Fair trade

Behind the promises of ‘responsible’ chocolate: a bleak future for cocoa farmers and an unsustainable food industry

Fair trade

by Simon Gouin (Grand Format)

Deforestation, child labour, underpaid farmers: in the countries where it’s grown, cocoa isn’t really synonymous with social well-being. Whilst chocolate giants such as Mars, Mondelez or Nestle have never been doing so well, the cocoa industry is failing both socially and environmentally. The food multinationals are trying to react by announcing a shift towards ‘responsible’ cocoa, with a number of fair trade certifiers offering them customised labels. But for Mars and others, these moves are primarily a way to secure and optimize their supply chain.

This article was originally published in French. Translation: Jocelyn Timperley.

From afar, it seems like a small revolution. The giants of the chocolate industry are converting to ‘sustainable cocoa.’ US multinational Mars announced they would source 100% certified cocoa by 2020 (for the moment, Mars says, 20% of the cocoa it buys is certified). Certified, so – in theory – more respectful of cocoa farmers and the environment. Mars isn’t the only one throwing itself into ‘fair trade’: the Swiss group Barry Callebaut, a world leader in chocolate production, is developing a program to support producers in using environmentally-friendly methods. The Swiss firm says that already 10% of its raw materials is certified by fair trade organisations. In such a concentrated sector, where only a handful of companies share the market (Mars is one of just three global chocolate giants, alongside Mondelez – which has taken over the Kraft Foods brands – and Nestle), these decisions could have a strong impact on an industry already reaching a critical stage.

The productivity of cocoa is steadily falling. Overexploitation of plantations, mainly located in West Africa (72 % of the world production), puts the global market supply in jeopardy. In 2013, more than four million tonnes of cocoa were consumed worldwide, 32% more than ten years ago. And global demand continues to grow: in Asia and the Pacific, chocolate consumption is increasing by 25% each year. How can it be ensured there will be enough cocoa by 2020? Production may become too low in relation to demand, and prices will rise if these trends are not reversed. The chocolate giants, however, have understood it well: that’s why they are seeking to change practices on the ground.

Chocolate or the forest

The first challenge is environmental. Cocoa is cultivated at the expense of the forest. Production costs are high: time, labour and soil enrichment are required. Once the cacao trees are exhausted, after 20 years of production, farmers turn towards new land. And the ground underneath forests is still fertile. An estimated 14 million hectares have been cleared in the Ivory Coast in order to plant new cacao trees; that’s bigger than the total area of England [1]. A report by the United Nations Development Program (UNDP) estimates that, in order to maintain current production, around six million hectares more will have to be destroyed in the coming years. Next likely targets are Cameroon’s forests, as well as those of Vietnam and Indonesia.

In addition to all this there is a social challenge. Since 1950 the price of cocoa has declined steadily. ‘Today, cocoa isn’t worth even half of what it was 30 years ago,’ the Berne Declaration says. [2] Faced with ever-lower incomes, many producers in the Ivory Coast, which supplies 40% of the world’s cocoa, are moving towards different work or abandoning their land. ‘Families [in the Ivory Coast] would need to earn on average ten times more than they do today to reach the poverty line,’ says the Berne Declaration. Prices are extremely low, but also very volatile. ‘Prices can drop by 30% from one day to the next, as occurred in autumn 2011,’ says Christophe Alliot of the Bureau of Social Analysis for Civic Information (French: Bureau d’analyse sociétale pour une information citoyenne, or BASIC). This sort of fluctuation creates considerable uncertainty for farmers, who are now also affected by the impacts of climate change.

230,000 children on the plantations

There is a shortage of labour for cocoa cultivation. Despite the use of insecticides, fungicides and fertilizers, cocoa requires a lot of manpower, something machines cannot replace. Child labour makes up for part of the deficit. In 2009, an estimated 230,000 children worked on plantations in the Ivory Coast and Ghana. 15,000 were thought to be child slaves. Forced to work during the day, they are locked up at night to prevent them from escaping.

In the early 2000s the issue of child labour attracted international attention. The United States implemented the ‘Harkin Engel Protocol’, named after two of their political representatives. The object of this Protocol was to force the chocolate industry to take action to eradicate child labour by 2005. But the agreement remained voluntary and non-binding. The deadline has been extended. Statements are issued, actions are expected, but in 2014 child labour is still a reality in the plantations of West Africa. Why such a failure? ‘The problem is economic and social at its core,’ says Christophe Alliot. ‘As long as farming families don’t have the means to live, forced child labour will be very difficult to suppress.

Certificates ‘to give a good conscience?’

Codes of conduct and certificates promoted by food companies only bring marginal change. But the trend has been set: all chocolate companies now want to certify a portion of their products as a way to reassure consumers. The brand reputation must be protected, and labelled cacordingly. How fortunate that there are organisations, including Rainforest and Utz, all too eager to provide such endorsement. Their principle is not to certify cocoa products unless the farmers have made certain commitments. For the Rainforest certification, farmers must protect the forest. But children’s rights are a different story: ‘Child labour is certainly prohibited before the age of 15, but there is no guaranteed minimum price to ensure a stable and adequate income for families, even though this is essential to attacking the problem at its root,’ says Christophe Alliot.

In 2011, 11% of the cocoa used by chocolate manufacturers was certified. This is a first step, perhaps, but what is the real impact of these certificates? In 2013, the Centre for International Cooperation in Agronomical Research for Development (French: Centre de coopération internationale en recherche agronomique pour le développement, or CIRAD) investigated this issue in the Ivory Coast. They studied 160 plantations, including 80 certified by Rainforest. Their conclusions are clear: the certification criteria are not always respected. ‘Ultimately, these certificates are above all a way for the chocolate makers and the states to keep a good conscience,’ explains François Ruf, economist and cocoa specialist at CIRAD. [3] In his opinion, the food companies’ primary objective is to increase yields by training farmers. A productivist approach, which can lead to an increased use of pesticides. ‘We recognize that in the Ivory Coast the Rainforest Alliance certification must be improved,’ says Edward Millard of Rainforest. ‘But we are making progress.

Where does our chocolate come from?

Industry initiatives are thriving. But is the goal of producing more cocoa compatible with promoting the rights of farmers and protecting the environment? ‘For the chocolate industry, what matters is ensuring the supply of cocoa, therefore increasing the yield,’ says the Berne Declaration, adding that ‘companies are not always ready to invest in initiatives that don’t lead directly to such an increase.’ This is the case for traceability, which lets you know the precise origin of your cocoa. That way, you could avoid, for example, dealing with plantations where human rights are not respected. But traceability has a cost, which the majority of the large food companies are reluctant to take on.

It would be necessary, however, ‘to force them to be openly accountable,’ says the Berne Declaration. ‘Currently, if you ask brand distributors about the exact origin of their cocoa, they generally can’t give you an answer because only the manufacturers have this information,’ Christophe Alliot explains. In order to avoid low stocks, the chocolate manufacturers trade in cocoa, which prevents traceability, and makes it difficult to know if you are actually supporting child labour when you buy our standard-brand bar of chocolate.

The difficulties of fair trade chocolate

The question of the purchase price paid to the farmer is equally crucial. How can the decline and constant fluctuation of cocoa prices be stopped? How do we ensure a minimum income for farmers and enable them to cultivate cocoa more sustainably? Fair trade could provide a solution. Certification bodies such as Max Havelaar and distributors of fair trade products such as Alter Eco and Ethiquable in France allow the development of long-term relationships with cocoa producers engaged in more sustainable practices, and thus support the traceability of cocoa.

Many aspects of fair trade, such as a minimum price guarantee for producers [4], a premium on development and the strengthening of farmer organisations (cooperatives), allow cocoa farmers to escape the poverty so prevalent in the industry. According to Max Havelaar, which supports 127,000 cocoa farmers, fair trade accounts for 1.2% of the world cocoa market. However, it is estimated that only a third of cocoa produced according to fair trade standards is sold with the fair trade label. The other two thirds are sold on the conventional market, at a lower price than fair trade cocoa. [5]

Towards even more relaxed labels?

It is largely because of this paradox that Max Havelaar has recently decided to amend its certification rules. In early 2014, the company announced the launch of a new label, the Fairtrade Supply Program, or FSP. It entails substantial changes, targeted at convincing more and more manufacturers to shift to fair trade. Max Havelaar can now label whole products containing just one ‘fair trade’ ingredient. ‘Previously, all ingredients which could be fair trade certified (for which there are specifications) had to be in order for the whole product to be certified,’ explains Max-Havelaar France. [6]

Now it will be sufficient that only the cocoa, present in very small quantities in a Mars bar for example, is fair trade certified, in order for the whole product to be given the label - even if all the other ingredients, such as the sugar, come from the conventional market. This chocolate bar can bear the new Max Havelaar label, which, apart from a few minute details, closely resembles the traditional one. In the eyes of the consumer, this will transform many mainstream food products into fair trade products. Which will help Mars reach its ambitious goals for 2020! [7]

True, ‘100% of the cocoa contained in the product must have been produced under fair trade conditions in order for a company’s product to carry the new label,’ explains Max Havelaar France, which expects in 2014 a 22% increase in the volumes sold by cocoa producers within the Fairtrade/Max Havelaar system. ‘A company that uses 10% fair trade cocoa can’t use the label except in its CSR [corporate social responsibility, ed] communication.’ But even this is something that could appeal to numerous chocolate manufacturers concerned with a greener reputation.

The end of the connection between consumer and producers?

Several years ago, Max Havelaar also developed the’mass balance’ approach. The principle is the following: a chocolate manufacturer who buys 30% fair trade cocoa can certify 30% of its chocolate products. This is regardless of whether the final product which carries the Max Havelaar label actually contains any certified cocoa: certified and non-certified cocoa are mixed during production. This way, chocolate manufacturers avoid having two separate production chains, reducing the production cost of fair trade chocolate. Max Havelaar can therefore compete with Utz and Rainforest, whose labels are less demanding.

Here’s the video presentation by Utz about their mass-balance system:

But, with this approach, the link between consumer and producer – originally fundamental to the fair trade philosophy - is no longer clear. Physical traceability is being replaced by documented traceability, and the consumer can no longer be sure that his bar of chocolate indeed contains ‘sustainable cocoa.’ Ultimately it is not certain that consumer‘s interest in buying ‘fair trade’ stamped products will continue in these conditions.

With the relaxed conditions of new label, there is also a risk that companies previously certified for products containing a majority of ‘fair trade’ ingredients will move towards the lighter version of the label, using only fair trade cocoa, but not other fair trade ingredients, in their products. ‘This new fair trade will certainly allow larger volumes to be processed,’ says French fair trade cooperative Ethiquable. [8]But it will mean renouncing the social transformation and shift in power relations that fair trade (at least the one that we, Ethiquable, practise) requires.’ Deforestation, child labour and small farmer migration will likely continue. Despite many initiatives, the chocolate industry still seems far away from carrying out its revolution.

Simon Gouin

Photo : CC Daniel


[1Read here (in French).

[2Déclaration de Berne - a Swiss-based NGO which has devoted a number of reports to the challenges of the chocolate industry, including an assessment of 19 Swiss chocolate companies. The report is available to read on their website (in French).

[3See here (in French).

[4This price varies between different organisations and there is no overall consensus on the price per tonne of cocoa.

[5According to the federation of African fair trade producers (Fairtrade Africa), whose member cooperatives complain of the low percentage of cocoa they manage to sell under the Max Havelaar conditions, even though all their production is certified.

[6A second condition is imposed: 20% of the total product must be certified for the logo to appear on the product.

[7Mars is not planning to use solely the Max Havelaar certification scheme to meet its objective. Other organisations will be made responsible for certifying other parts of the production.

[8Read their full statement (in French).