Cocoa certification schemes are not enough
The consensus across campaigning organisations, and even now among quite a lot of industry representatives, is that all of this is inadequate.
A recent paper commissioned by the Dutch government argues that “farmers need both a major price increase for their cocoa and a substantial increase in productivity in order to make a decent living out of cocoa.”
Even Fairtrade’s price supports are minimal. During the recent price collapse, the cocoa price dropped below $2000/tonne, very briefly, for the first time in a decade. But at all other times, the market price has been between $2200 and $3500, so Fairtrade’s $2000/tonne minimum price hasn’t been doing anything (farmers receive whichever one is higher). The $200/tonne premium, meanwhile, while not nothing, is clearly not huge. Fairtrade is reviewing these prices at the moment, and it is to be hoped that it will raise them.
But Fairtrade is the only scheme that directly addresses pricing, even minimally. The others rely exclusively on policing, training and small infrastructure investments. While these may help, nobody seems very convinced that they are going to really change the game.
Given this, some people are calling for a more radical solution, such as governments agreeing to regulate the supply of cocoa. This is not an unprecedented idea: a number of such international commodity agreements existed prior to the neoliberal era. A particularly successful one was the International Coffee Agreement (ICA) which was based on national quotas and kept the price of coffee high until its demise in 1989. To an extent, this agreement was a product of the cold war: a key reason importing countries (particularly the US) agreed to only allow coffee imports that carried the ICA stamp was the threat of poor coffee-producing counties turning to communism if they didn’t get thrown some bones. However, it demonstrates what is possible.
It is also theoretically possible that companies themselves could make an agreement. The cocoa market is extremely concentrated. There are three traders (Barry Callebaut, Cargill, and Olam) which buy 75% of the cocoa in the world. The top six manufacturers (Mondelz,
Mars, Nestlé, Hershey’s, Ferrero and Lindt) have 40% of the manufacturing market. And most chocolate is sold in supermarkets, of which there are only a handful. This concentration gives these companies a disturbing degree of power, but it does open the possibility of benevolent as well as malevolent coordination: if they all agreed to pay higher prices they would no longer need to worry about being undercut. Neoliberalism does not smile on cartels that fix prices, and such an agreement might be illegal. However, its grip is weakening sufficiently that people are at least starting to talk about the idea. Of course, the companies would also need to be motivated to do it – no trivial matter.
Direct trade and value added at source
The International Labor Rights Forum recommends buying from chocolate companies who buy directly from farmers, as that not only means that you know where the cocoa is coming from but, by cutting out the multiple layers of middlemen, it makes it more likely that farmers will receive a better wage. Madécasse has got itself certified ‘direct trade’ on this basis, meaning that it buys directly from farmer. Divine is 45% owned by cocoa farmers themselves, meaning that they are intimately connected with the company, and get a 45% share on any distributed profit. We recommend buying from these companies.
Another possibility worth looking at is the ‘value added at source’ business model, which is a more structural response.
As described above, poverty plays a fundamental role in every negative aspect of the cocoa supply chain. It is, in turn, linked to oversupply, which is exacerbated by a lack of alternative employment opportunities in cocoa-producing communities. And while the cocoa farmer only gets about 3-7% of the final chocolate price, about 40% of it is taken at the manufacturing stage, which is invariably done in the rich world.
There are a few companies that are trying to create more money and employment for local people in cocoa growing countries by making it at source instead. Only about 1% of UK chocolate is made this way, but we looked at two companies who do so – Chocolaterie Robert (Chocolat Madagascar), based in Madagascar, and Pacari in Ecuador. These companies are eager to point out the difference that their model makes. Fairtrade, they say, means that the cocoa producing country gets an extra 5-10%, whereas their model means that it gets about an additional 400%.
Madécasse, also based in Madagascar, has also been based on this model until recently, although it has been having problems with production, so, for the time being, it is making its chocolate in the developed world. However, it hopes to get its Madagascan factories up and running again soon.
It is a shame that you can’t buy chocolate fully made in West Africa in the UK, but while there are a few companies who make it and sell it locally, we don’t know of any options to buy it over here.
And unfortunately, it may not be easy for this model to catch on widely. Value-added-at-source chocolate tends to be expensive, and there are good reasons for that – it is much harder and more expensive to make chocolate in hot climates and transport it in finished form. One problem is that it melts.