Download and read the full whitepaper here.
The global cocoa supply chain is fraught with multiple economic, social and environmental challenges – creating a potentially critical situation for the sector. Challenges in production include the availability of productive land, deforestation concerns, pesticide/chemical use, the availability of trained workers, local climate and soil conditions, access to modern and appropriate agronomy techniques, production costs, processing, transportation and export costs and many more.
The social concerns are much more fundamental than production inefficiencies and lead to a paradoxical situation where the world is running out of cocoa farmers despite huge and growing demand for cocoa worldwide. Younger generations no longer see any prospects of working in cocoa and older generations are reaching their life expectancy. The explanation simply is that smallholder cocoa farmers currently do not receive a living income and the supply chain has been squeezed beyond sustainability. The reasons, though, are complex.
Understanding these issues is the first step to uncovering significant opportunities for both innovation and strategic capital investment to address the needs of the cocoa industry to 2020. Developing small producer markets such as the Dominican Republic – already the leading producer for the small but rapidly growing organic cocoa market – can showcase how ecologically sustainable and socially responsible production methods can work efficiently and profitably at scale and to the benefit of all participants in the production value chain. More than 70 percent of the global supply of cocoa currently comes from production in West Africa, where in recent years there has been an average annual decline in production. This is the result of aging cocoa crops and lower productivity, which is the result of past underinvestment and poor agricultural practices. These problems are further exacerbated by ongoing child labor/slavery practices. This may affect up to 12,000 of the 200,000 children working in the cocoa plantations of Côte d’Ivoire, for example. It is estimated that more than 1.8 million children in West Africa are involved in growing cocoa.
Trying to remedy such problems proves to be very challenging given that the vast majority of cocoa production is coming from smallholder farmers (there are more than five million cocoa farmers worldwide, with 90 to 95 percent of production coming from smallholder farmers on three acres of land or less). Any attempt to improve the situation necessitates extensive intervention of the large players in a very concentrated industry at multiple levels of society. For this reason, most of the world’s largest cocoa companies have joined forces in an attempt to address such issues through programs such as CocoaAction through the World Cocoa Foundation, which aims to achieve sustainability in cocoa while supporting communities that rely on cocoa for all or part of their livelihood.
Commitments by some of the world’s largest chocolate companies for 100 percent sustainably sourced cocoa by 2020 or shortly thereafter will ensure the demand for sustainable cocoa continues to grow for decades to come. This demand for sustainable cocoa will be the leading driver for change and evolution in the cocoa industry.
Download and read the full whitepaper here.
