A big conference!

Attending the World Cocoa Conference (WCC) 2024 in Brussels was a remarkable experience. The event brought together diverse stakeholders across the cocoa industry, including farmers, industry leaders, policymakers, and NGOs. The conference's central theme revolved around its title, “Paying More for a Sustainable Cocoa”, with the aim of creating a sustainable and equitable cocoa industry by focusing on improving the livelihood of cocoa farmers. Despite the interesting discussions and proposals, several issues stood out, painting a complex picture of the industry's current state and the challenges ahead. In this blog, I want to share some of my thoughts about the three-day conference.

The Core Issue: Creating a Living Income

First, let’s address the elephant in the room: The payment of a living income. The recent poor cocoa yields due to weather patterns and diseases exacerbate the financial struggles of smallholder farmers, especially in West Africa. The cocoa market is alarmed as supply is under pressure, with an approximate deficit of 500MT this year alone, the third year with low supply (Uncommon Cacao, 2024). Nevertheless, the resulting high cocoa prices in the global commodity markets didn’t significantly increase farmers' earnings despite the reported rise in farm-gate prices in Ghana and Cote d’Ivoire. Moreover, it struck me that farmers and their work are often perceived merely as costs in the value breakdown of a chocolate bar, although they provide the key ingredient – cocoa. For instance, in France, the value distribution shows that retailers and chocolate brands create approximately 70% of total value and around 90% of margins from farmer to end-consumer (BASIC, 2020). This situation raises a critical question: Is this perspective in the value distribution rooted in a Western extractive approach to the commodity or the inability of farmers to participate in the value chain beyond selling their crops at the farm gate? I would state that both are heavily interlinked. The strong focus on the commodity (cocoa) and the complexity of its value chains have diverted attention from the individuals who produce this valuable product, diminishing the personal sense of accountability among buyers in the Global North. This perception must change, and a heightened sense of accountability should be fostered through regulatory pressures (such as the EU DR and CSDDD) and perhaps other solutions.

A New Buzzword: The Necessity for Decommoditisation

A recurring theme in the discussions at the WCC was cocoa “decommoditisation”. It is the opposite of commoditisation, which strips products of differentiating characteristics to make them into a single market item. In the case of cocoa, this approach has led to exploitation and inequitable distribution of profits. Decommoditising cocoa would mean valorising the different aspects of cocoa by acknowledging local market conditions, thus creating additional value and forming a bigger pie to share. In other words, the decommoditisation of cocoa can generate more income for farmers without necessarily taking away profits from other value chain actors.

However, decommoditisation can present challenges, especially for powerful industry players who rely on existing cost and revenue structures that focus on traditional economic growth, potentially leading to further exploitation of people and nature. I'm intrigued by the concept of decommoditising cocoa, and I believe it could offer a sustainable solution for cocoa production while maintaining its viability for farmers. However, further clarification of the term is needed to ensure it doesn't become just another vague buzzword.

As climate change threatens the industry's traditional business model, it must adopt new pricing and purchasing strategies that account for externalities in the long term. Decommoditising cocoa may become feasible if consumers are willing to pay more, as sustainable practices, product differentiation, and higher valorisation entail increased production costs. Highlighting the consumer's role in transforming the cocoa industry, one speaker criticised the belief that consumer purchasing behaviour alone can solve the value chain problems, calling it "an act of cowardice" due to the difficulty of making responsible and ethical choices. This perspective challenges the notion that consumer choices alone can drive systemic change. While ethical consumerism has a role, it is not a panacea. Structural changes, driven by industry leaders and policymakers, are essential to creating a sustainable and equitable cocoa sector.

Empty Promises and the Need for More Genuine Action

The representatives of farmers in the cocoa-producing countries echoed the sentiment of "what's being discussed is not what we are seeing", highlighting the gap between the high-level discussions at the WCC and on-the-ground realities. It became evident that some industry actors remained shallow in their statements without focusing on the issues of fairness and equity. Moreover, the quote "white men coming and giving promises" by farmer Leticia Yankee resonated with me, reflecting the historical pattern of unfulfilled commitments made to cocoa farmers. Therefore, fulfilling those promises is of the utmost importance. Otherwise, this perception will lead to valid cynicism from the farmers about the potential livelihood-improving measures. 

Based on the statements of the attending farmers, the conference itself left me feeling frustrated. I would explain this by comparing the WCC to the annual global climate conferences organised by the UNFCCC, where commitments are made, but actions fall short of solving the problems. A similar situation can be seen at the WCC; the participants acknowledge the need for a living income, propose action plans, start pilot projects, and often stop there without genuine long-term and large-scale implementation that leads to meaningful impact. The calls for multi-stakeholder networks, co-creation, and a pre-competitive collaboration are essential. However, big industry players seem hesitant to be the first movers in these initiatives due to the fear of losing competitiveness. If there is a genuine desire for change towards a more sustainable cocoa industry, the powerful players would allocate the necessary resources to make it happen.

A Call for Real Change

The need to change the industry is pressing due to the threat of climate change to the cocoa supply and other systemic issues that make the value chain actors highly susceptible to external shocks. The current high market prices could result in even greater consolidation of an already heavily consolidated market. This means that a sustainable and fair cocoa sector can only be achieved if the most influential actors are willing to adjust their business models to adapt to a changing environment. Otherwise, the future of the cocoa industry may be even bleaker than it is now.

Additional Resources

If you found the blog interesting, I can only recommend John Oliver’s take on the chocolate industry (here) and Antonie Fountain’s keynote speech at the WCC on the current state of the cocoa sector and the hope for change (here).

Sources

FAO and BASIC. 2020. Comparative study on the distribution of value in European chocolate chains, Executive Summary. Paris. Retrieved from https://lebasic.com/wp-content/uploads/2020/07/BASIC-DEVCO-FAO_Cocoa-Value-Chain-Exec-Summary_Advance-Copy_June-2020.pdf

Uncommon Cacao. Feb 26, 2024. What is going on with cocoa prices? Part 2. Retrieved from https://www.uncommoncacao.com/blogs/uncommon-cacao/what-is-going-on-with-cocoa-prices-part-2