Around 1,300 people congregated in the Dominican Republic for The 2016 World Cocoa Conference (WCC) from May 22 to 26.
In interviews with ConfectioneryNews and during on-stage speeches, some industry figures said cocoa farming must be a business rather than a charity, while one NGO called the cocoa sector “broken for farmers” and suggested stricter government regulation may be necessary.
Mondelēz: ‘Cocoa farming should be a business and not a charity’
Cathy Pieters, director of Mondelēz’s Cocoa Life program, told ConfectioneryNews:"A big chunk of the conference is nice presentations and everybody wants to show the beautiful side of things...we are indeed doing much better...we have platforms that work. But we are still far off from a sustainable sector."
She added: "Cocoa farming should be a business and not a charity. It's not about how much we give to farmers, it's about how business-driven they become.”
WCF: ‘A poor cocoa farmer is in the interest of no-one’
Her sentiments were echoed by Tim McCoy, acting president of the World Cocoa Foundation (WCF).
"We’re on the path but we're not yet where we need to be,” he said during the conference’s closing session. "Now's the time to move forward even more aggressively."
WCF chairman Barry Parkin - also Mars’ global procurement head - said WCF's CocoaAction sustainability platform would now move beyond the initial 12 member companies with a new model for SMEs to get involved.
McCoy said there was a growing consensus between industry, origin governments and other stakeholders on key performance indicators (KPIs) for company programs.
"The importance of being able to measure what we do and measure it to an agreed results framework, to me that's one of the big takeaways,” he said.
McCoy was questioned about the industry's position on the cocoa price during the closing session.
"Industry has been accused of running away from this issue," he said. "But, a poor cocoa farmer is in the interest of no-one...because if cocoa farming is not perceived as a viable livelihood, where will the next generation of cocoa farmers be found?"
He said the issue could potentially be addressed by boosting farmer living income, but said more work was needed to understand what a sustainable living income may be in different geographies.
Voice Network: ‘We need to avoid the backslapping’
Antonie Fountain, managing director of Voice Network, an association of European NGOs and trade unions such as Oxfam and STOP THE TRAFFIK, underlined his core frustration during a conference session.
"We're trying to work within the system we've been in for a very long time,” he said. “If we're going to try to resolve this within the system, we are going to fail."
He argued the existing cocoa sector may be “broken for the farmers”.
“Maybe it's time to think outside of this deregulation zeitgeist and say governments, in both importing and exporting nations, have a legislative role to play in actually putting in a level field...that the true cost of making cocoa is also the true price the cocoa farmer receives,” he said on the conference stage.
The 2015 Cocoa Barometer, a report by the Voice Network and other NGOs, estimates 6.6% of the value of a $1 chocolate bar reaches the farmer, while chocolate manufacturers receive 35.2% and retail and taxes take 44.2%.
Fountain said the cocoa price was only an element to improve farmer living income, but said it should not be avoided by industry fearing anti-trust legislation.
He continued: "As a sector we're in a much healthier place, but I do think not all the different stakeholders are at the same level accepting the challenge that lies ahead of us...we need to avoid the backslapping...we're nowhere near sustainable yet...we cannot wait another two years to go to the next WCC and have some more comfortable conversations, it's time to do things."
Hardman Agribusiness: Price dictated by supply & demand and quality
Doug Hawkins, head of the agricultural practice at Hardman Agribusiness told this site: “We do not find this argument that producers should have a greater share in the value chain supportable: In a free market, price is dictated by supply and demand and by differentiating factors, typically around quality.”
Hawkins said the smallholder/subsistence farmer model of production is “structurally unsound, and probably unsustainable”.
It follows his organization’s recent ‘Destruction by Chocolate’ report, in which it claimed cocoa buyers would move away from the African market to a professional sector in Latin America to source future demand.
Hawkins said after the World Cocoa Conference that the smallholder sector will continue to produce the vast proportion of the crop for the years ahead.
“But it becomes increasingly important for professional producers to prove that cocoa can be produced while generating acceptable profits – for if they cannot, then they will not be able to compete with the smallholder sector, which may continue to produce for no better reason than lack of choice,” he said.
Hawkins said that current cocoa prices - at around $3,000 per metric ton – made the “commodity economically attractive” to produce as he estimates producing a metric tonne of cocoa (delivered to an international port) is in the range of $1,100 - $1,600 per MT.
But he warned that the cost of labor and pests and diseases could disrupt the economic case.
Innovation required, says ICCO council chairman
Alex Bruijnis, policy officer at the Dutch Ministry of Economic Affairs and Chairman of the International Cocoa Organization’s (ICCO) Council, said: "We need more innovation to help farmers to get the level of productivity going."
ICCO estimates that global cocoa yields averaged 0.5 MT per hectare in 2013 and it expects yields to rise to just 0.6 MT per hectare by 2026.
The organization - which represents cocoa producing and consuming governments - recommended introducing large professional estates in smallholder areas in Africa and South East Asia.
It hopes smallholder cocoa farmers - which account for 95% of the world's supply - can boost yields through a technology transfer.
Bruijnis suggested cocoa be "decommoditized" so farmers producing the highest-quality cocoa have the bargaining power to negotiate a higher price.
Cargill: Admitting failures is key
Taco Terheijden, director of Sustainable Cocoa at Cargill Cocoa & Chocolate, told this site the industry needed to admit and correct failures.
"I got the sense that's a growing consensus in the industry," he said.
"It's not that we have a whole lot of failures, but I do think within industry there's now a better platform to be transparent.”
He called on more concrete numbers to be able to measure failure and success.
Mars: 'We may be walking blindfolded'
Dr. Martin Gilmour, R&D director for Mars, said during one of the final conference sessions: "We're better, but not completely sustainable yet.”
“Cocoa farming is still not an attractive enough proposition. If I were a young person growing up on a cocoa farm, I'm not sure being a cocoa farmer would be among my top choices. Until we make cocoa farming a viable career choice, we may be fooling ourselves, we may be walking blindfolded,” he said.
But he highlighted that the conference had placed emphasis on quality in the cocoa sector and added stakeholders were talking about climate change seriously for the first time.
An audience member asked if the industry could supplement cocoa farmer earnings when the market price drops, to guarantee a sustainable living income by paying premiums.
Gilmour said he wasn’t aware of such discussions among industry but said crop diversification and certification had roles to play in raising income.
"If you add up the thousands of tons that are certified, and the premiums for certified cocoa, there are millions of dollars going somewhere into the sector. So where is that going?...How much of that is actually getting to the farmer?" asked the Mars R&D director.
His company has committed to sourcing 100% of its cocoa from certified sources such as Fairtrade Rainforest Alliance and UTZ Certified by 2020.
