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Can sector-wide marketing of cocoa contribute to sustainability? - Marcel Vernooij

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Can sector-wide marketing of cocoa contribute to sustainability?

Chocolate is lovely food. There’s such a great variety of products and flavors, enjoyed by a growing number of consumers with their specific taste, habits and cultural traditions. At the recent Chocoa Festival in Amsterdam chocolatiers showcased the transformation of cocoa from all over the world in award winning chocolates, pralines and fine patisserie. The event also illustrated how cocoa finds its way in delicious bars, ice cream, cookies and crêpes. Visitors marveled how chefs used cocoa in dining and happily tasted great combinations of chocolate with wine or beer.

Where the chocolate side of the supply chain shows a pleasant reality, the cocoa side is confronted with serious challenges . Cocoa is grown by millions of farmers in tropical countries in Africa, Latin-America and Asia. 60% of the world’s cocoa is being produced in Côte d'Ivoire and Ghana. An estimated 95% of the annual world cocoa production is derived from smallholdings of 1-3 hectares. In major producing countries the income of around 2.5 million small producers and their families depends on cocoa production. Many such farmers are in trouble, earning not enough money to lift their families out of poverty. In some cases, cocoa production relies on unlawful child labor. Furthermore, the agricultural productivity of cocoa trees needs major improvements. The future of cocoa farming is at stake. Many farmers are older than 50 and the younger generation is reluctant to take over.

In response, initiatives are being implemented to enhance sustainable production and trade of cocoa. Producer countries are drafting and implementing national cocoa development plans. They work together with international partners, such as through the IDH Initiative for Sustainable Trade, supported by our Ministry. IDH brings together stakeholders from the global cocoa processing industry and chocolate manufacturing businesses. The IDH cocoa program will improve agricultural productivity and increase income for at least 300,000 cocoa farmers in West Africa.

Over the last years, stakeholders have realized that public-private cooperation is needed to successfully address the challenges in the sector. The World Cocoa Conference held in Amsterdam in 2014 acknowledged the need for more collaboration and alignment between stakeholders, in order to deliver results to the advantage of all, in particular smallholder cocoa farmers.

I think the cocoa sector is well underway with joint efforts. At the same time, it often strikes me that cocoa stakeholders tend to stress their single solution in achieving a sustainable cocoa economy. Some state that only initiatives led by major chocolate producers will deliver substantive improvements, such as through higher productivity in cocoa farming. They argue that massive mainstream changes by default can only be achieved gradually, given that consumer prices for products like chocolate bars will remain highly competitive. Others call upon a fundamentally different approach. They favor adding market value by developing unique cocoa products, which can be transparently linked to countries of origin and high standards in environmental and social protection.

I would argue for a mix. Just as we need to cherish the variety of cocoa, we should applaud that different roads are leading to sustainability. There are several reasons why I believe that a one-fits-all strategy does not work for sustainable development, in particular for a product as diverse as cocoa, in terms of its agricultural setting, geography and cultural heritage. In this blog I would like to put forward one argument: cocoa flourishes in diversity, exactly because there is such a wide variety of end products, unique stories and smart marketing strategies.

I believe it is a common interest for all working in the cocoa sector to convince consumers that they have so much to choose from, from a sharply priced candy bar, to an exquisite praline from single estate cocoa. In doing so, communication and marketing initiatives should include stories of what is delivered in terms of sustainability in all its diversity.

At the same time, if the cocoa sector wants to reach out effectively to consumers, it has to stand united in being fully accountable on three basic requirements:
1. enhanced transparency of supply chains in order to reassure consumers’ interest to know where a product comes from and how it has been produced;
2. clear explanation of what is being done to increase farmers’ income; and
3. a strong commitment to eradicate child labor.

A sector-wide approach to reach out to consumers is common in the European Union, for example in promoting wine and beer. Product boards and sector organizations jointly invest in outreach and promotion campaigns. They show the beauty, quality and diversity of their products. EU producers of wine and beer are furthermore publicly accountable on how they improve environmental efficiency. They also support campaigns to promote and enforce responsible drinking behavior.

Will such an approach also work for the cocoa sector? I believe so. Firstly, the growing global demand for cocoa should not be taken as a given. On a structural basis consumption of cocoa has to be earned by producing and promoting good products. Consumers might drift away from specific cocoa products – or perhaps even from cocoa as a whole – if their consumption remains associated with such fundamental matters like unlawful child labor and poor farmers. Proper communication and being honest about what is difficult is part of the license to produce.

Promoting the diversity of the market will help develop diverse profitable production strategies, throughout the supply chain. It will in the short or long term also offer farmers the opportunity to find their own niche in producing and selling cocoa for a fair price. But moreover, it will underline that consumers have their share of responsibility in buying a product from a supply chain to which all stakeholders have been able to contribute with commitment and satisfaction.

Marcel Vernooij

Sustainable Economic Development Department
Ministry of Foreign Affairs, The Netherlands

Twitter: @Marcel_Vernooij

Comments

Dear Marcel, interesting blog!

We at CBI (Centre for the Promotion of Imports from developing countries), part of the Netherlands Enterprise Agency and commissioned by the Ministry of Foreign Affairs of the Netherlands, definitively believe that a sector wide approach works for the cacao and (fine chocolate) producers in Central America.

In early December 2014, 18 cacao and chocolate producers from Guatemala, Nicaragua, El Salvador, Honduras and Belize signed the statutes of a new regional business association called AMACACAO, the Meso-American Association of Fine Cacao and Chocolate. This new association will work together to implement a common marketing strategy and establish common quality standards. The cacoa sector in Central America did not have a regional coordination mechanism, so an adequate private-sector driven body that could implement the regional marketing strategy was not (yet) in place. An important objective of the project was therefore to create the ‘institutional operational mechanism’ to implement the regional marketing strategy.

The main reason for creating this new association is to strengthen the position of Central America as a producer of fine cacao and chocolate for international markets. Central America is believed to be the cradle of cacao. Long before Europeans arrived in Latin America and “discovered” it, the Mayans from Central America already considered cacao to be the food of the gods.

If you would like to know more about this project, don't hesitate to contact me!