Chocolate Scorecard sustainability study calls on sector to deliver living income goals
pic: Fairtrade
The organising team behind the Chocolate Scorecard industry transparency and sustainability study is calling on major chocolate producers to ensure an industry-wide commitment on delivering a living income for cocoa farmers within its supply chains, reports Neill Barston.
Consisting of a total of 37 NGOs, and universities, the collaborative group has made its plea to the sector, as findings from its study claims that only 11% of company respondents from its survey of leading manufacturers can fully trace their core supplies.
According to the initiative’s fourth edition scorecard, its analysis of the $131 billion global market examined the cocoa chains of major businesses and their sourcing policies, examining their performance on policy and performance and outcomes on reducing poverty, child labour and environmental impact within their respective operations.
As the scorecard’s organisers noted, more than 90% of industry was surveyed, though it noted that around half of companies had adopted a living income reference price by which to pay their suppliers, leading businesses including Mondelez and Unilever declined to take part in the industry examination, along with retailers Walmart, Tesco and Whole Foods. Confectionery Production has approached Mondelez for comment on its decision and is awaiting a response at the time of going to press.
The findings from the study drilled down to six areas, exploring approaches to deforestation, climate change, agroforestry, living income, and child labour, rating them on a scale of green (leading the industry), yellow (making progress), orange ‘on a journey’ and red, lagging significantly behind the sector.
Companies including Alter Eco, Tony’s Chocolonely (which has worked with Fairtrade (main image), Beyond Good, Halba, and Original Beans were all rated in its most positive category for sustainability policies, while Kellogg’s was rated red along with Japanese confectionery groups Glico and Morinaga, South Korea’s Lotte confectionery, as well as German sweets firm Storck.
As Confectionery Production has previously reported, major confectionery groups including Mars, Mondelez, Ferrero, Cargill, Nestle, Barry Callebaut and Cargill have all established their own initiatives targeting major gains on sustainability. These schemes, in conjunction with industry partners including the World Cocoa Foundation, and governments within West Africa have collectively acknowledged that actions on the ground need to be scaled-up significantly in order to bring about significant, tangible change to improve farmer pay, living and environmental conditions for core markets in Ghana and Ivory Coast, which represent two thirds of the cocoa trade.
Describing its approach towards assisting cocoa communities, Barry Callebaut, which has instituted its Forever Chocolate programme which has set a goal of lifting more than 500,000 farmers out of poverty, has instituted a defined policy on the issue.
The company stated on its website: “As a result of low yields due to poor farming practices, ageing trees and limited access to inputs such as fertiliser and planting materials, the average cocoa farmer’s income is significantly below the World Bank’s extreme poverty line of USD 1. 90/day. Such low income makes it impossible for farmers to invest in their farms, or to hire staff to work the fields.
“Aligned with the industry’s CocoaAction strategy, we commit to tackling farmer poverty by empowering farmers to earn a better income through access to training, coaching, financing, and planting material. We will also reach out to governments in origin countries and work with donors to create an enabling environment for the sustainable replanting of cocoa farms.”
For its part, as recently reported, Mars Wrigley confirmed it is closing in on a core sustainability target, stating that as of this year, 100% of its supplies purchased for its direct factory operations in Europe will be verified as responsibly sourced cocoa.
This has been built around a major investment of $1 billion over a decade into delivering its Cocoa for Generations Strategy, which was established in 2018 with the aim of delivering real, lasting positive change across the supply chain for farmers of the future.
In addition, this month, the Nestle group confirmed it is extending a pilot of 1000 farmers in Ivory Coast to a further 10,000 families, which the company said would be assessed, adapting where necessary, before extending the program throughout our global cocoa supply chain by 2030.
Significantly, the Swiss-headquartered firm acknowledge that ‘poverty is the main reason that children work on cocoa farms,’ and in response, the business said it would be building on a decade of its Cocoa Plan and Child Labor Monitoring and Remediation System, created to incentivise cocoa farming families to make sustainable changes that will move them towards earning a living income.
Another major player in the sector, Cargill recently issued its latest sustainability report, which recently revealed that the company is now assisting over 244,000 farmers across Ghana, Ivory Coast, Cameroon and Brazil, up from 169,000 in 2020. As previously reported, the company said it had used GPS to map the polygon farm boundaries of 64% of all farmers participating in the Cargill Cocoa Promise programme, designed to offer enhanced levels of support to communities.
Conditions on the ground
Notably, according to the Chocolate Scorecard team, on average, around 40% of cocoa on global markets is still bought indirectly, making it even harder to pin down traceability and delivering on clear sustainability targets, including tackling ongoing key issues of child labour and deforestation that remain a significant factor for the global industry after two decades of the sector attempting to address such issues.
Furthermore, conditions in West Africa appear to have worsened in recent years, which has been underlined by a report from Oxfam, which found that has asserted that net farmer wages in Ghana and Ivory Coast have in fact decreased 16.8% between 2019 and the 2021/22 peak season. Its findings asserted that in periods where cocoa prices have in fact risen, this has seen a corresponding rise in essential supplies, including for vital fertilisers, which many agricultural workers have reportedly been unable to source due to inflation costs. This in turn has impacted on crop yields for the sector, which remains dominated by smallholder farmers within the region.
Company policies
According to the scorecard study, less than half of surveyed companies have a policy which includes clear expectations for improvement plans for suppliers, including the possibility of exclusion for continued non-compliance . It also found that 91% of companies did not have a ‘no deforestation policy’ requiring suppliers to prove that cocoa is sourced from areas that do not destroy forest canopy.
As the authors of the Chocolate Scorecard noted, solutions to the situation have been discussed within the Cocoa Barometer study – which asserted that present methods of tackling poverty, namely increasing yields, were not a long-term solution. It underlined the basic requirement for increasing farmgate prices significantly in order to bring about positive change. It concluded: “Higher yields do not necessarily lead to increased net income but do lead to greater risks for farmers. Without significantly higher farm gate prices, sustainability in the cocoa sector is a pipe dream.’
Commenting on the report, Carolyn Kitto, from the Chocolate Scorecard said: “We do not accept all calculations are credible. Some companies have a price as low as $1.90 per person in the family per day which is the old (pre-2022) extreme poverty line set by the World Bank. Paying above this amount simply means you may be lifting people out of extreme poverty and into poverty.”
Fuzz Kitto, Director of Be Slavery Free, the co-ordinating NGO of The Chocolate Scorecard added: “On a recent visit to Ivory Coast, near the border with Liberia, I was standing in an area close to a national forest, which is protected by law. But the bulldozers were still running, clearing pristine forest to make way for cocoa plantations.”
“The bulldozers won’t stop until business and governments deal with the root causes: a lack of traceability and transparency in supply chains and of a living income for farmers. Deforestation, child labour and pesticide use are all symptoms of the two fundamental issues.”
