Sea Change in Cocoa: Trading Practices core to Sustainable Cocoa

A group of people sitting on a stage at a conference discussing sustainable cocoa.
A group of people sitting on a stage at a conference discussing sustainable cocoa.

By Stephanie Daniels

Amsterdam Cocoa Week hosted by the World Cocoa Foundation and Chocoa was full of debate on strategies to achieve living income, forest protection, gender equality and elimination of child labor in the cocoa sector. Virtually every session had some mention of farmers’ economic resilience and living income, which represents a sea change in the sector dialogue to recognize the structural problems in the commodity market and their links to environmental and social issues.

I started my career in a specialty cocoa trading company in 1996. Since then I have attended countless events on sustainable cocoa and have heard hours of debate on how to improve yields, efficiency, quality, and genetics of cocoa. For years the definition of sustainable cocoa has been defined as farm level practices and squarely a responsibility of the farmer. While agronomy and efficiency are still very much on the table, this event recognized that market conditions, procurement and prices are core to the current sustainability debate and fundamental to farmers’ capacity to invest in their farms.

  • A few highlights of the week:
    The income panel on market mechanisms included a strong call for collaboration between origin governments and the industry on pricing from the Côte d’Ivoire-Ghana Cocoa Initiative, the need for professional diversification from KUAPA KOKOO FARMERS UNION and a new emphasis on long term relationships and cash transfers as critical tools to boost incomes from The Hershey Company.
  • The important research from KIT Royal Tropical Institute and International Cocoa Initiative on how to design income programs to avoid increasing labor demand and thus child labor.
  • VOICE Network’s Civil Society Gathering, including a fun but serious game show contest of The Price is (NOT) Right, along with critical debate on core sector challenges and how CSOs can be most effective. This was followed by the VOICE living income breakfast characterized by honest and critical exchange on principles of responsible procurement practices with leading cocoa and chocolate companies.
  • The role of cash transfers: 100WEEKS showed powerful results from delivering cash directly to women with direct coaching; the KIT data from the Nestlé Income Accelerator showing proportionally higher impact for the poorest farmer quintiles; Alliance of Bioversity International and CIAT and Mondelēz International development of a ground-up PES solution, underlining the importance of farmers and communities being involved in program design. All approaches emphasized that the quality of implementation really matters.
  • A fascinating session on procurement which delved into decommoditization at scale, while recognizing the stability and risk management benefits that the terminal markets provide. Speakers from Cargill, Uncommon Cacao, Africa Cocoa Marketplace and ICE all agreed that the market must reflect what Ghanaian farmer Issifu Issaka said – farmgate prices that cover the costs of sustainable production.
  • Powerful evidence on gains from diversified cocoa systems and alternative incomes from Cacao for Development, Lady Agri Impact Investment, and Luker Chocolate. And several dialogues on how access to affordable and high quality health care is a critical enabling factor for living income.

While the challenges facing the sector are still enormous, particularly in this year’s sprint to develop inclusive EUDR systems, the dialogue is addressing the systemic issues. Cocoa sustainability has previously been seen as a farm level, farmer responsibility and now it is recognized to be a shared responsibility of the trade and governments, along with farming communities and civil society. There is a more systemic approach in the current dialogue, and the challenge for the cocoa sector is to ensure that dialogue results in action and positive impact for people and the planet.

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