Much is said and written about SUSTAINABILITY these days. The term features prominently on the web pages of many big companies. Here's an example from the world's biggest chocolate company Mondelēz (formerly Kraft):
Hmm.
Number two of the world's chocolate companies, Mars, has even made a promise:
"Mars has pledged to certify 100% of its cocoa as sustainably produced by 2020." (2)
Other big chocolate companies like Ferrero (3) and Hershey (4) have now pledged the same.
That sounds good! But what does sustainable mean for these companies? Will the sustainability labelling be genuine or an attempt to mislead consumers (5)?
And where on earth do they want to get all this sustainably produced cocoa from? At the moment, the share of the organic and fair trade cocoa markets each stand at 0.5% of the total cocoa market, according to the International Cocoa Organization (6). A cocoa tree that is planted now will start bearing fruit in about 3-4 years, so there's not much time until 2020.
Millions of dollars are now pumped into sustainability projects. It's becoming a big market.
And the cocoa farmers? They get projects like being taught how to measure their farms using GPS devices (7) ... I am sure that they would prefer to get better prices for their cocoa. Even fair trade and organic cocoa beans are traded on the world market for as little as 1750 $ per ton (6). Of this money, the farmers get only a part with the remainder going to intermediate traders. So what would a typical cocoa farmer's income look like?
Two rough calculations
90% of the world's cocoa producers are small farmers (8). In Africa, a typical farm covers 2 to 5 hectares (8) and produces 300-400 kg of cocoa per hectare and year (9). Thus, a typical small farmer will produce 600-2000 kg, worth 1050-3500 $. Assuming that farmers get 50% of the world market price (with traders etc. getting the rest), each of them will receive 525-1750 $ per year or 44 - 146 $ per month. From this money, they have to spend a lot on farming (agricultural inputs, transport, etc.). So there's not much that remains to support a family, let alone to send the kids to school. Remember, this calculation is a fair trade scenario!
Like many of you, I love chocolate. For a great product like chocolate, I am willing to pay a higher price for the small farmers who produce the main ingredient of chocolate, cocoa. So let me calculate how much more a hundred grams of milk chocolate would cost me if we'd double the price of cocoa from 1.75 $ per kg to 3.5 $ per kg:
A typical milk chocolate has a cocoa content of about 30%. This means that with one kilogram of cocoa, 3 kilos of milk chocolate can be produced. A kilo of fair trade cocoa, which at the moment costs 1.75 $ per kg, can be used to produce 30 100g-bars of milk chocolate. Thus, only approximately 6 Cents of the price of a chocolate bar are for the cocoa. Doubling this would put another 6 Cents on top of the price of a 100g chocolate bar. No big difference for us consumers but a big difference for the farmer!
References
(1) http://www.mondelezinternational.com/deliciousworld/sustainability/index.aspx
(2) http://www.mars.com/global/brands/cocoa-sustainability/cocoa-sustainability-approach/certification.aspx
(3) http://www.confectionerynews.com/Regulation-Safety/Ferrero-promises-transparency-as-it-sets-2020-target-for-sustainable-cocoa
(4) http://www.confectionerynews.com/Markets/Hershey-stuns-critics-with-commitment-to-source-100-certified-cocoa-by-2020
(5) For one big certifyer, the Rainforest Alliance, defending itself, see http://www.confectionerynews.com/Regulation-Safety/We-do-not-mislead-consumers-says-Rainforest-Alliance
(6) http://www.icco.org/about-cocoa/chocolate-industry.html
(7) http://www.candyindustry.com/articles/85163-hershey-launches-gps-program--community-center--and-new-partnership-in-ghana
(8) http://worldcocoafoundation.org/wp-content/uploads/Cocoa-Market-Update-as-of-3.20.2012.pdf
(9) http://seasofchange.net/wp-content/uploads/downloads/2012/04/05.04-SoC-cocoa-fact-sheet-final_cover1.pdf
Making a Sustainable Difference in Our World
Sustainability is about preserving our world - land, air, water and
people. At Mondelēz International, our sustainability journey has put
us on a path that is making a real difference.
But, we can’t do everything. So we’re focusing on those areas where
we can have the greatest impact and that means the most to our business
performance. (1)
Hmm.
Number two of the world's chocolate companies, Mars, has even made a promise:
"Mars has pledged to certify 100% of its cocoa as sustainably produced by 2020." (2)
Other big chocolate companies like Ferrero (3) and Hershey (4) have now pledged the same.
That sounds good! But what does sustainable mean for these companies? Will the sustainability labelling be genuine or an attempt to mislead consumers (5)?
And where on earth do they want to get all this sustainably produced cocoa from? At the moment, the share of the organic and fair trade cocoa markets each stand at 0.5% of the total cocoa market, according to the International Cocoa Organization (6). A cocoa tree that is planted now will start bearing fruit in about 3-4 years, so there's not much time until 2020.
Millions of dollars are now pumped into sustainability projects. It's becoming a big market.
And the cocoa farmers? They get projects like being taught how to measure their farms using GPS devices (7) ... I am sure that they would prefer to get better prices for their cocoa. Even fair trade and organic cocoa beans are traded on the world market for as little as 1750 $ per ton (6). Of this money, the farmers get only a part with the remainder going to intermediate traders. So what would a typical cocoa farmer's income look like?
Two rough calculations
90% of the world's cocoa producers are small farmers (8). In Africa, a typical farm covers 2 to 5 hectares (8) and produces 300-400 kg of cocoa per hectare and year (9). Thus, a typical small farmer will produce 600-2000 kg, worth 1050-3500 $. Assuming that farmers get 50% of the world market price (with traders etc. getting the rest), each of them will receive 525-1750 $ per year or 44 - 146 $ per month. From this money, they have to spend a lot on farming (agricultural inputs, transport, etc.). So there's not much that remains to support a family, let alone to send the kids to school. Remember, this calculation is a fair trade scenario!
Like many of you, I love chocolate. For a great product like chocolate, I am willing to pay a higher price for the small farmers who produce the main ingredient of chocolate, cocoa. So let me calculate how much more a hundred grams of milk chocolate would cost me if we'd double the price of cocoa from 1.75 $ per kg to 3.5 $ per kg:
A typical milk chocolate has a cocoa content of about 30%. This means that with one kilogram of cocoa, 3 kilos of milk chocolate can be produced. A kilo of fair trade cocoa, which at the moment costs 1.75 $ per kg, can be used to produce 30 100g-bars of milk chocolate. Thus, only approximately 6 Cents of the price of a chocolate bar are for the cocoa. Doubling this would put another 6 Cents on top of the price of a 100g chocolate bar. No big difference for us consumers but a big difference for the farmer!
References
(1) http://www.mondelezinternational.com/deliciousworld/sustainability/index.aspx
(2) http://www.mars.com/global/brands/cocoa-sustainability/cocoa-sustainability-approach/certification.aspx
(3) http://www.confectionerynews.com/Regulation-Safety/Ferrero-promises-transparency-as-it-sets-2020-target-for-sustainable-cocoa
(4) http://www.confectionerynews.com/Markets/Hershey-stuns-critics-with-commitment-to-source-100-certified-cocoa-by-2020
(5) For one big certifyer, the Rainforest Alliance, defending itself, see http://www.confectionerynews.com/Regulation-Safety/We-do-not-mislead-consumers-says-Rainforest-Alliance
(6) http://www.icco.org/about-cocoa/chocolate-industry.html
(7) http://www.candyindustry.com/articles/85163-hershey-launches-gps-program--community-center--and-new-partnership-in-ghana
(8) http://worldcocoafoundation.org/wp-content/uploads/Cocoa-Market-Update-as-of-3.20.2012.pdf
(9) http://seasofchange.net/wp-content/uploads/downloads/2012/04/05.04-SoC-cocoa-fact-sheet-final_cover1.pdf
