of the market the Fairtrade product is competitive. Darkly Divine plain chocolate (£1.09 for 100g, made to the connoisseur's benchmark of 70 per cent cocoa solids) compares favourably with Lindt's Excellence dark chocolate (98p per 100g), while Divine's hazelnut milk chocolate is fractionally cheaper than Lindt's - £1.09 per 100g compared to £1.10.

But is Divine as good as Lindt, Côte d'Or or Green & Black's? It certainly isn't far off. Made in Germany to Continental standards (though the milk chocolate was dumbed down a little to appeal to the British palate), it is better than the high-fat, bargain-basement bars we traditionally buy. Besides, the real value for money lies in the fact that paying a few pence more benefits so many.

That message is getting through. In 2001, the value of Fairtrade products at the check-out totalled £44 million (compared to £33m the previous year). In Britain, £1.30 is spent every minute on Fairtrade purchases, which now include not just chocolate and coffee but bananas, mangoes, wine, tea, pineapples and chocolate cake. Ethical shopping is increasing six times faster than the overall groceries market and is worth £5.7bn a year.

In 2002 the Co-op switched all its own-brand block chocolate to Fairtrade, sourcing all its cocoa from Kuapa Kokoo. Overnight, the move doubled the amount of Fairtrade chocolate sold in the UK. 'Within six months,' says David Croft, head of Co-op brand, 'sales of our own-brand chocolate - all Fairtrade - were up by 21 per cent while non-Fairtrade brands had grown by just three per cent. Shoppers have switched allegiance to the extent that Fairtrade growth has out-performed non-Fairtrade growth by a factor of seven.'

It's a burgeoning ethical movement, with something of the momentum and exuberance of Kuapa's AGM in Kumasi. The only difference is, British shoppers can't dance. Nevertheless, Mr Ohemeng is confident that the Co-op figures indicate what many British shoppers are now thinking. 'If I have a message for all consumers of chocolate in Britain,' he says, 'it is really to buy more Fairtrade products. It gives a clear social message and has a clear social benefit. You will not only be eating chocolate but helping people who are trapped in poverty because of the world market price. We all have to go shopping - and Fairtrade is just going shopping with respect.'

· Divine and Dubble chocolate lines are available at Asda, Booths, the Co-op, Morrisons, Oxfam, Sainsbury's, Somerfield, Spar, Waitrose and Woolworths. Divine Chocolate Company: 020 7378 6550, www.divinechocolate.com