-By Alastair Hagger
The unpalatable truth is an unfair distribution of profits in the global cocoa trade, of which West Africa has substantive market share. Thankfully, entrepreneurial disruptors and a new initiative in Ghana seek a sweeter ending for farmers.
BEFORE IT REACHED THE fashionable parlors of early modern Europe, where it was imbibed as an expensive accessory to gossip and gambling, chocolate had already enjoyed a long, intoxicating life. The aphrodisiac beverage cacahuatl, favored by ancient South American cultures such as the Mayans and the Aztecs, was brewed, with chillies, from the cacao bean, a local currency so valuable it quickly caught the avaricious attention of the Spanish Conquistadors. The rest is history – and a narrative tainted with the bitterness of greed and exploitation. But there are signs at last that this story may be headed to a sweeter ending.
The World Cocoa Foundation has calculated that 4.5 million tons of cocoa beans are now consumed annually: as cocoa butter, widely used in cosmetics as well as chocolate products; cocoa powder, a staple in chocolate flavorings; and cocoa liquor, a paste of cocoa butter and solids essential in the production of solid chocolate. The juice of the bean (sweatings) can also be found in soft drinks and alcoholic beverages such as brandy, with the bean husk burned into potash for soaps and fertilizers.
The humble cocoa bean is thus a versatile, repeatedly monetizable commodity: in a 2019 Allied Market Research report, the global cocoa products market was valued at $24.5 billion, and is expected to garner $30.2 billion by 2026. But like many of the planet’s most coveted exports, such as tea and iron ore, the crop’s rich dividends are often not trickling down to the mouths that need them most.
The International Cocoa Organization reports that 60% of the world’s cocoa is produced by 2.5 million farming families in Ghana and Côte d’Ivoire (the populations of the two countries are 29 million and 25 million respectively). But according to the Walk Free Foundation’s 2018 Global Slavery Index, this figure includes an estimated 2.1 million children working under illegal conditions, and at least 30,000 people entrapped in modern slavery. The International Labour Organization (ILO) defines child labor as “mentally, physically, socially or morally dangerous and harmful to children, and [that which] interferes with their schooling”, and modern slavery as “exploitation that a person cannot refuse or leave because of threats, violence, coercion, deception, and/or abuse of power”. The unpalatable truth is that most of the chocolate that reaches our shelves handsomely rewards a giant multinational handful of liquid chocolate manufacturers and cocoa traders, but pays cocoa farmers in West Africa an average of less than $1 a day (Fairtrade Foundation report, 2019).
Professor Genevieve LeBaron, Director of the Sheffield Political Economy Research Institute (SPERI), and author of the Global Business of Forced Labour report of 2018, has identified “widespread labor exploitation” within the global cocoa supply chain. “This is rooted in the industry’s business model and supply chain dynamics, which concentrate profits and value at the top of the chain and involves incredibly thin margins and low income for actors at the bottom,” she says. “I also found that ethical certification schemes covering the cocoa industry are failing to create worksites that are free from exploitation.”
LeBaron warns that stickers and symbols on cocoa products glibly advertising guarantees of ‘fair’ conditions for their producers are not what they purport to be. “Consumers need to be sceptical of ‘ethical’ and ‘fair trade’ marketing,” she says. “Labor exploitation takes place even in ethically certified supply chains. There is a need for much stronger accountability over ethical and fair trade certification and auditing. A major overhaul of these programs is needed, especially in terms of how they create and distribute value and are ‘enforced’ – both of which are highly flawed and lacking.”
Until recently, the status quo in the market had remained undisrupted, favoring the industry superpowers who could source cheaply from multiple suppliers and buy in large amounts. “Cocoa is unique in that West Africa contributes such a substantive proportion of market share,” she says. “And the confectionary industry is heavily reliant on sourcing from the region to secure supply and maintain profits.”
New investment in the West African cocoa industry may go some way to improving conditions on the ground. In November 2019, Ghana’s cocoa regulator, COCOBOD, finalized a $600 million loan at the Africa Investment Forum “to finance new warehouses, rehabilitate plantations and support the processing sector”, including $250 million from development finance institutions led by the African Development Bank (AfDB). “Proceeds of the facility will be used to finance key components of COCOBOD’s productivity enhancement programs – a set of interventions aimed at improving Ghana’s cocoa productivity per hectare and increasing overall cocoa production levels,” says Dr Jennifer Blanke, the AfDB’s Vice President for Agriculture, Human and Social Development. “The financing of new warehouses will provide more opportunity to store beans longer and create buffer stocks. This will also allow COCOBOD to have more influence on the volume of beans on the market, as well as the associated price.” She maintains there is a framework already in place for safeguarding farmers against exploitation. “The bank applies integrated environmental and social safeguard systems into business practices with all clients with whom we work, including COCOBOD.” Blanke believes these investments in the cocoa production infrastructure will in turn have a positive effect on the lives of the industry’s vulnerable farming communities. “The idea is that the bank-funded productivity enhancement programs will increase farmer incomes, as well as modernize farming methods,” she says. “This combination should serve as a disincentive to participating in the cocoa trade under illegal or unethical conditions.”
With a mission to make chocolate “100% slave free”, the entrepreneurial disruptor at the sharp end of the industry is Dutch chocolate company Tony’s Chocolonely. The brand was founded in 2005 by investigative journalist Teun (Tony) van de Keuken, who set out on a (lonely) quest to create a chocolate bar from cocoa beans produced in West Africa by fairly-compensated farmers instead of slave labor. Tony’s Chocolonely advocates five game-changing ‘sourcing principles’: traceable beans, a higher premium paid to farmers, investment in cooperatives and farmer training, a minimum five-year business relationship, and improved productivity (from 300kg to 800kg per hectare). Paul Schoenmakers, the company’s Head of Impact, says that efforts to completely eradicate slavery from its supply chain are vigilant and ongoing. “In the past year, 6,624 cocoa partners supplied to us,” he says. “We found 259 new cases of illegal child labor, which we are working to remediate. More than 25,000 people participated in our awareness-raising sessions. For the second year in a row, 100% of the 5,465 metric tons of cocoa beans Tony’s purchased through its partners were traceable. Seventy one percent of people who buy chocolate in the Netherlands (where the brand is the market leader) now know about the issues. That’s important for us, because our roadmap starts with trading awareness.” The company has pushed hard for two years for the Dutch parliament to enact legislation similar to the UK’s 2015 Modern Slavery Act, and a bill has now passed which will require companies legally domiciled in the Netherlands to “conduct investigative research to determine whether child labor is occurring in their supply chains and establish a concrete course of action for rectifying it”.
Schoenmakers believes that any company, big or small, can and should apply the same due diligence. “The framework of our five sourcing principles fits very well to other commodity sectors too,” he says. “Especially coffee and tea, but also cotton. What we are currently working on is making the framework easier for other companies to implement, and we are actively helping them to use that model.”
He says the company’s aim is for all its suppliers to become independent – even from Tony’s. “We used to be the only buyer from a particular cooperative in Ghana. But two years ago, we helped them successfully represent themselves in the international market, and they got access to seven other premium customers. We’re a well-paying customer, so cooperatives like to work with us, but we want them to find other customers too. That also helps us grow.”
A fair premium for cocoa beans – last year, Tony’s paid a 20% premium on the farm gate price – can have a radical and long-lasting impact on the lives of local farmers. “One of the most positive concrete changes is simply paying more money to the farmer. Fighting poverty is a very complicated thing to do, but if you don’t pay more for cocoa, all the other efforts will fail.”
Within a complex chain from producer to consumer that reaches far across the globe from the bean’s origin, are there ever opportunities for the farmers to try the final product (a chunky chocolate bar quirkily divided into unequal pieces, a metaphor for the unfair distribution of profits in the cocoa trade)?
“We take two cases full of chocolate every time we go there,” Schoenmakers says. “It’s ridiculous so many cocoa farmers have never tasted chocolate in their lives. It’s a luxury they will normally never taste. More than four and a half billion dollars get sucked up by the big chocolate companies every year. Chocolate is a treat, a gift. It’s absolute madness that for a gift that no one really needs, so many people suffer.