As Easter approaches are we nearer to fixing the chocolate supply chain?

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In a world of ever increasing scrutiny and tightening regulation, there are still aspects of our food systems that even the biggest retailers and brands struggle to get to grips with. And global cocoa supply chains are a case in point. In the runup to Easter, a new report by a coalition of charities including Mighty Earth and Be Slavery Free has named and shamed companies like Mondelez, Tesco and General Mills for their opaque cocoa sourcing practices.

They weren’t the only ones. According to the latest edition of the ‘Chocolate Scorecard’, many of the world’s biggest chocolate buyers face claims of links with child labour, deforestation, harassment and pay exploitation, most commonly Ghana and Ivory Coast, from where two-thirds of the world’s cocoa comes.

So, more than two decades after Nestlé, Mars and Hershey pledged to eradicate child labour in their west Africa supply chains, why is the cocoa sector still so problematic? And can cocoa sourcing be done sustainably and responsibly, at all?

A major challenge for many in the chocolate trade is traceability. Around 40% of the world’s cocoa is still untraceable to the farm, says Mighty Earth Africa senior director Julian Oram.

Many buyers struggle to get 100% traceable data to farm level because the market is heavily consolidated in the middle, explains Anna Mann, head of sustainable sourcing at Fairtrade Foundation. “You have a few key traders and manufacturers, and getting visibility and information from them can be a real challenge if you’re not their biggest customer.”

Fairtrade cocoa farmer Bismark Kpabitey, from Ghana’s Ahafo region

The problem is, when you have a manufacturer collecting beans from a variety of local farmers operating on non-exclusivity contracts – who in turn supply to different buyers based on demand and price – it becomes difficult to to be sure those farmers acting as an occasional source don’t grow some of their beans on an illegally deforested patch of land or pay minors next to nothing to help with the harvest.

“There is too much problematic cocoa that gets mixed with other non-problematic cocoa,” Oram adds. “And when companies don’t know where their beans are coming from, then we have a problem.”

Solutions do exist, says Mighty Earth’s senior adviser in Ghana Sam Mawutor – satellite monitoring helps identify cases of deforestation and child labour. Some of the bigger businesses, like Mars, are investing in the technology.

But industry-wide collaboration on tech improvements is needed to reach full traceability, Mawutor says, otherwise some businesses will continue to rely on “outsourcing the responsibility” to smallholders – whose data-keeping efforts often rely on (famously unreliable) paper-only systems.

The problem is not helped by the fact lots of companies still fail to pay farmers at or above the living income, says Oram.

“Many farmers want to produce sustainably, but for that they need to earn a decent income. And because the market prices of cocoa have been stagnant to actually falling over recent years, and they don’t earn enough, then you’ll see child labour and you’ll see encroachment into protected forest areas.”

Paying suppliers a premium price for their product offers them a “safety net” to then reinvest on their farms, increase productivity and break the poverty cycle, says Mann.

But Covid-19 and the cost of living crisis have seen more cost-cutting than investment in the area, she adds.

However, there also big players taking important steps.

“We’re seeing Aldi and Lidl making big commitments on cocoa through Fairtrade, which is a phenomenal sign to the market that it doesn’t need to cost you loads,” Mann says, pointing to the relatively affordable price point of discounters’ own-label chocolate. “And you have the likes of Mars and Nestlé investing in wide-scale programmes to support farmers, so I think things are improving.”

Last year, Nestlé announced a $1.4bn initiative involving direct payouts to African cocoa farmers to try to tackle the root issues leading to child labour. “For the other companies who aren’t going as far, the biggest challenge they’re going to face is that if you’re chasing profit at the expense of farmers – that’s a very short-term gain,” Mann warns.

Multi-pronged approach

Achieving sustainable longevity for the sector requires a holistic approach that goes beyond paying premium prices. Some of the problems plaguing cocoa supply chains are deeply complex and need a multi-pronged approach, including funding education for farmers and their communities, as well as having local teams on the ground helping to build these support systems over time.

This is exactly what businesses like Tony’s Chocolonely – which has an ‘open-chain’ model based on 100% transparency in areas like traceability and child labour – and Original Beans (the two top scorers in this year’s Chocolate Scorecard) have been doing.

Original Beans founder Philipp Kauffmann says the business’s strategy is based on a “regenerative approach” on the ground. That entails: its team traveling to particularly poor areas; offering twice the Fairtrade price to build lasting relationships with farmers; having its agronomists spend time with growers educating them on quality and productivity; while ensuring craft traditions are honoured at all times.

“Our mission is to make something ’really good’ rather than ‘less bad’,” says Kauffmann, “and I think the paradigm in confectionery is that many are happy to stop at ‘less bad’.”

In contrast, when ‘less bad’ is the baseline for cocoa sourcing practices, then the chocolate we put on the shelves is bound to come with a bitter aftertaste.