The market price of cocoa beans has remained unchanged in the last 30 years when adjusted for inflation.(1) Wait. What? Read that sentence again. And to make matters worse the world market price these days is dramatically low. As low as I have seen it in years. That’s great news for Big Cocoa (the 8 or so companies the buy the majority of cocoa in the world). But the low price of that cocoa bean–and consequently the chocolate–is on the backs of struggling cocoa farmers who are living on less than $2 per day. It’s akin to modern day slavery, a sort of neo-slavery, but sophisticated because of obtuse supply chains. In other words, Big Cocoa has plausible deniability.
In recent years Big Cocoa has implemented many social programs from schools to clinics to improved farm yields to reforestation initiatives. This is not “social washing,” because these projects are probably real. They have long names that usually end in a year; something like “Sustainable Cocoa 2030.” There are so many projects and initiatives for this, that, and the other that it’s impossible to keep track. I read about them every day in industry newsletters. That means the PR firms for Big Cocoa are cranking out press releases announcing Big Cocoa to the rescue. Then come the cool PowerPoints. In reality, X program might make a terrible life a little more bearable, slightly more human. But it’s as if these projects and programs are designed to keep us from remembering that many cocoa farmers are living a subhuman existence. To be clear, I am speaking mostly of the farmers in West Africa. The farmers are beholden to Big Cocoa, with no choices, no power, no voice. Big Cocoa indirectly controls the market price. The farmers were already in the depths of poverty which is only made worse by the terribly low world market price of cocoa this year.
It’s a worthwhile endeavor to look at the simple math supporting this proposition that these farmers are unbearably poor. The World Cocoa Foundation states that the average cocoa farmer has between two and four hectares (five to ten acres), yielding between 300 and 400 kg per hectare in Africa. Here is the breakdown: assume our West African farmer has 3.5 hectares (conservatively) and that his yield is 450 kg per hectare. That means the farmer has 1,575 kg yield on his farm. The world market commodity price has been hovering around $2 per kg. This means that the total yield on the farm of 1,575 kg (if the farmer’s buyer received the world market price) multiplied by $2 would equal $3,170. But, our farmer (in the case of Ghana) will only receive 70% (or less) of the world market price. The other money (30% or more) is siphoned off in a highly complex government controlled buying system. This reduces our farmer’s income on these cocoa beans to $2,205 annually. When we divide that number by 365 days in the year, that puts him or her at $6.04 per day. The way we look at these numbers, however, is by dividing yet again by the average number in the household. In this case it’s 6, so our farmer and family are living, somehow, on $1 per day. The United Nations defines “extreme poverty” as less than $1.25 per day and “poverty” is below $1.90 per day. If the world market price was at $3 per kg as it was 12 months ago, then our farmer’s per capita income would be $1.51 per day assuming the other variables as true in my example. You see where I am headed with this?
Message to Big Cocoa: you really want to help cocoa farmers? Four words. Pay. Them. More. Money. And make sure it gets to the actual farmers. “Not that simple,” you say. The truth is that it is. “We would sacrifice too much profitability,” you say. Not likely. All of us in the industry understand the other variable costs and the effect higher prices paid to farmers will have on margin. I understand that it’s in your financial interest and thus your duty to shareholders to not only control the price of cocoa but keep it low (but not so low that it threatens your supply). If consumers are eating a cheap chocolate bar there’s probably a reason it’s so cheap and it’s not because the manufacturer is the most efficient company in the world. Big Cocoa has the power to give freedom to many cocoa farmers by simply paying them more money.
You might be thinking, “Why would Shawn care since they don’t buy beans from West Africa?” Over the last eleven years, we’ve paid our farmers, on average 48% more than they would have otherwise received at their farm gate and we’ve documented it here for our customers to read and review. Why? Well, we do it for our customers and to hold ourselves accountable. We want to constantly assess how we can do better. Our system of profit sharing and opening our books to the farmers in their native language is good but it’s not perfect. The system of cocoa bean buying in Ghana is so complicated that I gave up after two years of really trying to deep dive into the intricacies and crack the code. I don’t quit easily but it was just too byzantine and government controlled in Ghana to fit our model of direct trade. But, we at Askinosie Chocolate, should not let ourselves off so easily. We are part of the larger world of chocolate, even of chocolate made from beans on the backs of struggling farmers we’ve never met in West Africa. Joseph Campbell says we are called to, “participate joyfully in the sorrows of the world.” What’s “the world”? Well, that depends. Right now, to me, it means the world of cocoa beans. I often talk and write about the juxtaposition of sorrow and joy and the mysteries of both. I am at a loss though to find joy in this story. A story in which I see nothing but pain, powerlessness, silence, hunger.
I suppose then I am called to create the joy in this saga. I can think of two things that will help. First, please consider buying good chocolate this Valentine’s Day for the ones you love. Might I suggest some others than us, such as Dandelion Chocolate, French Broad Chocolates, or Harper Macaw to name a few? I am certain you will not be disappointed. There are many more. I ask that you search us out, try us and engage with us to change the channel on Big Cocoa. Second, I am not suggesting that you never buy another Snickers Bar but I am hoping that you will look into the issues I raise here and perhaps apply your mindfulness muscle to ask yourself if it is a good or bad idea to support Big Cocoa with your hard-earned money.
1. The commodity price of one metric ton of cocoa beans in 1985 was $2,342.19. In today’s dollars that would be $5,187.56, according to the Bureau of Labor Statistics CPI Inflation Calculator. The price today for one metric ton is roughly $2,000.