In the cut-throat world of chocolate, big businesses have kept information on their supply chains close to their chests.
But as scrutiny grows of the role of child labour and deforestation in what remains a largely informal industry, and policymakers step up regulation, they are finally making headway in mapping and disclosing their products’ origins.
“If the cocoa industry can achieve full traceability it will be huge,” said Etelle Higonnet, senior campaign director at NGO Mighty Earth, noting that if the chocolate sector could achieve supply chain transparency, there was no excuse for other agricultural commodities not to follow suit.
The industry, which pledged to eradicate the problem of child labour decades ago, has long faced criticism over its social and environmental impact in the countries where it is grown.
Chocolate’s key ingredient, the cocoa bean, is mainly grown in west Africa by smallholder farmers who, struggling with poverty and unable to pay workers, often turn to their children for labour. Meanwhile, its cultivation has led to the destruction of vast swaths of primary forest.
Being able to trace the food supply chain from bean to bar so that acceptable working practices can be verified is seen, by some activists at least, as a key step in addressing these problems.
Olam, a leading agricultural trader responsible for more than a quarter of all cocoa sold worldwide, said last month it had achieved visibility on 100 per cent of the beans it purchased directly from farmers, accounting for about 60 per cent of its total consumption, or 12 per cent of the commodity traded worldwide. The remainder, bought from other traders, is much harder to trace.
“We know the farmers or the farmer groups or co-operatives and we now have relationships at the local level,” said Gerard Manley, head of cocoa at Olam, adding that this allowed the company to put in good agricultural, farm management and community care practices.
Barry Callebaut, the Swiss cocoa processor and producer of industrial chocolate, has also reached full traceability for the cocoa it buys directly, accounting for 47 per cent of its total purchases. Cargill said it could account for half the beans it buys, Nestlé 44 per cent and Mars 84 per cent.
Mondelez, which owns the Cadbury brand, told the Financial Times it had mapped 85 per cent of its direct suppliers. However, it did not disclose how much of its total procurement this represented.
Italian chocolate group Ferrero, US processor Blommer and French trader Touton did not respond to requests for data and comment.
The industry’s moves follow sustained media scrutiny of its failure to deliver on its pledge two decades ago to stamp out its use of child labour and come as western governments step up their efforts to crack down on the practice.
A US lawsuit filed in 2005 alleging that farms using trafficked labour supplied the chocolate industry has moved up and down the federal court system, keeping it in the news.
The EU is discussing regulation to minimise the impact of the chocolate industry, while Germany is considering a due diligence law for supply chains, while both the EU and the UK are considering rules to outlaw the import of commodities and products from illegally cleared land.
Technology is helping the industry’s traceability efforts. Olam said it had relied on extensive GPS and mobile technology while Cargill’s payments for cocoa in Ghana are now all done via mobile phone.
But despite the progress, some campaigners and NGOs say traceability alone will not ensure a chocolate bar has no links to deforestation or child labour.
Suzan Yemidi at Solidaridad, a Netherlands-based NGO focused on increasing sustainability in commodities production, said the root of the problem lay in cocoa farmers’ low incomes.
“In the short run, such interventions are OK . . . [but] we are still grappling with deforestation, child labour and far too low farmer incomes after years of such interventions,” she said.
The coronavirus pandemic, which has hit demand for discretionary food products such as chocolate, initially depressed cocoa prices, while closed borders kept foreign farm labourers out. This has more than offset steps taken to help farmers, such as a premium on the bean’s price imposed last year in Ivory Coast and Ghana, which together account for more than 60 per cent of world production. In recent weeks both countries have raised farmgate prices by about 20 per cent in an effort to increase farmer income.
Michiel Hendriksz, a former cocoa executive who now runs FarmStrong Foundation, which works on sustainable agriculture programmes in Ivory Coast, said the push for traceability was “creating a bit of false assurance”.
He said, like sustainability more broadly, traceability added layers of bureaucracy that drove up the cocoa price without benefiting farmers.
“We’ve created this whole sector of sustainability and NGOs, and myself — I make my money trying to change this — and at the end of the day, who is benefiting from all of this?” he said. “Everybody except the farmer.”
Consumer group pressure spurs palm oil progress
Consumer goods companies are also making inroads on tackling tropical deforestation by groups making palm oil, a ubiquitous ingredient in a vast number of products.
Confectionery company Mars said it had achieved complete visibility of its palm oil supply chain after slashing the number of mills it used to less than 100 from 1,500 previously. It hopes to halve the number to 50 by 2022.
Palm oil, which is one of the cheapest vegetable oils and is used in everything from ice-cream to lipstick, has long been linked to rampant deforestation in south-east Asia and Africa.
Other companies to have announced progress on their sourcing include Mondelez, which said last month that from 2021 it would require traceable, monitored palm oil across its supply chain, and that by the first quarter of next year 80 per cent of its palm oil supplies would be sustainably sourced.
Source: Economy - ft.com
