Environmental, social issues threaten chocolate and cocoa
Sustainability efforts are critical to ensuring a future for cocoa and chocolate
It’s hard to imagine a world without chocolate milk, rocky road ice cream or double-fudge sundaes. But if present trends continue, cacao trees (Theobroma cacao) — the source of cocoa and, ultimately, chocolate — could become extinct by midcentury. That’s because cacao and the agricultural system supporting it face both manmade and natural threats that may prove existential.
Consider: Cacao trees grow in a narrow geographic band that, at best, extends 20 degrees north and south of the equator but promises to shrink as climate changes. Fungal diseases have already effectively destroyed the Central American crop, while surviving trees continue to age and lose productivity. And population growth and urbanization eat up ever more land that could otherwise go to new plantings — if only farmers themselves weren’t fleeing agriculture for surer opportunities elsewhere.
It’s enough to drive a chocoholic — to say nothing of a dairy processor — to despair. Which is why dairy brands have reasons beyond pure altruism to care about the sustainability of the world’s cocoa and chocolate supply. As Ilse Tarantino, North America sustainability lead for Cargill Cocoa & Chocolate, Minneapolis, put it, “It’s imperative that we find long-term solutions to cocoa’s environmental and socioeconomic challenges.”
Given the pressures on it, can cocoa be saved?
“Cocoa is a vulnerable crop,” Tarantino conceded. “Weather, pests and diseases, land competition, farming standards and poverty all influence the quality and quantity of supply.”
Estimates hold that as much as 30% to 40% of the crop is lost annually to environmental stresses, pests and disease, noted Kip Walk, senior director, sustainability for Blommer Chocolate Co., Chicago. And because cacao trees thrive in a tight window of optimum temperature, humidity and soil conditions, even slight climate shifts threaten it further.
What’s more, as a smallholder crop, cocoa can’t support the expense of regular fertilizer, pesticide and herbicide application, nor is it amenable to irrigation.
“This leaves the farmer completely exposed to changes in the natural environment,” Walk said.
A common response among farmers has been to offset these risks by planting new seedlings when cocoa prices are high. But that feeds a boom/bust pricing cycle that exacerbates instability.
“Cocoa farmers, not unlike farmers everywhere, are exposed to the macroeconomic factors of their crop, which already presents more challenges and lower returns than several other crop options,” Walk noted.
More than half of the world’s cocoa supply comes from two West African countries alone — Ivory Coast and Ghana.
“Steps need to be taken to ease pressure on farmers in these countries, to mitigate climate risk and to protect living landscapes,” said Andrew Brooks, head of sustainability for Olam Cocoa, Singapore.
Focus on farmers
The most effective steps often focus on cocoa farmers themselves, and on raising them and their communities out of poverty. That’s no easy task, given that poverty is endemic in cocoa-producing regions.
“Most of the world’s cocoa is grown by between 6 and 7 million smallholder farmers in countries with lower levels of development,” Tarantino noted, pointing to one study showing that cocoa accounts for about 60% of farmer income — “a very relevant” portion.
Yet with aging, low-producing trees and unpredictable incomes, farmers have trouble accessing the infrastructure, training and financing they need to invest in their farms and run them successfully, she continued.
Further, poverty limits farmers’ ability to hire professional workers, forcing them to draft family members, including children, into working the fields.
“As a result, the future generation of cocoa farmers, deprived of their childhoods and education, isn’t equipped to break this vicious cycle,” said Brooke Smith, sustainability business development manager for Barry Callebaut, Chicago.
Reversing the brain drain
No wonder cocoa agriculture suffers from a debilitating brain drain.
“Younger generations are increasingly seeking alternative careers in cities rather than following their families into the cocoa industry,” Brooks said.
The solution? Make cocoa farming — as a job — great again.
“We need to make sure farming is an attractive, rewarding career so that cocoa supplies are well balanced with demand for the future,” Tarantino said. “The foundation of this is through training, one-on-one coaching and access to inputs. Helping farmers implement efficient, environmentally friendly and safe practices in their daily operations boosts their productivity.”
And because a stark lack of community resources such as quality education, healthcare and nutrition also threatens the industry, just as important as helping farmers is “ensuring that holistic cocoa-farming communities thrive,” Tarantino added. That’s where farmer cooperatives serve as “key partners” to help ensure a sustainable cocoa supply in the years to come.
“Our success is linked to theirs, and everything comes back to how we create lasting benefits for cocoa farmers, their families and their communities — empowering them to own their futures and achieve their own success,” she said.
Cocoa suppliers have gotten the memo, as every responsible company with a footprint in a cocoa-growing region has a plan to bolster the long-term viability of the commodity they trade.
For example, Cargill touts its Cargill Cocoa Promise program as a “future-looking and action-oriented framework” for its global sustainability activities, Tarantino said.
“It’s a commitment to farmers and their communities, enabling them to achieve better incomes and living standards while sustainably growing cocoa,” she said.
In 2017, the company adopted sustainability goals aligned with the United Nations Sustainable Development Goals, and it implements community-driven initiatives to augment women’s economic opportunities, increase educational access and improve health.
“We work to complement and enhance the efforts of our customers, other cocoa and chocolate companies, NGOs and farmer organizations on the ground and policymakers in origin countries,” Tarantino declared. “We believe that a prerequisite for making real progress on sustainability is ensuring maximum transparency across the complex cocoa supply chain.”
Olam also emphasizes traceability, committing itself to achieving 100% traceability in its supply chain by 2020, and using technology to analyze farm-level data to provide bespoke advice to farmers on how to optimize production while minimizing environmental impact, Brooks said.
The company is helping farmers diversify their incomes beyond cocoa, too — instituting, for example, a program that has helped more than 8,000 women in Indonesia’s South Sulawesi province run their own small businesses, giving them a measure of financial independence.
Forest protection and restoration are also important in the company’s campaign. Olam supports the World Cocoa Foundation’s landmark Cocoa & Forests Initiative (CFI) and partners with Rainforest Alliance and local communities and authorities in Ivory Coast, where it’s instituted a landscape-management program promoting climate-smart agriculture and biodiversity, Brooks said.
Olam’s trained more than 111,800 farmers in Ivory Coast and Ghana in good agricultural practices, hosting one-one-one coaching sessions to encourage adoption of farming techniques that sustainably increase yields. And it’s distributing more than 1.2 million shade trees for farm planting and developing 30,000-plus hectares of cocoa agroforestry to support farm restoration.
Finally, the company provides interest-free financing to farmers and, since 2018, has established 58 village savings and loans associations (VSLAs) that pool community savings in a lockbox and allow members to take out loans repaid to the group over three months at 10% interest.
“At the end of the year,” Brooks said, “the total saved, plus interest, is shared among community members.”
While active in Indonesia and Ecuador, Blommer concentrates most of its efforts on Ivory Coast, its leading source of beans.
A founding member of the World Cocoa Foundation and a signatory to CocoaAction — an industry strategy to modernize the cocoa trade — the company maintains an “extensive” team on the ground and is active with partners that include exporters, NGOs, cooperatives and village communities, explained Walk.
It’s also been an active signatory to the CFI since 2017, although it promoted the planting of forest tree seedlings well before signing.
“We provide farmers comprehensive training on good agricultural practices with a focus on improving yields through improved soil fertility, tree maintenance and disease and pest mitigation,” Walk said.
At the community level, Blommer’s implemented development projects involving community needs assessments, VSLAs, child labor sensitization and remediation, capacity-building for women’s groups and literacy classes for women.
“Today, our Sustainable Origins programs reach more than 40,000 farmers, source more than 70,000 metric tons of cocoa and provide $6,000,000 annually in farmer premiums,” Walk said.
For its part, Barry Callebaut launched the Forever Chocolate program in 2016 “to help make sustainable chocolate the norm,” Smith said.
“Our objectives include bringing 500,000 cocoa farmers out of poverty, eliminating child labor from our supply chain and being carbon and forest positive,” she said.
The company works with the Cocoa Horizons Foundation, a nonprofit third-party-verified organization.
“That drives cocoa-farmer prosperity by creating self-sustaining communities that protect nature and children,” Smith said. “Cocoa Horizons is one of the key sustainability programs helping Barry Callebaut achieve its 2025 Forever Chocolate commitments.”
The company also holds membership in the World Cocoa Foundation and International Cocoa Initiative, which sponsor projects, research and working groups focused on sustainability and child labor issues in the cocoa sector.
And in June 2014, Barry Callebaut also committed to CocoaAction. It partners with governments in origin countries, having signed letters of intent in 2018 to work with Ivory Coast’s Conseil Café Cacao and the Ghana Cocoa Board “to accelerate progress towards a sustainable cocoa sector,” Smith said.
It’ll cost you
Rick Stunek, marketing and sales, Forbes Chocolate, Broadview Heights, Ohio, notes that his company focuses most of its efforts on working with the
Akumanyi Foundation in Ghana.
“They work with the people in Ghana to create a better life by building schools, focusing on health issues and providing vocational training,” he said. “That has a more immediate impact on people who need action. Seeing the girls who graduated from the Seamstress program was so awesome.”
He notes that Forbes Chocolate sells sustainable products under various certifications.
“But we can only sell it if the customer wants to buy it,” he added.
And that’s no small matter. Not surprisingly, sustainability efforts cost money — sometimes a lot of it. And that expense translates into price premiums on sustainable cocoa and chocolate reflecting the costs of changing a complicated supply chain — especially at the origin, where it counts most.
As Stunek put it, “Sustainability costs more. So it comes down to whether or not your customers are willing to pay more for the product. A few are willing. Most are not.”
On the manufacturing side, he continued, price, consistency and quality tend to outrank sustainability.
“And until the public’s priorities change, or more importantly the stock-holders priorities change, that order will not change,” Stunek said.
But the investments breed measurable improvements, Tarantino insisted, incentivizing farmers to meet on-farm standards and helping farmer organizations operate as professional businesses.
“One-hundred percent of the sustainability premiums customers pay to us we reinvest in cocoa origins,” she continued. “On average, one-third is paid as cash premiums to certified-sustainable farmers; one-third goes to the certified-sustainable farmer organization; and one-third goes to the programs and projects we operate under the Cargill Cocoa Promise.”
Ignore sustainability at your own peril
Will consumers see sufficient value in such distributions to willingly pay more for their own sustainable chocolate treats? Perhaps we should ask millennials.
“Millennials are the generation that drives the topic,” Smith said. “In fact, millennials believe that their buying behavior has more impact than their vote and openly align with brands that reflect their values.”
So as they and others investigate where their food comes from and how it was made, they’re putting a spotlight on cocoa and chocolate as ingredients they care about. Barry Callebaut’s own 2018 research found that consumers prefer sustainable chocolate and cocoa product concepts three to one over standard, nonsustainable concepts.
But consumers aren’t alone in holding chocolate companies responsible for sustainability stewardship.
“Environmental NGOs are also aggressively pushing the industry to adopt more stringent deforestation policies,” Walk said.
And while chocolate users in the dairy and baking sectors have yet to feel the wrath of concerned cocoa consumers, that reality likely will change.
“Major brands in dairy and baking are now stating clear sustainability strategies around cocoa, giving consumers the tools to compare and contrast them with others in the industry,” Walk said.
It makes sound sense to Smith.
“Sourcing sustainable cocoa not only pays dividends in customer loyalty and risk reduction,” she said. “It’s also critically important to retailers, investors and boards, and helps to future-proof your business.”
It takes a coalition
No one can future-proof cocoa on their own, though.
“While the greatest threats facing cocoa-growing communities concentrate at the start of the supply chain, it takes a collective effort to make change — from the beginning all the way to the end consumer,” Tarantino said. “This is the only way to ensure that the actions we take have the effect we intend. The solution is greater than any one company.”
And the solution will probably transform the cocoa sector into something unlike anything we can imagine today.
“The reality is that cacao farming as it exists now will not likely be the successful model of the future,” Walk said. “It’ll need to evolve to address public concerns while providing a clear business incentive for continued farming.”
So can chocolate be saved?
“Yes,” Walk said. “I believe that there will always be a willing supplier. It’s the cost of that supply that’s harder to predict, and perhaps the greater influence on consumption in the future.”