Cacao Sustainability - ChocoVivo

Cacao Sustainability

Posted by Micah Peay on

Empathy is virtually inseparable from humanity. Over the past thousand years our world has become increasingly interconnected through trade, and the ever expansion of the internet over the past 38 years has given us a closer and more intimate glimpse into who we trade with and how we trade with them. We used to get products for cheap, blind to the manufacturing conditions. But then we uncovered sweatshops, bogus contracts, and shady business practices that inject a sense of guilt into the slivers of enjoyment we extract from the products we consume. The pain and injustice connected to these products trigger that oh so human empathy, compelling us to reflect on and revise what we consume and how we consume it. Unsustainable products are harmful to not only other people, they are harmful to the planet, and are a detriment to our enjoyment. 


Economic Centralization of Cocoa

Only cultivable 10 to 20 degrees north or south of the equator, modern economic conditions relegate the growing of cacao to economically developing countries with tropical climates; a small, heavily populated strip of the world. As money is needed, people from the surrounding areas flock to cocoa farms, harvesting the world's supply of chocolate and selling to companies such as Mars, Nestle, Hershey, and Godiva. But as these huge chocolate conglomerates bring in enormous amounts of money, the farmers are stuck toiling behind harvesting cocoa for less than two dollars a day. But how high can the company price the product before demand disappears? Price the product too low and you become impoverished. Price the product too high and the competition undercuts. Perhaps you and your competition agree to a fair price range, but what happens when you and your competition don’t speak the same language, don’t share the same values, are accused of collusion, or they’ve decided it's time to supersede your agreement and drive you out of business? Not to mention that such a practice is considered market fixing and is illegal. This is the predicament for the chocolate giants, and caught in the middle of it, the Côte D’Ivoire cocoa farmer. 

The average Ivorian farmer owns less than 10 acres of land and makes $2707 annually. With little income left after operating expenses, the farmer has a few options; employ his own children, bring in child labor, or shut down the farm. Of course the last option is not an option, so they hire their own children, and if the farm is big enough, they bring in extra small hands. But even with a child labor force the farmers live below the international poverty line. After paying nine dollars per week to the children’s overseer who then, at best, pays the children around $4.50 a week, the farmer is left with little. 

As child labor and child slave labor continue to grow in the Ivory Coast, governments -both foreign and domestic- have attempted to pass laws and initiatives to combat unethical practices. Sadly, no progress has been made. Since 2001, when the worlds leading chocolate producers first promised to eradicate child labor in their supply chain, the child labor force has increased, with the percentage of children working on these farms ages 5-17 rising from 31% to 45%, with over a million estimated in the ivory coast alone. A million sounds like a tragedy. But what are the farmers to do? The farmer can’t spread non-existent wealth. The children arrive and get sparse financial compensation in exchange for land on which to sleep, food, opportunities, and schooling. Of course who is to say that all of these promises are kept -or even if they are, that what these children receive is adequate- but the farmer can’t do much, if anything, to improve the situation without sinking himself. So we look to the large companies to correct these injustices. 


Finding the Children and Auditing the Farms 

In the past decade, chocolate conglomerates have begun using third party verification systems that designate sustainably sourced chocolate with a cute little label. These companies, such as Fairtrade and the Rainforest Alliance, are required to annually inspect ten percent of the farms; but inspections are easily passable. Since the farms are notified in advance of the inspections, workers are often sent off for the day while auditors peruse the farm. Even so, the verifiers are not stupid. If the farm is large enough, and no one else is working on the farm, it’s obvious the farmer has some presently absent help. While this can be factored into the reports, with no actual children or slave labor present -and no solid proof- these verifiers can not necessarily strike a farm from certification. 

Realizing this struggle, new programs have arisen. Local farmers are hired by a third party organization to periodically visit cocoa farms and encourage sending the children to school. This program, although still small, has shown results; apparently reducing child labor, or at least the constant presence of it, by thirty percent. The program costs around seventy dollars per farmer. 

Other auditing firms opt for another technique. Instead of doing a random 10 percent of all farms, they take the square root of the total number of farms in each region and audit those farms. This, the square root method, yields a far more accurate representation of the supply chain. 

Even so, poverty still creates a dependence on the underage workforce. In response, some smaller companies have begun to pay forty percent more per ton of cocoa beans. Due to the countless other ingredients in your grocery variety chocolate bar or “truffle” infused caramel “chocolate” ball, the average bar wouldn’t see much of a price hike, even with essentially doubling the price per ton. But many of these smaller companies satisfy a niche in the marketplace; upscale and expensive. Larger conglomerates fear that hiking their prices to compensate for paying the farmers more will dissuade many customers from that all too tempting grocery counter impulse buy. Even possibly more pertinent, is that raising their prices invites competition to undercut them, leading to bad sales figures and drops in quarterly earnings reports.  

The global chocolate industry rakes in close to 130 billion dollars annually, and from 2001 to 2019 has spent 150 million dollars, or 0.00809% on combating forced labor. This number would not be nearly as egregious if the world leaders in chocolate sales had not signed onto an agreement in 2001 promising to eradicate slave labor from its supply chain by 2005, then 2008, and then 2010, extending the deadline every time they failed to achieve the goal. In 2002, the International Cocoa Initiative was formed, but has failed to accomplish any of its goals. Peter McAllister, The former director of the initiative, is quoted as saying that the companies were just desperate to avoid legislation and promised more than possible. But the real question is, was it more than they could do, or more than they were willing to? 

Bring It To The Courts 

Six individuals in Mali had their case heard in front of the supreme court in December of 2020, alleging that both Cargill and the American arm of Nestle were partially responsible for their forced labor as children. The plaintiffs argued that the business decisions which led to their forced labor -where they were kept from leaving by armed guards and paid little beyond food- were made on American soil, thereby allowing them to sue the companies based on the 1789 Alien Tort Statute. This Statute, passed by the first congress, allows foreign citizens to sue domestic companies over violations of international law, as long as the conduct occurred domestically. The suit was struck down in June of 2021, as all physical aiding and abetting to their forced labor -the giving of money, fertilizer, and training- occurred in Cote D'Ivoire. The further allegation of business decisions being made on U.S. soil that led to the forced labor was also dismissed, as the plaintiffs were alleging mere corporate presence. If a company is a U.S. company, of course business decisions are made on U.S. soil. A company merely having corporate presence in the U.S. is not enough to sue them for conduct done overseas by an independent contractor.  

The "Chocolate Cartel"

In 2019, Ghanian President Nanna Addo Dankwa Akufo-Addo stated, “We will not continue to be victims or pawns of the global cocoa industry that is dependent on the work of our farmers.” Growing tired of being left to the whims of foreign chocolate companies, Cote D'Ivoire and Ghana formed a coalition. In 2020, the Ghana-Ivory Coast coalition imposed a Living Income Differential (LID) on it’s chocolate, raising the price per ton by 400 dollars. But after a 36% slice of their prices in 2017 due to a global oversupply of chocolate, the price increase was essentially negligible. 

To make matters worse, at the tail end of 2019, Hershey made an industry-shaking large purchase of cocoa futures on the New York market. Seeing this, the newly formed coalition accused Hershey of circumventing the LID, and soon after accused MARS of changing its buying patterns to circumvent the price raise. The coalition didn’t stop there, also accusing Olam International Inc, one of the world's largest chocolate conglomerates, of changing their recipe’s to work around the new prices. 

The visceral response to Hershey’s move in the futures markets makes even more sense when analyzing the coalitions operations. In a move to boost sales, the coalition expanded their operations just before the global impact of covid. Now stuck with a large amount of cocoa and no one to sell it to, many farmers were forced to lower prices and sell to a middle man below the government's new LID price. Compound that with the 2017 slash of prices that lowered the asking price per ton of Cocoa, and the magnitude of the coalition and it's farmers problem really comes into frame. 

Nevertheless, the number of cocoa farmers continues to rise, and with it, deforestation. As one portion of the country runs dry from the planting of cocoa shade trees (if the farmers deem them necessary, hint: shade trees are always necessary) farmers move to another portion of the country. While this process of sucking the soil dry takes a couple of decades, the area from which they move slowly rebuilds its lush ecosystem, until the farmers inevitably return, or new farmers -sniffing a consistent living- populate and cultivate the land. 

Seemingly, no matter where you turn or to whom you look, someone is being exploited or something is being destroyed. Although chocolate companies have deployed auditors, have cute stickers on their bars, and have pledged to eradicate forced labor from their supply chain over two decades ago, the problem has only grown. Children lured away from home with the promise of money and opportunity are trapped and forced to work in small to large cocoa farms across the Ivory Coast. Not attending school, not seeing their families, not necessarily being fed properly, and having no escape. Blaming the corporate giants seems to be the way to go. You can’t blame the poor farmer for trying to not starve to death, you can’t blame the kids for wanting money, and you certainly can’t blame the consumer for not wanting to overpay for a commodity.  So it must be the corporations, right? 

This is the part where the writer says Yes and no, and you, the reader, nod along. “Yes, of course, it’s always somewhere in the middle.” But no, the simple answer is that if you actually want cruelty free chocolate you will have to pay more. We can’t blame the consumer per se, whether you’re trading money for products or bartering, you have limited resources, and left with the agency to do with those resources what you wish, there is only so much you are willing to sacrifice for a product. The farmer of an undervalued or low value commodity is never going to rake in the bucks. So what has to change is the perception of the commodity in order for the consumer to be willing to give up more to have said commodity. As long as chocolate is viewed only as a dessert, and not as a nutrient packed and antioxidant rich food, companies will be unable to raise the prices of their bars and maintain the margins that they have been operating under for decades. 

Some companies care much more about having a clean supply chain than others, spending more than double what other companies spend to have a thorough auditing of the cocoa farms. But their competitors have a price point they must hit, and if they consistently fail to hit this price point they put their own stability at risk. Such is the nature of survival. A company only bends to the will of the consumers. As long as the farmers produce a commodity that’s main market is the gas station impulse buy and the once in a while chocolate set, they can’t charge much more for their chocolate without being undercut by the competition. 

So the quick answer you're looking for to the question of, “who’s fault is it that cocoa farmers live in poverty” is ‘Culture’. Outside of regions where cacao has a rich history stretching a couple thousand years, chocolate is not viewed as being worth more than the dollar and fifty nine cent “myswell” one says when waiting in line at the local supermarket. Therefore, companies understand that charging more will counteract the cheap impulse buy and eat into their profits. In order to pay more for the cocoa beans, they would have to either decrease salaries of virtually everyone in the company, possibly causing the employees and the executives to find more lucrative opportunities -leaving the industry itself to completely rot which benefits no one- or they have to lay off workers and put more demand on the remaining workers, leading to these remaining employees to look for other, less demanding or better paying, opportunities. As a result, the only real solution is to charge more for the low quality bar which decreases sales. The companies must survive, so they will do what allows them to survive. If the consumer still desires a cheap bar but at the same time desires an expensive to maintain supply chain, they have to only buy from companies that are willing to sacrifice time, money, and energy just to provide them with chocolate, while reaping none of the rewards for the time, money, and energy that is put into the product. 

Keeping a clean supply chain is difficult. Even with a supply chain where there are no child workers, the average farmer is still well below the international poverty line. But sustainability is important. Cheap products are made with cheap materials. If those who sell these cheap materials do not sell copious amounts of said material, they will make little money. A commodity must be valued to have value. The secret to sustainability in chocolate is the attitude the consumer has towards chocolate. This is an attitude that will not change unless the cultural perception of chocolate is one that understands the numerous health benefits of its consumption. If this is understood, people will be willing to spend their discretionary income on whatt was known to millions as the Food of the Gods. 

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