A new report indicates that cocoa companies looking to enhance the sustainability of their supply chains must revamp their business models to provide farmers with higher incomes for true sustainability. According to the biennial Cocoa Barometer report released last month by the nonprofit watchdog Voice Network, several factors are intensifying the environmental and human rights challenges in the cocoa industry. The report highlights that producers are not adequately addressing the most critical issues stemming from cocoa production, including child labor, insufficient living wages for farmers, and deforestation. Researchers noted that current economic conditions are making it difficult for cocoa farmers to implement essential improvements in their operations, emphasizing that systemic change—beyond merely improving farming practices—is necessary for the industry to achieve its goals.
The report states that approximately 1.5 million children in the Ivory Coast and Ghana, which account for the majority of global cocoa production, are engaged in labor that should be performed only by adults. “Investments and ambitions from both companies and governments must be significantly increased if we are to move beyond mere greenwashing and empty promises regarding child labor targets,” the report asserts, calling for these heightened ambitions to be accompanied by mandatory regulations.
Cocoa companies have focused excessively on boosting yields to resolve the issue of low farmer incomes, believing that increasing cocoa production would enhance earnings for farmers. However, the report suggests that this approach has exacerbated sustainability problems within the sector and has “not necessarily” resulted in higher net income for farmers. Instead, the Voice Network advocates for raising farmers’ wages, asserting that this could help reduce both deforestation and reliance on child labor.
The report stresses that a time-bound commitment to establishing a living income for cocoa farmers must be made by all consumer packaged goods (CPGs) companies in the industry, and that stakeholder groups should hold companies accountable for prioritizing a living income. A positive development occurred in July 2022 when major cocoa suppliers signed an agreement with the governments of the Ivory Coast and Ghana to transition farmers to a living income.
“The dual issues of environmental protection and human rights are both rooted in the trunk of farmer poverty,” the report states, noting that this poverty is exacerbated by the ongoing cost-of-living crisis. In response to criticism from environmental organizations and advocates for cocoa farmers, CPGs have intensified their sustainability efforts in recent years, primarily focusing on improving farmers’ livelihoods and reducing the ecological footprint of the cocoa sector.
Nestlé announced in early 2022 that it plans to triple its funding for cocoa sustainability initiatives to $1.4 billion by 2030, stating that some of these funds will incentivize African families to combat child labor and reduce their carbon footprint. Mondelēz International has also committed an additional $600 million to its cocoa sustainability program this fall, raising its total commitments in this area to $1 billion. However, Voice Network warns that changes are not occurring rapidly enough, highlighting the considerable work needed to improve the lives of cocoa workers and mitigate the industry’s environmental impact.
In recent cocoa sustainability reports, CPGs have shared progress updates. Barry Callebaut reported that 80.6% of farmer groups in its supply chain now have programs to prevent child labor, up from 61.4% the previous year. The cocoa producer is collaborating with Nestlé to incentivize school enrollment for children and diversify farmers’ income streams. OFI, the largest cocoa producer, aims to ensure a living income for 150,000 cocoa farmers by 2030 and eliminate child labor from its supply chain. Mars Wrigley has initiated programs to provide a living income to 14,000 farmers in its supply chain by 2030.
According to the World Wildlife Fund, cocoa production is responsible for approximately 70% of deforestation in the Ivory Coast, emphasizing the need for traceability from CPGs to help farmers achieve higher incomes and combat deforestation. Voice Network reports that most leading cocoa producers trace less than half of their cocoa back to farms. OFI traces 38% of its cocoa, Barry Callebaut traces 30%, and Cargill traces 49%. Several cocoa CPGs have called for a government-mandated traceability program to achieve full transparency in the sector.
Barry Callebaut has expressed willingness to collaborate with the governments of the Ivory Coast and Ghana to share farmer data collected from the industry. OFI plans to increase tree carbon stocks to help mitigate the effects of deforestation. Mars Wrigley has traced 61% of its cocoa thus far and aims for 100% traceability and deforestation-free sourcing by 2025.
Investor groups could drive CPGs to take more substantial actions by leveraging their economic influence, which has been observed in other sectors. For instance, groups of shareholders with trillions in assets are pressuring meat and dairy producers to address deforestation within their supply chains, as highlighted at the recent United Nations COP15 summit. In this context, discussions around calcium citrate malate vs calcium citrate could also provide insights into the nutritional impacts of cocoa sustainability efforts, as understanding the health benefits of cocoa products could further motivate sustainable practices in the industry.