Latest Cocoa Barometer report calls for urgent systemic change to deliver sustainability

The latest Cocoa Barometer state of the industry report has highlighted urgent need for reform of government policy and purchasing practices to ensure the future viability for key producing nations in Ghana and Ivory Coast reports Neill Barston.

According to the sector review, produced every two years by independent advocacy group, The Voice Network, its analysis has placed a spotlight on major ongoing challenges of child labour, deforestation and significantly inadequate pay for farmers gaining extremely low wages that are facing the global cocoa trade as it is presently structured.

As the new report asserted, the underlying driver of the main tests facing the sector is that of poverty within agricultural communities – with present policies failing to take into account the fact that farm gate prices remain stubbornly low. This has been dominated by existing supply chains which the study described was led by ‘Colonial era dynamics’ that ensured a system where the vast majority of profits from the multi-billion industry remain in the hands of cocoa and chocolate companies based in Europe.

Confectionery Production has tracked the key issues in recent years, with major businesses including Mars, Mondelez, Barry Callebaut and Nestle, all putting in place their own respective engagement programmes that have claimed progress in tackling the core issues facing the industry. In addition, there have been recent key developments on a legislative level, namely EU due diligence policies that are presently being introduced that observers believe will have a notable impact on the industry.

However, according to the Voice Network, in order for living income to become a reality for cocoa farmers, ‘action is needed on three separate fronts’ including good governance policies by public bodies; good purchasing practices by the private sector; and good agricultural practices by farmers. As the organisation notes, the past two decades, however, almost all of the cocoa sector efforts have been focused on farmers themselves, sidestepping the necessary changes in government policy and purchasing practices needed to tackle sustainability issues.

As the report added, ‘higher yields do not necessarily lead to increased net income but do lead to greater risks for farmers,’ adding that without significantly higher farm gate prices, sustainability in the cocoa sector is a ‘pipe dream’. This is reflected by the sector’s only major study to put a figure on the exact level of deficit faced by farmers in West Africa, which was conducted by Mondelez.

The US-headquartered firm produced its No Silver Bullet study two years ago that put the income gap for cocoa farmers at $10 billion – though many observers close the sector believe that figure is now far higher due to multiple factors including the increased cost of living, market volatility, and major hikes in prices for fertilisers that is also anticipated to affect cocoa yields within the next few years.

Speaking to Confectionery Production, Antonie Fountain, managing director, noted that several key areas required urgent focus, namely the need to pay farmers considerably more within the sector to ensure its sustainability.

“For the last two decades, at least, the cocoa sector has focused on farm practices to solve the challenges in cocoa. But it is high time we shift that focus to the governance policies and purchasing practices that should form the basis of a business model for cocoa farmers. We need to pay farmers more, we need to shift the risk from the farmer to further downstream in the supply chain, and we need the transparency, infrastructure and rule of law to support that.”

“Our new models show that raising productivity or increasing farm size will never work in isolation to address the myriad of problems in the global cocoa supply chain. Paying a higher price is inevitable if the living income gap is to be closed.”

Range of major issues

As the organisation added, child labour continues to be a challenge in West African cocoa production, where children are involved in age-inappropriate and hazardous labour – with industry studies within the past two years stating that more than 1.5 million minors are affected by the issue within the region, with Fairtrade International noting that the situation is likely to have deteriorated further amid the lingering impacts of the Covid-19 pandemic, as well as the global cost of living crisis that has created further market instability.

Furthermore, the cocoa sector remains impacted by  gender inequality, which raises barriers for women, both as rightsholders and as agents for change within the industry – which many companies in the past few years have attempted to respond to with their sustainability schemes, such as Barry Callebaut’s Forever Chocolate venture, and Mars with its Sustainable in a generation initiative.