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The cocoa market continues to wrestle with an unorganized production base, systemic poverty and child labour, according to a report, The State of Sustainable Markets 2017, Statistics and Emerging Trends, published by the International Trade Centre, International Institute for Sustainable Development and Research Institute of Organic Agriculture.

The report shows how certified agriculture and forestry continue to expand rapidly, in line with a growing global population and increasing consumption, but highlights many of the issues that continue to plague the cocoa sector. It provides a comprehensive snapshot of significant growth in the use of global sustainability standards across nine sectors: bananas, cocoa, coffee, cotton, palm oil, soybeans, cane sugar, tea and forestry.

“Certified agriculture and forestry are expanding rapidly and voluntary sustainability standards are no longer a novelty serving niche markets. They have found their way into mainstream markets,” said the authors of the report. “The trend is clear: sustainable agricultural products, demonstrably compliant (third-party verified) with internationally recognized standards, are growing at a pace that outstrips markets for conventional products.”

Some 16 per cent of the world’s cocoa area is now certified by four standards, and the coffee sector boasts the highest compliance rate, with the organic coffee area up 25 per cent since 2011.

Cocoa is harvested almost entirely (90-95 per cent) by an estimated five million smallholders, in direct contrast to the plantation model found across other tropical cash crops. In 2014, 4.5 million tonnes of cocoa were produced, more than 85 per cent of it in the five largest producing countries: Côte d’Ivoire (32 per cent), Ghana (18 per cent), Indonesia (17 per cent), Nigeria (8 per cent) and Cameroon (6 per cent).

“With the production base largely unorganized and located in developing countries, the most salient sustainability issue concerning cocoa is systemic poverty,” said the authors of the report. “Despite the size of the downstream chocolate market, valued at about US$100 billion, the percentage that actually percolates down to cocoa farmers is relatively small: on average, they receive between 3 and 7 per cent of the street price of a chocolate bar.

“The downstream cocoa market is highly consolidated, and the fact that the production base is largely unorganized has resulted in a substantial imbalance of negotiating power. Three multinational processers account for more than 40 per cent of global cocoa processing. Moreover, much of the value added, such as the roasting, grinding, pressing and chocolate manufacture, occurs outside of producing countries. Less than 30 per cent of cocoa bean are ground in the top five producing countries, most of which is exported before the final confectionary process.

“A lack of inputs and extension services at the production level has resulted in a global cocoa harvest that is estimated at less than one third of theoretical maximums. Inadequate disease and pest management, ageing trees and reduced soil fertility are major factors contributing to low yields. In addition to the economic cost to producers, the combination of low yields and consistently expanding demand has resulted in an expansion in plantings, which in turn has led to the unnecessary deforestation and forest degradation of at least 2.1 million hectares in the Guinean rainforest of West Africa since 1960. The growth in plantings also accounts for an additional 1.4 billion tonnes of CO2. If yields do not increase, the trend towards unnecessary deforestation will likely continue.

“Cocoa’s poverty trap has resulted in the use of child labour, an issue that attracted significant attention. Currently, major voluntary standards operative in the sector include Fairtrade, Organic, RA/SAN and UTZ. Between them, they have attracted or enabled 100 per cent compliant sourcing commitments by 2020 from four of the top six manufacturers: Mars, Hershey’s, Ferrero and Lindt. 16 per cent of the world’s cocoa-growing area is certified by four voluntary standards.”

For more information about certification of cocoa and coffee, see the forthcoming November 2017 issues of Coffee & Cocoa International.

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