Why we don't sell beans

For decades, various institutions have been making genuine efforts to enable cocoa farmers to live in dignity. But although almost a third of cocoa is traded fairly and donations are collected diligently, nothing changes: about 36% of cocoa farmers continue to live below the poverty line, or about 2 million families.

Chocolate is almost never fair

It may seem that our problem lies not in the absence of quality seals and product information, but in the necessity for such seals in the first place. When we purchase items without an organic label, it's often a reasonable assumption that they were produced under conditions detrimental to the environment. Similarly, the assurance that someone earns a fair income and works in humane conditions is something we should take for granted in our society, yet we find the need to print these promises on product packaging. Unfortunately, such claims are often printed without the corresponding commitments being upheld.

Cocoa is 95% grown by smallholder farmers. Like most agricultural products, by the way. 90% of all farmers worldwide are family farmers and 70% of the world's population feeds on their produce, according to the Food and Agriculture Organization of the United Nations (FAO).

The global chocolate market reached a staggering value of $113.2 billion USD in 2021. While one might assume that the producers of such a coveted product are  affluent, the opposite is, in fact, true.

Despite their tireless efforts, one-third of cocoa farmers live in abject poverty, a situation that has persisted for years. Even the existence of fair trade labels, which control a significant portion of the market, has not substantially altered this harsh reality.

The VOICE network, a global institution of NGOs and trade unions working for sustainability in the cocoa sector, therefore describes the poverty of cocoa farmers in a position paper as systemic. 90% of all cocoa is grown by smallholders, who bear the complete risk of crop failure and quality defects, e.g. due to parasites.

Exploitation without exploiters?

If a group of people supplies 90% of a raw material in demand for a growing market of billions, one should expect that these people earn well, even come to relative wealth. But when two out of five of them end up below the absolute poverty line of 1.90 USD a day, one can no longer speak other than of exploitation.

The system to which cocoa farmers supply their beans consists of a world market over which they have no control and which dictates prices determined on international commodity exchanges such as those in New York or London, and a value chain that ensures that profits from the market flow primarily to Europe and the United States. From the price per ton, cocoa farmers are left with between about 2600 USD and 3600 USD for conventional cocoa. Too little to live and too much to die. It is common knowledge that farmers need more, but that is how the market works. You can't blame anyone for that.

The market sets the price, to which the fair trade institutions obviously also have to surrender, and the know-how for production and trade as well as the infrastructures that allow the production of large quantities of high-quality chocolates are in Western hands.

The export markets of cocoa and chocolate

To better understand the cocoa market, it is worth taking a look at the Haward Growth Lab's Atlas of Economic Complexity (AEC), whose data is provided by the UN COMTRADE database. The AEC is based only on export and import data, but it quickly becomes clear where and at what point in the process the most money is earned.

The graph on the export market for cocoa beans in 2020 shows that most of the beans come from Africa and South America, and Ecuador is the third largest cocoa exporting country.

You can see very clearly that the countries located around the equator in the so-called cocoa belt dominate exports. Almost three quarters of the cocoa beans are exported from Africa (purple) and another 17% from South America. In total, this makes up around 90% of an export market volume of USD 7.26 billion.

The graph on the export market for chocolate illustrates the domination of European and North American countries. With Germany as the largest exporter of chocolate.

The export market for chocolate, which will be four times as large in 2020 at just under 28 billion, is dominated by European and North American countries at over 85%. And this is just exports. The global total market for chocolate was $113.2 billion USD in 2021. The Ivory Coast, Ghana or Ecuador. The three largest cocoa-producing countries play practically no role here.

And in Ecuador?

The situation in Ecuador is somewhat different from the world market. Here, cocoa is usually one of many crops grown by a family and so the dependence on the cocoa price is not so high. There are other things that play a role here and that are of great importance for the rainforest.

In the region that is now Ecuador, cacao has been cultivated and consumed for thousands of years. The variety of cacao commonly used in Ecuador is the fine of flavor cocoa "Cacao Arriba Nacional". This cocoa only grows in the jungle and it requires more care, such as the removal of parasites, and is more vulnerable to disease than the common CCN 51 clones that account for the vast majority of cocoa consumed worldwide. However, the quality of the cocoa is in no way comparable to that of Arriba Nacional.

Ecuadorian cocoa farmers receive almost nothing for the additional effort they put into growing Arriba Nacional. Because fine flavoured cocoa (FFC) is not certified and the price is determined between small cooperatives or individual farmers and middlemen, Ecuadorian farmers do not receive more than for an average variety. This, of course, is another threat to the rainforest, as 40% of Ecuador's cocoa is now also derived from CNN 51 clones and grown in plantations that were once jungle. Companies like Nestlé even encourage this development.

A study (available only in German) conducted by the WWf and the Südwind Institute shows impressively that Ecuadorian cocoa farmers receive no more for Arriba Nacional than the usual price for normal cocoa on the world market.

"The import price for Ecuadorian cocoa in 2020 averaged 2,496 euros per ton, only marginally higher than the price of cocoa from Côte d'Ivoire (2,407 euros) and from Ghana (2,486 euros)."

Even there is more and more CNN 51 chocolate grown in Ecuador, 60% is still Arriba Nacional.

If you look around in stores that sell chocolates made from Arriba Nacional like this one, it is easy to calculate that a ton of fine chocolate can fetch about 117,000 euros. Moreover, it consists on average of only about 65% cocoa. The rest is mainly milk powder, sugar and ingredients such as nuts.

What has to change for things to actually change?

Consider a scenario where winegrowers worldwide were presented with an offer to cease producing their own wine. Instead, their harvests would be purchased and processed by large trading groups at a fixed rate of a few thousand euros per ton. Specialized companies in Africa would then refine the product and introduce it to the global market. It's improbable that most winemakers, who generally earn substantial incomes (especially when compared to cocoa farmers), would willingly accept such an arrangement.

This also shows that current trade practices, whether fair trade or not, further cement the exploitation inherent in the system. But it also shows how something can be changed in the long term.

Chocolate is an expensive import product in Ecuador, one of the countries with the best cocoa in the world, and it comes from the USA or Germany. To change this and ensure that cocoa farmers earn fair wages, the entire value chain must be relocated to the countries that produce cocoa. Cocoa farmers and cooperatives in the cocoa belt between the 23rd degree of northern latitude and the 23rd degree of southern latitude must eventually produce chocolate themselves. And the same goes for coffee and many other so-called colonial goods.

Even though our efforts here are too small to make a difference, we do not want to participate in the current conditions. Therefore, we do not sell beans.

Read also:

Making Chocolate: Better than buying land.

Better than buying the land to preserve it from deforestation is of course making people not want to sell it, but protecting it themselves. So read about our project of building the Ariyani Chocolate Manufacture run by women.

Read the full  Article described above