Earth Systems Senior Seminar

Gwendolyn BurkeIberia ZafiraJeanette Lim

HC C O L A T EO

CHOCOLATETASTING

CHOCOLATE THE FROM SOURCE

HOW IT'S GROWN

“Cocoa” is the product of beans from the cacao tree. Farmers harvest pods from their cacao trees, and the beans and pulp are fermented together.

http://nathan-palmer-royston.tumblr.com/

FURTHER PROCESSING

The fermented beans are dried out in full sun and then

prepared to be shipped

http://nathan-palmer-royston.tumblr.com/

AT THE MANUFACTURER

Beans are roasted, winnowed, milled, and mixed

http://www.immortalhumans.com/wp-content/uploads/melted_chocolate_bar-1340.jpg

DETAILED SUPPLY CHAIN

Source: www.bcca.org

INTRODUCTION

Overview of Chocolate

● Question

● Industry Overview

● Social, Economic, & Environmental Impacts

● Legal Pressure

● Certification & Alternative Markets

● Conclusion and Consumer Power

● How YOU can make a difference

QUESTION

QUESTION

Does consumer choice of chocolate

matter? Does it ensure improvements

in the social and environmental

concerns associated with cacao

production and a more responsible

sourcing and supply chain?

Source: http://sphotos-a.xx.fbcdn.net/hphotos-ash4/c0.0.403.403/p403x403/398201_10151226499669841_912266250_n.jpgjpg

SIGNIFICANCE

● Why chocolate?

● Goals

● Earth Systems Framework

INDUSTRY OVERVIEW

COCOA MARKET

● $89 billion industry● US 21% global net

imports, European countries 58%

● Sales of chocolate confectionery in Latin America and Asia have more than doubled in the past 5 years

● Steady growth of market

http://i276.photobucket.com/albums/kk17/cupcakequeen91/summer%20trip%2008/DSC03647.jpg

COCOA PRODUCTION

● 90% of the world’s cacao is grown by 3 million smallholders, employing 14 million worldwide

● Africa produces 77% of world exports

● Asia and Oceania produce 17%

● Americas produce 6%

Ivory Coast 36.5% Ghana

20.4%

Source: World Cocoa Foundation, An Overview

Indonesia14.9%

MANUFACTURERS

Net Sales of Top

Companies, 2012

Mars

Kraft

Nestle

Hershey

Source: http://2.bp.blogspot.com/-hVu808VRldU/UAaZS7zzfoI/AAAAAAAAFlg/qP8BCLjg_gA/s1600/Picture1.png

$16.8 b

$15.48 b

$12.8 b

$6.5 b

SOCIAL & ECONOMIC IMPACTS

SOCIAL COSTS

Source: http://legacy.businesscasestudies.co.uk/company_images/67/177/11121853871.jpg

● The greatest social impacts are felt at the beginning of the supply chain by the growers

● Child labor and unfair wages are the most notorious social costs

TONY CHOCOLONELY

http://www.youtube.com/watch?v=5VgkVYhFqDc

● Tony from the Netherlands wanted to sue himself for procuring illegal chocolate via slavery

● His case was not pursued in court, so he made his own brand

● Took back his certification

Source: http://oud.girlscene.nl/images/library/articles/images01/girlscene/tony5.jpg

CHILD LABOR

Source: http://thumbnails.visually.netdna-cdn.com/the-truth-about-chocolate_5139edf7d0b08.jpg

CHILD LABOR

300,000 children <12 years old are forced to work on cacao farms for 12 hours a day

Source: http://www.ethicalliving.co.za/wp-content/uploads/cocoa-child.jpg

TOP 3 ISSUES: CHILDREN

1. School attendance: access to education

2. Participating in unfair farm tasks

3. Injuries as a result of farm work

Source: World Cocoa Foundation, An Overview

UNFAIR WAGES

To escape poverty, the income of cacao farm laborers needs to be increased by 341-1608%

Source: http://www.policymic.com/articles/28418/chocolate-is-more-sinful-than-you-think/390484

DISTRIBUTION OF WEALTH

Source: http://www.ethicalliving.co.za/wp-content/uploads/cocoa-child.jpg

● Cocoa has a lot of opportunity to support farmers, but ~50% of the profit goes to retailers

● In some cases, there can be 12 steps in a company's supply chain; companies rarely buy directly from farmers

ENVIRONMENTALIMPACTS

ENVIRONMENTAL COSTS

Source: http://legacy.businesscasestudies.co.uk/company_images/67/177/11121853871.jpg

● Inevitable to have environmental impact since cocoa is only grown in tropical regions

● The greatest environmental impacts along the supply chain are by the growers, cocoa processors, and chocolate manufacturers

● Environmental costs are not as well-researched as social costs

● Limited information available on a true life cycle assessment of environmental costs of chocolate

FARMING TECHNIQUES

● Deforestation● Pesticides● No technology to

improve crop yield● Old harvesting tools● Full-sun monocultures

have led to low-efficiency scores

Source: http://www.hardrainproject.com/thumbnail.php?im=SP1024232.jpg&type=U

Source: http://www.sciencedirect.com/science/article/pii/S0921800911001029

HIGHER PRODUCTIVITY

Source: http://www.idhsustainabletrade.com/content/images/405.jpg

HERSHEY'S COCOA LINK

ESTIMATING IMPACT

1) deforestation in tropical areas and pesticide use on cocoa farms, 2) international shipping, 3,4,5) processing, manufacturing, distribution & retail in developed in countries

Source: http://thumbnails.visually.netdna-cdn.com/the-truth-about-chocolate_5139edf7d0b08.jpg

3,4,5 3,4,5

1

22

1 1

LEGAL PRESSURE

FRAMEWORK

Source: World Cocoa Foundation, An Overview

WORLD COCOA FOUNDATION

HARKIN-ENGEL PROTOCOL

"Protocol for the Growing and Processing of Cocoa Beans and Their Derivative Products In a Manner that Complies with ILO Convention 182 Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor"

● Media flurry of 2000● Amendment bill passed

in House to develop a label indicating slave-free chocolate

● Protocol emerged from the lobbying against Harkin-Engel in 2001

● Goal was 2005, deadline extended to 2008, then to 2010, status currently unknown

http://i55.photobucket.com/albums/g147/buscheaux/imeem%20page%20stuff/my%20soapbox/TreeHugger-chocolate.png

PROGRESS

Source: Payson Center, 2011 Report

CRITIQUES OF PROTOCOL

Because of government instability, it's up to the industry to make large reforms!

● Protocol should be applied globally

● Protocol "little more than a document and politics"

● Major companies admit perfect tracking in the supply chain is impossible

International Labor Rights Forum● opposed to Protocol● see need for regulatory

action

NESTLE AND TRANSPARENCY

“The use of child labour in our cocoa supply chain goes against everything we stand for. As the FLA report makes clear, no company sourcing cocoa from Côte d’Ivoire can guarantee that it doesn’t happen, but what we can say is that tackling child labour is a top priority for our company.” -Nestle

● Largest food company in the world

● Sources 10% of Ivory Coast cocoa

Fair Labor Association Report

● Numerous violations of labor code, especially child labor

● Action plan in response● Supplier code

distributed, monitoring and remediation system

KRAFT

Biggest in Europe

In 2010, we continued to be the largest buyer of coffee from Rainforest Alliance Certified farms and the largest buyer of cocoa beans from certified Fairtrade or rainforest alliance farms.

“In 2010 we invested approximately $10 million to improve the quality of life for thousands of people in cocoa farming communities in West Africa. We’re proud to have helped provide better access to education, improve family incomes, encourage responsible labor practices, and provide aid to at-risk children, while at the same time helping to protect the environment. And our commitment to work in communities continues as we plan to increase our investment over the years.”

KRAFT REVEALED

More transparency is needed - where is the money directly going?

Response to Case ID: 24434434We understand your concerns.Mondelez Global has been working with Anti Slavery International, companies, governments and others to help eradicate child labor.As the world’s largest buyer of Fairtrade cocoa and one of the largest buyers of Rainforest Alliance cocoa, we’re committed to expanding our investment.We recently announced that we’re investing $400 million into our “Cocoa Life” program over the next ten years to improve the livelihoods of more than 200,000 cocoa farmers. This will then give us the best opportunity to address child labor issues in the cocoa supply chain.

CERTIFICATION & ALTERNATIVE MARKETS

CERTIFICATION LOOP

Source: World Cocoa Foundation, An Overview

FAIR TRADE DEMAND

CERTIFICATION LOOP

Source: World Cocoa Foundation, An Overview

INDICATORS & DATA● The Case of Côte d’Ivoire

○ Poverty at 50% in 2008

○ slow deterioration of basic social and economic

infrastructure such as health and education.

● Solutions from Fair Trade

○ Kavokiva co-operative has grown to more than 3,400

farmers

○ hired agronomist to boost yields

○ health insurance and medical services

○ school fees and access

● Result of Nestle's Kit Kat Bar Conversion

● Only a case study- research needs to catch uphttp://www.fairtrade.org.uk/

CERTIFICATION LOOP

Source: World Cocoa Foundation, An Overview

ALTERNATIVE MARKETS

SCALE COMPARISON

● Revenue: $5 M/year● Price of chocolate bar:

$1.30/oz

● $3800/ton for cacao beans

● Revenue: $6.64 B/year● Price of chocolate bar: $.

005/oz

● $2100/ton for cacao beans

ALTERNATIVE MARKETS

● Partnerships● Philanthropy● Stretches its

profits to make an impact beyond just farming issues

"Radical Mainstreaming" "Fully Transparent and Direct Trade"

● Farmer Networks in Ghana

● 45% Farmer Ownership

● Empowerment

● Innovative Technologies

● Government Support for Cooperative Development

● Regional Flavor Differentiation and Valuation

● Sets their own prices

● Direct Trade certification

● Organizes with existing cooperatives and rural development enterprises

"Superior Beans and the Ultimate Win-

Win"

"People, Planet, Profit"

ROCOCO CHOCOLATES

● Produces $21 "carbon-

neutral" chocolate bars

● 60% of profits go back

to the farmers

● 25% of electricity used

is generated by solar

● sourced from a small

cacao farm in Grenada

● Final beans arrive to

the UK by sail 30

tons/time

Source: http://blog.rococochocolates.com/category/fair-transport-2/page/2/

Source: http://thefoodiebugle.com/uploads/images/IMG_1224_(640x427)_thumb.jpg

OVERALL IMPACT● A new standard and grade distinction

● Companies remove farmer volatility by giving a

premium that is better than fair trade

● Involve farmer in chocolate process

● Creation of new farmer networks, cooperatives,

knowledge, tools, technology and better agricultural

practices

● Community driven development projects and

investments

● Visible and transparent impacts

CONCLUSION: CONSUMER POWER

QUESTION

Does consumer choice of chocolate

matter? Does it ensure improvements

in the social and environmental

concerns associated with cacao

production and a more responsible

sourcing and supply chain?

ANSWER: PART A

Does consumer choice ensure more sustainable sourcing and a fair supply chain?

● It's complicated and it depends● Consumers can demand these things, but change and

verification are difficult● Little research has been done to understand change

on the farmer level● Example: Tony Chocolonely rescinding slavery-free

label

ANSWER: PART B

Does consumer choice make a difference?

● YES! ● Consumer preference for CSR has influenced corporate

investments, alternative markets, & certification programs

● Consumers can choose the better options that are on the market right now

● Example: Stop the Traffick organization

Multinational vs. Local

Multinational Companies+

● More employment● Economies of scale● Cheaper product● Strong brand

-● Greater social,

economic, and environmental impacts

● Sensitive to intnl taxes, fuel costs

Local Companies+

● Control over more aspects of supply chain

● Local employment● Specialization

-● More expensive for

consumers● Weaker brand

LIMITATIONS & NEEDS

Needs● More progress in

research, especially efficient farming

● More progress in certification compliance

● More transparency in corporations

● More information and services given to the farmer

Limitations● Mainly focused on

West Africa, but cocoa is grown in other tropical regions

● Difficult to obtain data from unbiased sources

● Difficult to speak to chocolatiers and companies

● Injustice in cocoa industry is not limited to this industry, but points to global poverty

● CSR & certification are steps in the right direction, but needs to be expanded

● Consumers have the power to influence the cocoa industry and other industries

FUTURE IMPLICATIONS

Source: http://lgos.org/files/stt.jpg

CSR: THRIVING ECONOMY

Source: http://www.idhsustainabletrade.com/cacao-sustainability

CONSUMER CHOICE

Why is the market for fair trade & organic cocoa small? ● Consumer preferences

○ Price tends to be more important○ Problems are too far away

● Consumer willingness to pay○ Decreases as price increases○ Example: In one study, when price increased $1.50,

less than half of consumers were WTP● Availability

○ Fair trade and organic chocolate are sold at niche stores

● The choice is yours every day and during holidays - VOTE WITH YOUR CHOCOLATE

REFLECTION

● What we learned● How we leveraged our ES

background● Personal bias in research● Our critiques & solutions

○ Difficult to contact chocolate companies

○ Farmer knows as little as consumer does about chocolate production

○ Research limitations○ Focus on policy, enforcement

& collaboration

A cocoa farmer trying chocolate for the first time

http://nathan-palmer-royston.tumblr.com/

QUESTIONS?

HC C O L A T EO

WORKS CITED● CSR Wire. CSR Profile of World Cocoa Foundation. http://www.csrwire.com/members/10672-World-Cocoa-

Foundation. 2013.● Fair Labor Association. Underlying Challenges of Child Labor. http://www.fairlabor.org/blog/entry/fla-highlights-

underlying-challenges-child-labor-after-extensive-investigation-nestl%C3%A9. 2012.

● FAO. “Growing Cocoa.” http://www.fao.org/docrep/006/AD220E/AD220E01.htm. 2013.

● Franchise Help. “Chocolate Industry Analysis 2013 - Cost & Trends”. <http://www.franchisehelp.com/industry-reports/chocolate-industry-report>. 2013.

● HalogenTV. “Chocolate”. <http://halogentv.com/articles/happy-world-chocolate-day-infographic/>.● Hershey. “Hershey expands responsible cocoa community programs in West Africa”. <http://www.thehersheycompany.

com/social-responsibility/cocoa-sustainability/>. 2013.● Hoffman, Beth. Food and Tech Connect. “Infographic of the Week: Chocolate” <http://www.foodandtechconnect.

com/siteold/2012/02/10/infographic_of_the_week_chocolate/>.● International Cocoa Organization (ICO). Who are the main manufacturers of chocolate in the world? <http://www.icco.

org/about-cocoa/chocolate-industry.html>. 2012.● LaBau, Elizabeth. About.com. From Bean to Bar: How Chocolate is Made. < http://candy.about.

com/od/workingwithchocolate/a/beantobar.htm>. 2013.● Lepisto, Christine. Treehugger. “Tony’s Chocolonely Chocolate wins Conscience Award”. <http://www.treehugger.

com/green-food/tonys-chocolonely-chocolate-wins-conscience-award.html>. February 3, 2008.● Ntiamoah, Augustine; Afrane, George. Environmental Impacts of Cocoa Production and Processing in Ghana: Life

Cycle Assessment Approach. November 14, 2007● Oxfam. Oxfam Media Briefing. “Mars, Mondelez and Nestle and the fight for women’s rights”. <http://www.

oxfamamerica.org:8381/oxfam/files/behind-the-brands-gender-media-briefingfinal-signedoff.pdf>. February 26, 2013.

WORKS CITED

● Payson Center, Tulane University. Oversight of Public and Private Initiatives to Eliminate the Worst Forms of Child Labor. http://www.childlabor-payson.org/. 2011.

● Plank, Elizabeth. Policy Mic. “Chocolate is More Sinful Than You Think”. <http://www.policymic.com/articles/28418/chocolate-is-more-sinful-than-you-think/390484>. March 2013.

● Stop the Traffik Organization. People Shouldn’t be Bought and Sold. < http://www.stopthetraffik.org/campaign/chocolate/what-you-can-do/15>. (Accessed on March 3, 2013)

● World Cocoa Foundation (WCF). Cocoa: A Detailed Overview. 2010.World Cocoa Foundation (WCF). Committed to Cocoa-Growing Communities. http://www.worldcocoa.org/. 2012.