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Hershey’s and Mars sweeten market for West African cocoa farmers

<p>The chocolate makers lead the pack in helping poor farmers make more money and improve their standards of living.</p>

When it comes to being ecologically sustainable, the chocolate industry certainly could do better. Farmers, for example, could grow cocoa in the shade of trees that yield other commodities, such as fruit or timber.

"Some argue that cocoa is a cash crop that provides income for smallholders. However, some of the smallholders could grow other high value, cash crops (such as vegetables) that could also feed the local population with greatly needed nutrition," wrote Johan Six, professor of sustainable agroecosystems at ETH Zurich. "Furthermore, processing of cocoa into chocolate could be done locally so that the added-value would provide more benefits to the local economy. And cocoa produced in Brazil would not be sold back to Brazilians as expensive chocolate after having traveled across the ocean and back."

Maybe so, but some things are easier said than done, particularly when you consider that cocoa farmers are some of the poorest laborers in the world. The good news is that a couple of huge players in the space are taking action.

Demand for chocolate

Most people likely take for granted how easy it is to grab a relatively inexpensive candy bar in the checkout lane and scarf it down without a second thought.

Someday you might put more thought into buying chocolate. Thanks to increased demand and slower production, due in part to lower than average rainfall last summer, the cost of cocoa beans has risen in recent months, with a looming supply shortage on the horizon.

"The greater demand for cocoa comes as the industry expects production to fall short of consumption for a second year in a row," reported The Wall Street Journal. "Singapore-based Olam International Ltd., one of the world's largest cocoa traders, projects a deficit of 185,000 tons in the year ending Sept. 30."

An impending cocoa shortage

The impending shortage stems from two root causes, according to Elan Emanuel, senior cocoa manager for Fair Trade USA. First, traditionally global south countries, such as Brazil and China, are becoming wealthier, and more of their collective 1.5 billion denizens are consuming chocolate. Second, cocoa production is waning due to an aging workforce whose children are not adopting the profession because of its meager profits. In fact, in a supply chain that includes many intermediaries — all of which need to make money — the cocoa farmer gets less than 5 percent of a typical bar of chocolate, Emanuel said.

"Seventy percent of the world's cocoa production comes from … Ivory Coast and Ghana. These are very poor countries with very little government support," said Emanuel. "In the case of the Ivory Coast — a country that has been marked with rampant political instability — when you take the combination of low [income] and lack of government infrastructure, it's kind of a recipe for cocoa farmers not being able to support themselves and engage in that occupation."

It's here where Fair Trade certification can have a huge impact by incentivizing farmers to comply with social, environmental and agricultural standards through the promise of a Fair Trade premium. This premium significantly increases a farmer's income, allows them to invest in their farm and community, and perhaps most important, helps ensure that kids are sent to school in lieu of working on a family farm. Yet only a small percentage of the global cocoa supply — likely less than a tenth — is Fair Trade certified.

A new Fair Trade mark

The fact that chocolate is made from cocoa and other ingredients that fall under the Fair Trade umbrella, such as sugar and vanilla, meant that chocolate manufacturers must get all ingredients from Fair Trade-certified sources. Until recently, that is.

Fairtrade International and Fair Trade USA now offer an alternative Fair Trade-certified mark a chocolate maker can use on its label if it only uses Fair Trade-certified cocoa.

Some critics take issue with the new mark.

"Think back to Cadbury's high-profile switch to Fairtrade for its U.K. dairy milk chocolate," wrote Nick Dearden in The Guardian's "Poverty Matters" blog. "The company initially claimed it could not switch because it was only able to source cocoa to Fairtrade standards, not sugar. But in the end it did it, because it had to. Under the new scheme, it would not need to bother."

It's true, said Fair Trade USA's Emanuel, but making certification applicable to all ingredients in a chocolate product may have discouraged some companies that otherwise may have wanted to do more to support cocoa farmers.

He said it's also important to note that brands must still comply with Fair Trade USA's ingredients policy to use the "Fair Trade Certified Cocoa" label, or any Fair Trade mark at all. This means that at least 20 percent of the product must be Fair Trade. This can be done through cocoa alone, if cocoa makes up 20 percent of a product, or cocoa plus other ingredients. But for any single Fair Trade ingredient used, 100 percent of that ingredient must be certified. For example, a company can't use a portion of the sugar in a product as Fair Trade to meet 20 percent, and then supplement the rest with non-Fair Trade sugar.

"Chocolate companies in particular are really happy [with the new mark] because … they want to advertise and they want to support the supply chains in which they're working," Emanuel said. "And there's been a huge boon to fair trade cocoa since that change and we're seeing cocoa farmers, some of the poorest ones in West Africa, benefit a ton from that change."

Mars, Hershey's commit to Fair Trade chocolate

The plight of cocoa farmers appears to be changing, at least if you look at how some of the largest cocoa buyers in the industry invest in Fair Trade-certified cocoa. Mars and Hershey's have committed to only use cocoa from certified sustainable sources by 2020 and are investing in helping cocoa farmers improve their processes, yield and profits.

Blaine DeLuca, supply chain manager for Mars North America, recently spent a month traversing hundreds of miles of dirt trails and remote villages in Ghana and Côte d'Ivoire videotaping testimonials from local farmers, village leaders and community and government officials regarding improved labor conditions in the region.

"The testimonies were often tear-jerking," DeLuca shared on Mars' Sustainable Cocoa Initiative blog. "It's difficult to face the hardships some of these families have endured. The good news, however, is that each interviewee explicitly mentioned that the quality of life has dramatically improved since the arrival of Mars and ICI [the International Cocoa Initiative, a charitable foundation working to improve labor conditions in West Africa]."

As for Hershey's, Emanuel says the company has been working closely with Fair Trade USA over the last year.

"They've been very aggressive in pursuing certification efforts," he said.

In fact, Hershey's recently announced 18 percent of all cocoa it sourced globally last year was certified, compared to the goal of 10 percent for 2013.

"Our program's focus is on educating cocoa farmers as well as the larger farm community, including school-aged children. Sustainable cocoa farming depends on teaching farmers about modern farming practices and appropriate social practices," said Terence O'Day, senior vice president and chief supply chain officer, in a statement. "Our 21st century cocoa sustainability strategy seeks to address many dimensions of farmer livelihoods, including productivity, improved incomes and labor practices. By 2020, we expect to source 100 percent certified cocoa and to see the opportunities for West African cocoa farmers significantly improved."

Cocoa image by Yai via Shutterstock.

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