CTA
Small fontsize
Medium fontsize
Big fontsize
English |
Switch to English
Français
Switch to French
Filter by Agriculture topics
Commodities
Regions
Publication Type
Filter by date

Sustainably certified cocoa supplies available, but demand lagging

22 December 2013

According to Barry Callebaut, the world’s leading industrial producer of chocolate, the company is capable of supplying more cocoa certified as sustainably produced (12% of its volume currently comes from sustainable sources), but is “still supplying more than the market required”, despite growth in customer demand of 56% in fiscal year 2012/13. In that year, Barry Callebaut processed 920,000 tonnes, 23% of world cocoa production, and had annual sales of US$5.2 billion.

Speaking at a conference to announce Barry Callebaut’s annual results, the company’s CEO Juergen Steinemann commented that customers do want sustainable cocoa, but require it “without increasing the cost”. He observed that the increasing yields that result from the implementation of agricultural practices required as part of the sustainability certification process at present “more or less balance out the disadvantage of the costs of certification, which are very high”.

Unlike other companies, Barry Callebaut has set no targets for sustainable procurement. The company’s focus is on “encouraging farmers to engage in responsible labor practices that also [safeguard] the environment and [provide] basic health and education needs to farmers’ families”. In 2012, Barry Callebaut launched its Cocoa Horizons programme, a 10-year cocoa sustainability initiative, which “aims to double the yield per hectare of cocoa farmers (+800 kg/ha) by 2018 and to significantly improve cocoa quality”.

Barry Callebaut has identified three main challenges to sustainable cocoa production:

  • “the need for more training in good agricultural practices to enable farmers to improve crop productivity and generate more income”;
  • “the lack of adequate plant materials, fertilizers and pesticides available to farmers”;
  • “insufficient access to funds” for farmers to invest in pesticides, fertilizers and yield-enhancing practices.

The Cocoa Horizons programme uses a ‘cascade approach’: this starts with the training of managers of cocoa cooperatives at a centre of excellence in Pacobo, Côte d’Ivoire, after which the qualified farmers “share knowledge with two… farmer academies, then 12 model farms”, with an eventual outreach to 575 field schools in Côte d’Ivoire.

Barry Callebaut also runs education and health programmes in cocoa farming communities as part of the programme. According to company representatives, “customers are interested in products with a certain level of social and environmental assurance.”

Cocoa price volatility: Selected monthly average prices and percentage change

Month Price US$/tonne Percentage change
Nov 2008 2,046.08    
Feb 2009 2,660.47 +30.0  
Mar 2009 2,493.98 –6.3  
Jan 2010 3,522.10 +41.2  
Sep 2010 2,874.98 –18.4  
Feb 2011 3,471.10 +20.7  
Jun 2011 3,015.64 –13.9  
Jul 2011 3,167.18 +5.0  
Dec 2011 2,200.61 –30.5  
Mar 2012 2,359.25 +7.2  
May 2012 2,113.09 –10.4  
Sep 2012 2,620.28 +24.0  
Mar 2013 2,153.36 –17.8  
Oct 2013 2,730.70 +26.8  

Source: Indexmundi.com,

http://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=60

Editorial comment

The interest of Callebaut customers in products with “a certain level of social and environmental assurance” needs to be balanced against customers’ desire to secure sustainably certified cocoa “without increasing the cost”. Given that the costs of certification are currently offset by increased yields attained as part of the changes in farming practices required for certification (a one-off improvement), it is far from clear to what extent sustainability certification in the cocoa sector will assist cocoa farmers in dealing with price volatility, in the absence of broader agreements on the distribution of the costs of certification along the supply chain.

Across West Africa, the population of cocoa farmers is ageing, with little interest among younger farmers in engaging in cocoa production. Price volatility, rising input costs and uncertain returns all act as a disincentive to both investment and recruitment of younger farmers into the cocoa sector. So long as cocoa farming is not seen as a viable business by young farmers, the long-term future of the industry is on shaky ground. Corporate and multi-stakeholder initiatives to promote sustainable patterns of cocoa production may well prove ineffective in the long term if sustainable pricing issues are not addressed.

At present, multi-stakeholder dialogues focus on productivity enhancement, in order to avoid shortages of cocoa that would affect the ability of companies to serve expanding markets in Asia (with demand growth of 3% per annum, a shortage of 1 million tonnes of cocoa by 2020 is forecast). However, if the sustainability of cocoa production is to be promoted in the long term, then such multi-stakeholder dialogues will need to get to grips with both producer pricing and international pricing issues.

Given that the concept of sustainability implies economic as well as environmental and social sustainability, such claims may increasingly need to include pricing issues. There is potentially scope for a code of conduct promoting the full integration of pricing issues into sustainability labelling schemes.

Comment

Terms and conditions