What bean to bar strategies improve the lives of cocoa farmers?

While chocolate is sure to fly off the shelves today in celebration of Valentine’s Day, the benefit to the farmers who harvest the cocoa can vary widely. Worldwide, 90 percent of smallholder cocoa farmers live on less than $2 a day, “despite growing one of the world's most cherished ingredients,” said Emily Stone, the CEO of Uncommon Cacao, which aims to build more transparent supply chains in the chocolate industry. From the planting of the cacao tree to the purchasing of the chocolate bar, the entire supply chain is getting by on “miniscule margins,” she said. But a growing number of chocolate brands are trying to demonstrate which approaches can raise the bar for cocoa farmers. What are the bean to bar strategies that the chocolate industry can use to improve lives at the origin? Even when consumers want to support those brands that pay their farmers fairly, in a sector known for greenwashing, it is easy to confuse responsible sourcing and good marketing. More than 70 percent of the world’s chocolate supply comes from West Africa, with Côte d’Ivoire being the largest producer, where cocoa farmers typically earn a dollar a day, said Sri Artham, vice president of consumer packaged goods at Fair Trade USA. “A certification label is the best shorthand you can use to know that better practices are in place,” he told Devex. While it is best for consumers to do their research ahead of time, if they find themselves making a last-minute decision at the shelf, a glimpse at a certification can guide the process of elimination. The three major certification organizations for chocolate are UTZ, which aims to make sustainable farming the norm; the Rainforest Alliance, which works to conserve biodiversity and improve livelihoods; and Fairtrade International, which prioritizes better trade terms for farmers. In 2011, Fair Trade USA resigned its membership from Fairtrade International, pursuing what it calls a more inclusive model that includes producers beyond smallholder farmers organized in cooperatives. No matter the type of certification, what really matters is whether farmers are paid enough to provide for themselves and their families. Even when consumers pay high prices for chocolate, they have a hard time knowing whether that will be the case. “Nobody is making money in cacao, and smallholder farmers bear much of the pain of this squeezed supply chain,” said Stone. The farmgate price — what farmers actually receive for their cocoa — is extremely low, and only exacerbated by the fact that the price that exporters receive is currently at an eight-year low, she said. Companies such as Nestlé have the kind of scale to make industry-wide change, experts told Devex. But their margin structures, as well as the lower price expectations among their customers, can make them less likely to pay higher prices for cocoa. “We believe that continued progress to improve the livelihoods and lives of cocoa farmers and cocoa-growing communities requires a sustained, collaborative effort by the various stakeholders, and we’re committed to doing our part,” said Edie Burge, manager of corporate communications at Nestlé USA. She mentioned the Nestlé Cocoa Plan, which aims to source high-quality and sustainable cocoa and increase the profitability of farmers and suppliers. Since 2009, the company has invested $115 million in these programs, training 44,617 farmers and distributing 1.6 million cocoa plants. The company has partnered with nongovernmental organizations, certification organizations, and private companies in areas such as cocoa farmer training, tree cultivation, and water and sanitation. But whereas conventional brands pay no more than the market price, and then invest in side programs such as building schools, “that is antithetical to sustainability,” said Emily Benson, supply chain impact manager at Theo Chocolate in Seattle, Washington. Paying farmers above market prices incentivizes them to produce the highest quality cocoa beans and provides them with more stable and consistent income, said Benson, explaining that support for farmers and their families should be tied to the work they are doing rather than a side funding stream that could go away at any moment. While sourcing is not typically a selling point for chocolate companies competing for consumers' attention, Theo markets the stories behind its ingredients as much as the products those ingredients produce. The company sources its cocoa beans from certified organic and fair trade groups in Peru and the Democratic Republic of Congo, where it partners with the Eastern Congo Initiative. In tours at its factory, online, and on individual packages of chocolate, Theo emphasizes its sourcing practices. They include paying premium prices for high-quality beans, using third-party verification such as certified organic and certified fair trade, and providing transparency across its supply chain, posting their pricing matrix online. “It's really important to Theo that we always recognize the true cost of a product,” Benson told Devex. “We emphasize paying farmers a fair value for their crop whether that's consistent with the conventional commodity market or not.” Theo says it is working to prove that companies can pay farmers a fair price, offer consumers a product they can afford, and still run a profitable company. The idea is to demonstrate that models exist between mass market chocolate and the high price tags of specialty chocolate producers. As a chocolate maker, bringing the beans into the factory — rather than a chocolatier, which brings in processed cocoa in the form of a chocolate liquor — Theo also has more visibility from bean to bar. In addition to low prices, chocolate production faces several other threats, including pests, diseases and changing weather systems, which are projected to cause significant declines in the areas that are suitable for cocoa production. “As cocoa producing communities face increasing risks to their livelihoods, donors and companies need to invest more in helping them to become resilient,” said Simon Winter, senior vice president of development at TechnoServe, an international nonprofit organization that promotes business solutions to poverty. There needs to be more investment in access to information for farmers about these risks, he said. Better planning would spur investment in necessary changes, including the planting of other trees and nutritious food crops, which would boost food security, diversify income sources and improve soil health. There is also a need to invest in training to build the capacity of farmers, he said. Several experts who spoke with Devex said the global development community should consider more cross-sector partnerships such as CocoaAction, an initiative of the World Cocoa Foundation. This is an industry-wide strategy to align cocoa companies, origin governments and other key stakeholders to boost productivity and strengthen community development in Côte d’Ivoire and Ghana. Meanwhile, they said, consumers and companies alike need to recognize and pay the true cost of chocolate. Devex Professional Membership means access to the latest buzz, innovations, and lifestyle tips for development, health, sustainability and humanitarian professionals like you. 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