Special feature: Ethical cocoa sourcing under the spotlight
Ghana cocoa production. Pic: Shutterstock
Sustainability standards in cocoa sourcing have remained rightly high on the global agenda. Neill Barston examines the core issues and developments making major headlines
As one of the most critical issues facing international chocolate confectionery markets, ensuring sustainable, ethically sourced cocoa remains of paramount importance to the future of the industry.
From our extensive coverage over the past few years, it is evident that leading businesses in the sector have sought to raise their game regarding their direct engagement on the issue. With key programmes from the likes of Mars, Cargill, Mondelēz, Hershey, Nestlé and Barry Callebaut all pledging to make a difference over the past decade, there is little doubting that there has been positive movement on pivotal issues of farmer payment, child labour and protecting forests that remain central issues within cocoa supply chains.
However, the scale of such tests is still notably vast. This has seen significant sums of money diverted into schemes that have focused on supporting farmer communities, including the introduction of Fairtrade premiums, women’s empowerment initiatives, increasing access to education for young people, as well as a drive for greater use of advanced agroforestry techniques.
Among those groups, Barry Callebaut has stated it ‘wants to make sustainable chocolate the norm by 2025, with its latest progress report underlining that it had reached a total of 171,000 with its positive actions, including child labour remediation measures that have resulted in a total of 50 per cent of its products presently considered to contain 100 per cent sustainable cocoa or chocolate.
There has also been encouraging developments from major confectionery businesses including Ferrero, Mars, Mondelēz, and Nestlé teaming up with Fairtrade to back the soon to be introduced due diligence laws that place mandatory controls on sourcing supply chains responsibly in terms of tackling child labour, as well as key issues of addressing deforestation (see our feature on this earlier in the edition). However, while such progress is welcome, recent studies revealed that 1.5 million children in Ghana and Ivory Coast remain exposed to child labour despite the best efforts of industry – which faces an uphill battle to reach self-stated targets within the next few years.
Indeed, since the Harkin-Engel Protocol was signed in 2001, the industry has pledged to commit to delivering a voluntary code of higher standards that eradicated ‘the worst forms of child labour’ – yet it seems if anything, the Covid-19 pandemic has placed even further pressure on an agricultural system already under significant strain from a downward spiral of cocoa values in recent years. With prices pegged at a comparative low, farming communities have become locked into a spiral of being unable to afford adult labourers, resulting in children being exposed to the risk of being deployed to engage within potentially hazardous activities such as heavy lifting, machete work and crop spraying.
Major income gap remains
Underlining this issue, a key study on the income gap has come from Mondelēz International in 2020 produced research that indicated the farmer income gap for Ghana and Ivory Coast stood at a considerable sum of $10 billion. Consequently, the industry has reacted with premiums paid in the form of the Living Income Differential (administered by the region’s governments ($400 a tonne of cocoa), with mixed results, as well as initiatives such as Fairtrade’s price premiums that have attempted to drive sector change.
It’s this very situation which was placed under the microscope in the recent Cocoa Barometer report from the non-profit Voice Network industry organisation. Perhaps of greatest concern, it asserted that present policies for tackling cocoa supply chain issues had failed to address low farm gate prices paid to agricultural workers. In its view, this was in part down to what it described as ‘Colonial era dynamics’ favouring a system of sector processing profits largely returning to major European-based cocoa and chocolate companies.
Hope on the horizon
Despite this backdrop, there have been some key sector breakthroughs that have emerged in recent years that may prove pivotal in terms of addressing entrenched systemic problems. Among such initiatives is the business model of Made In Africa (MIA), a chocolate company founded on a model of farming cocoa and producing its ranges directly in Madagascar, which gained honours at our recent World Confectionery Conference, for the development of an ethical bean-to-bar supply chain in Ghana.
As the company explained, thanks to adding value beyond the cocoa farm gate, the brand will generate more than two times the economic value of cocoa export, while supporting skilled jobs in Ghana. In a similar vein, the West African nation is also home to another business seeking to retain manufacturing and processing within the country, is Fairafric.
This German-Ghanaian company has set out ‘to revolutionise the chocolate world’ in ensuring it adds value to the cocoa chain through maintaining its operations locally. As such, the firm has devised its ‘tree to praline’ approach from its own manufacturing facilities, rather than being handled by European-based operations as has typically been regarded as the sector norm. It attempts to give back through paying what it believes are the highest premiums in West Africa, $600 per tonne of organic beans, with its stated goal of enabling a living wage at a level that will also enable schooling for the next generation, and further combat child labour.
Another business that has been offering something different is Swiss-Ghanaian firm, Koa, which is aiming to create market disruption through innovative upcycling of cocoa fruit. Working closely with smallholders in the sector, it reduces on-farm food waste, generates additional farmer income and creates new jobs in rural communities (see our full feature next month).
The organisation recently gained coveted B Corp status for its sustainability credentials, joining a growing movement of around 6,000 certified businesses, including companies like Ben & Jerry’s, Innocent Drinks and Valrhona. Lucy Muigai, CEO of the African B Lab certifying Koa, noted that the company’s acceptance into the movement’s ranks “signalled a shift towards greater accountability and transparency in the cocoa sector,” in terms of directly supporting farmers.
Chocoa sustainability
Among a number of events at which this very issue has come under the microscope in recent times has been the return of the Chocoa event in Amsterdam last summer. This placed sustainability, and indeed ethical sourcing of cocoa at the heart of its focus. It included an opening address from Michel Arrion, the president of the International Cocoa Organisation, who expressed his own view that farmer pay needed to be increased by a factor of around three from present rates (which stand in many instances at under $1 a day, well below global UN-defined poverty levels.
Event co-organiser Jack Steijn spoke to Confectionery Production (pictured below) on the significance of its 10th anniversary, and he remained hopeful that industry tests can be met. As he explained, there were a number of challenges to hosting the event in hybrid format, yet he felt its milestone year offered a strong balance of some commercial opportunities for cocoa traders to physically market their offerings, as well as engage on the biggest issues of delivering on future sustainability for the sector.
“Our company, Equipoise, means counterweight, and that’s what we are trying to do with the industry in helping cocoa farmers – there have been lots of them at Chocoa, including co-operatives from Ghana and Cameroon, Peru and the rest of the world – all of whom are meeting with chocolate makers,” explained the event host, who explained the show has its dual aspect of its chocolate makers’ forum, as well as its linked sustainable cocoa conference. “I think what keeps me motivated is impact – what we can say with the projects we have with Equipoise, such as the Cocoa Origins venture (which targeted 100 per cent sustainable cocoa to be produced in the Dutch cocoa market by 2025), that it really makes a difference for farmers, and I like the fact we can measure the impact of what we do,” he noted, which he felt had been evidenced by a number of farming enterprises returning multiple times since the event’s inception.
As he enthused, he has also taken a further active role in cocoa sustainability in taking on a role as chair of the traceability committee of the national sustainability platforms of France, Belgium, Netherlands and Germany. “I have travelled to Ivory Coast and Cameroon – and the thing I found quite shocking was that even though there has been positive impact from projects, because of the general economic conditions there, life has actually been much harder there for farmers. Inflation is very high, and Covid has struck enormously in those countries, which are fighting an uphill battle. “I think overall, there has been a lot that has been done over the past 20 years, and across industry, NGOs and government, there’s no dispute over the direction of travel, it’s about the speed of getting there – some want to go faster than others. “But with the new legislation that is coming through in Europe, there is no room for anyone ‘cheating’ the system,” added Steijn, who remains hopeful of the prospect for delivering change.
For its part, the European Cocoa Association also held its key forum event in recent months, which we reported on in Rome, Italy. Notably, the event featured contributions from a number of leading businesses including Barry Callebaut’s CEO Peter Boone, who believed the company, as well as wider industry had made notable strides as regards overall sustainability and sourcing practices.
However, he conceded it was of concern that as a sector, only two per cent of businesses were entirely meeting their own direct goals, which he believed needed to be collectively addressed. During its sessions, there were presentations on key themes spanning due diligence in supply chains, regional industry data sharing plans, as well as exploring advanced satellite geomapping technology.
Speaking exclusively to Confectionery Production, Paul Davis, the ECA’s newly appointed president (pictured below at the ECA meeting in Rome), also offered a note of optimism that despite the tests facing the industry, a focus on collaborative working would eventually pay off. Among the main gains to have emerged from the meeting in his eyes was further progress being confirmed in relation to the Cocoa and Forests Initiative (CFI), which over the past five years has engaged industry (over 35 key businesses), NGOs and governments to place reducing deforestation as a core strategy. “Getting to a point where we now have traceability data from around 1.2 million farms is a significant number, and shows the level of co-operation that is there. With the CFI, one of the great changes over the past two years is that working together on long-term goals has become more mainstream,” he explained.
“I think we have all realised that the best way for all of us to just see the sector grow fairly, to avoid excessive costs and complications is simply co-operation, as we’re all trying to do the same thing,” noted the senior cocoa trader who works for French firm, Sucden.
He revealed there are challenges in terms of processing and evaluating such large volumes of largely polygon-mapped data, which required careful handling. “I think if we are going to go down this route, then it should be something that is legal, and done for everyone as standard,” he added on whether the concepts behind the CFI should be backed by mandatory controls of the kind which are being proposed by the EU in terms of supply chain legislation being brought forward.
Though he is keenly aware of the tests which the wider cocoa industry faces in its supply chains, he reflected that the event had provided a valuable platform for the entire sector to voice its issues, with some genuinely positive conclusions emerging. He added: “Cocoa to us is an incredible product, we have 15-20 million people dependent on that in West Africa, which is an enormous responsibility, which is why it is so treasured. “From the trade’s point of view, we want to see clarity, agreement and engagement.
We want to see this finished. Let’s look at the legislation, making sure that standards are aligned and practical. Will we be perfect from day one, probably not? But we’ll be 98 per cent there, and a million miles from where we were 25 years ago.”
