Money can grow on trees: the valuation of and payment for ecosystem services in the chocolate industry

As issues like food justice and consumer activism are popularized around certain products, there is an increased demand that food is good concerning not only taste but ethicality as well. When exploring what was being done to make chocolate more ethical and sustainable, I became interested in exploring how chocolate companies were taking action to make their products more “good” for people, the planet, and the sustainability of the industry.

A multi-billion dollar industry with nearly 50 million people along its global value chain, the chocolate industry, is undergoing many challenges which center around its sustainable procurement of cocoa. This is the case not only with respect to rising demands due to the expansion of new middle-class markets in Africa and Asia but is particularly relevant to concerns about the sustainability of its labour force, especially with regard to cocoa farmers and growers, and the environment, specifically with respect to the resilience of the crops affected  by climate change impacts; issues like these have affected an increasing global demand for chocolate. In fact, it is projected that by 2020, the global cocoa demand will exceed the supply by almost 1 million metric tons with industry forecasts of a 30% growth in demand amounting to 4.5 million tons by 2020. [1]

Alongside an increasing demand for chocolate, there has been a rising demand amongst consumers for greater transparency, traceability, and accountability throughout the chocolate value chain particularly at relates to social factors. [2] For example, chocolate companies are being scrutinized on the production end of its supply chain on issues like generational poverty faced by cocoa farmers, low productivity due to agricultural practices, and increasing the prevalence of many cocoa farmers and growers choosing to walk away from the industry entirely. For instance, according to CNN’s “Cocoa-nomics” series, revealed that compared to 16% received by cocoa farmers for every chocolate bar sold in the late 1980’s, today farmers receive only 3%. [3]

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Figure 1. Infographic outlining the pricing of chocolate bar and how it relates to actors all along the value chain.

 

Also, as the negative impacts of climate change -including increasingly unpredictable differentiation between wet and dry season, intense rains and flooding, longer and prolonged dry periods, as well as subsequent changes in the local ecosystem – continues to grow, many consumers have increased concern about the environmental impact of food production. Together, these focus areas have come to form a basis for the concern about the sustainability of the overall chocolate industry with attention increasingly directed at the both the beginning (farmers and growers) and end (consumers) of the chocolate product supply chains. Through emergence and development sustainability mechanisms like third-party audits, chain-of-custody schemes, direct trade (bean-to-bar chocolate producers), and single-source supply chains, chocolate companies have begun to adopt new and innovative models for sustainable sourcing of cocoa.

Concerning consumers, chocolate companies have increased their marketing efforts at increasing customers’ assurance of their sustainable practices. In particularly, some chocolate producers have implemented market-driven approaches through the use of consumer-facing tools like certification labeling and standards. [4] However, even with such certifications, there have been some useful questions raised about the effectiveness of certifications at positively impacting the lives of actors at the beginning of the supply chain, particularly for farmers and growers. For example, the Fair Trade certification offers a price premium price for the production of crops grown at higher social and environmental standards; however, questions have been raised around how much of the intended benefit of the certification reaches the poorest farmers and growers. [5] (Sylla, 2014, p. 208).

And so chocolate producers have begun exploring other market-driven approaches to increasing the sustainability of its industry. Most recently, in November of 2015, many leaders came together for the COP 21, the annual United Nations Climate Change Conference, where the Paris Agreement was adopted which governs the climate change related measures calling for the reduction of the world’s greenhouse gas emissions. While the  Paris agreement does not  go so far as to establish what agriculture’s role in  reducing global emissions should be, it does outline that the international community “must address climate change’s effects on agriculture to build resilience and enhance food security globally.”[6]The chocolate industry has been sensitive to the devastating effect climate change could have on its industry. In Yasin’s 2014 Salon article titled “Why climate change could mean the end of chocolate”, she points out that that in West Africa, particularly Cote d’Ivoire and Ghana where nearly 70 percent of the world’s cocoa is produced, temperatures are expected to rise by a 2-degree Celsius (36.5 F) by 2050.  Many worry that this increase in temperature could affect a greater amount of water being lost by cocoa trees to evapotranspiration making them too dry. [7] 

Overall, the COP 21’s call-to-action instilled a renewed interest in exploring how the expansion of ecosystem services markets could help industries become more sustainable, including the chocolate industry. Actors from the chocolate industry showed up to the convening to make leaders aware of the world’s first carbon-neutral chocolate company, The Change Chocolate, and distributed their chocolate to remind them of how crucial the outcomes of the talks were to the sustainability of the chocolate industry.

chocolate-e1449053074396
Figure 2. The Change Chocolate, a carbon-neutral chocolate bar making an appearance of the COP21 with words to leaders.

While much attention has been drawn to chocolate industry’s efforts to increase crop productivity, which could include things like monocropping,  as a vehicle for farmers to get liveable incomes thus sustaining the cocoa supply chain’s labor force, some have argued that this strategy alone fails to account for the environmental externalities associated with that increased production and adverse impacts like for example the loss of biodiversity. [8] [9] (Healy, 2001, p. 151). For instance, in the case of no-shade cocoa versus shady cocoa, scholars have found that a trade-off emerges between growing no-shade cocoa that has higher yields, meaning more economic return, but is more environmentally destructive, and shady cocoa which has lower yields but is more sustainable, meaning increased biodiversity, permaculture, and carbon sequestration. [10] When the only thing valued is the consumption of resources, it can leave many developing nations having to choose between exploiting those resources and their economic development.

To bring balance to key decision-points, people have increasingly looked at valuing the ecological services provided to evaluate in a cost-to-benefit analysis against the exploitation of the said resource. Such valuation looks towards the value of not only what is provided but what may be avoided or lost as well to become the basis of an emerging environmental marketplace. Features of such markets could include tools like payment for ecosystem services (PES). [11] One of the most readily recognizable examples of PES are carbon credits.

The chocolate industry has begun to explore how to engage in carbon markets both at the beginning and end of the product supply chain. Actors in the chocolate industry are exploring how the economic valuation of environmental services provided by eco-friendly farming practices can work for payment for ecosystem services (PES) program. Such a system would be formed to create new value-streams for its cocoa producers so as to incentivize sustainable agroforestry practices monetarily. Also, as consumers become increasingly concerned with understanding how their consumption and purchasing decision impacts their overall carbon footprint, companies are marketing chocolate products that feature carbon emissions labeling.

Concerning farmers and growers and their communities,  more food companies have looked towards working with farmers and growers to introduce more ecological farming practices to curtail environmental degradation and increase the crop’s resilience. [12] An inspiring example of small-scale farmers benefiting from a PES program focused on the sequestration of carbon in the soil is the Kenya Agricultural Carbon Project (KACP). The KACP was the first organization in the world to earn verified carbon credits under the verified carbon standard (VCS) through its use of the sustainable agricultural land management (SALM) methodology for carbon sequestered in soil. [13] Later, the research on the efficacy of KALP adoption of the SALM methodology in the context of the KACP program not only provided benefits to the environment but led to increased agricultural productivity as well.

(lo-res) New manuals will help farmers in Kenya and Uganda earn carbon credits (1)
Figure 3. An agroforestry project training for farmers on how to sequester carbon and earn money.

The SALM methodology is empowering to farmers and growers because of how it engages them in measuring the impact of their eco-friendly farming practices on crop yields and the amount of carbon sequestered in the soil and makes them the PES beneficiaries for their performance of the improved farming methods.

According to Diarietou Gaye, World Bank Country Director for Kenya, “carbon credits are creating a revenue stream that enhances the extension services provided to farmers, which are critical to the adoption of these practices and also adds to farmers’ income beyond their increased crop yields.” [14] Moreover, methodologies like SALM have found their way into the chocolate world as well on both the large and small scale. For example, German-based ForestFinest Consulting, a well-renowned sustainable land-use expert, works with cocoa farming communities in Panama on a  carbon-certified climate-protection project and in turn worked with a small-scale chocolate manufacturer trying to achieve a climate-positive product. On the other end, Mondelēz International, one of the world’s largest manufacturers, promised $400 million USD  to support the production of sustainable cocoa with zero net deforestation in Africa. [16] All in all, this points to how PES is used at the beginning of the chocolate product supply chain by a variety of chocolate industry actors.

Chocolate is a product that has a relatively high carbon footprint associated with it, attributed mostly to its production, and chocolate producers have already started marketing and selling their carbon-neutral or reduced carbon impact chocolate products as a potential buying point for some consumers and in preparation for anticipated legislation requiring such labeling. [17]

chocolate_graphic_v3_english
Figure 4.  An infographic featuring the carbon footprint associated with different types of chocolate.

While some chocolate companies have chosen to focus its carbon neutrality or reduction effort on the production side of the chocolate product supply chain, others have decided to steer that focus in other areas. For example, Gru Rococo, a British chocolate company transported its chocolate bars via sail and solar powered ships and then sold famously sold its 3.5 ounces bars for around $21 USD each. [18] The company’s spokeswoman explained that the price was meant to shock consumers to help them realize that “people are not paying anywhere near the real environmental price for chocolate when they buy an ordinary bar. This is chocolate without an impact.” [19] While this company is making significant steps in reducing the carbon impact through its use of environmentally-friendly transportation, researchers have agreed that the majority of carbon reduction in the chocolate industry likely has more to do with how the crop is produced. [20]

Finally, food is about more than just taste, it’s political. With regard to food (and politics for that matter), it’s our responsibility to learn more and do more with that knowledge to increase the wellbeing of ourselves, families, community, and world. Rather than marginalizing certain cocoa growing regions from prime chocolate production markets due its reputation,  examining what steps are being taken to create ethical supply chains and better livelihoods for farmers is critical. For instance, while artisan producers may:

“purchase costly flavor beans and can thus improve the livelihoods of poor farmers, they are also unlikely to buy from a place with a negative image—such as West Africa. Colin Gasko, who has not sourced from West Africa, although he is considering it, remarked: ‘How do you buy cacao from West Africa in a way that is socially responsible, given its reputation and political climate?'”[21] (Leissle, 2013, p. 30).

Promoting the work being done to engage farmers in PES programs, brings into focus examples of cocoa cultivation working in ways that are not exploitative to workers through community-level engagement and then markets that as a selling point for buying chocolate from that community. It helps to draw consumers to become aware of the communities it purchases from and imagine their decision to purchase as being supportive of its wellbeing rather than contributing to its exploitation. By focusing on the community-level, it helps to disrupt the biases blanketed over the entire region and helps producers from those regions that are growing cocoa ethically to have access to the lucrative artisan and fine chocolate markets. An excellent example of this approach being used is in the case of Divine Chocolates.[22] (Ibid., p. 27). Essentially, it helps to counter the “dislocation of production and consumption in commodity markets”[23](Martin & Sampeck, 2015, p. 48) and achieve “the transformation of the relationship between producers and consumers.”[24] (Ibid.)

Food and climate change activism has re-shaped ideas, policies and industries and has led to positive transformations in key agricultural industries, like coffee for example. This was accomplished through the work of multiple stakeholders with communities rather than excluding those communities that needed to improve to lucrative areas of the market. When looking to recent examples of  how the chocolate industry is beginning to engage in environmental markets to make itself more sustainable, such programs have the ability to shine a spotlight on ethical and sustainable actors in the industry. Overall,  it is exciting to see how the incentives of the industry, farmers and consumers can come together to make the future of chocolate seem a little sweeter while bringing into focus the communities themselves.

Endnotes

[1] Goodyear, D. (n.d.). The Future of Chocolate: Why Cocoa Production is at Risk. The Guardian. Retrieved May 1, 2016, from http://www.theguardian.com/sustainable-business/fairtrade-partner-zone/chocolate-cocoa-production-risk

[2] Mccabe, M. (2015). Fine Chocolate, Resistance, and Political Morality.Journal of Business Anthropology, 4(1), 54-81. Retrieved May 1, 2016.

[3] Torre, I. (2014, February 27). Cocoa-nomics explained: Unwrapping the chocolate industry. Retrieved May 1, 2016, from http://www.cnn.com/2014/02/13/world/africa/cocoa-nomics-explained-infographic/index.html

[4] Sylla, N. S. (2014). The Fair Trade Scandal: Marketing poverty to benefit the rich (1st ed.) (D. C. Leye, Trans.). Athens, Ohio: Ohio University Press.

[5] Ibid.

[6] Center for American Progress Energy and Environment Team. (2016, May 12). Agriculture and the Paris Agreement. Retrieved May 12, 2016, from https://www.americanprogress.org/issues/green/report/2016/05/12/137310/agriculture-and-the-paris-agreement/

[7] Scott, M. (2016, February 10). Climate & Chocolate. Climate Watch Magazine. Retrieved May 01, 2016, from https://www.climate.gov/news-features/climate-and/climate-chocolate

[8] Harris, N., Payne, O., & Mann, S. (2015, August 6). Tech tells you how much rainforest is in that chocolate bar. Retrieved May 1, 2016, from http://www.greenbiz.com/article/tech-tell-you-how-much-rainforest-chocolate-bar

[9] Healy, K. “Cacao Bean Farmers Make a Chocolate-Covered Development Climb.” In Llamas, Weavings, and Organic Chocolate: Multicultural Grassroots Development in the Andes and Amazon of Bolivia. Notre Dame, Indiana: the University of Notre Dame Press, 2001.

[10] Ibid.

[11] Attunes, P. (2013, May). Ecosystem Services. Retrieved May 1, 2016, from http://www.ejolt.org/2013/05/ecosystem-services/

[12] Ibid.

[13] Muriuki, T. (2014, January 21). Kenyans Earn First Ever Carbon Credits From Sustainable Farming. Retrieved May 1, 2016, from http://www.ecosystemmarketplace.com/articles/kenyans-earn-first-ever-carbon-credits-from-sustainable-farming/

[14] Ibid.

[15]  Fortyr, P. (2015, November 05). Sweet: Chocolate goes climate-positive with carbon insetting. Retrieved May 1, 2016, from http://www.landscapes.org/insetting-turning-things-sweet-with-climate-positive-chocolate/

[16] Taylor, L. (2015, December 12). Paris climate deal might just be enough to start turning the tide on global warming. The Guardian. Retrieved May 1, 2016, from http://www.theguardian.com/australia-news/2015/dec/13/paris-climate-deal-gives-even-a-cynic-grounds-for-optimism

[17] Inderscience Publishers. (2016, February 26). Consumers care about carbon footprint: Do consumers care about carbon emitted during the lifecycle of consumer goods?. ScienceDaily. Retrieved May 1, 2016, from http://www.sciencedaily.com/releases/2016/02/160226133615.htm

[18] Ibid.

[19] Vidal, J. (2011, May 11). UK’s Only Carbon-neutral Chocolate Arrives by Sailing Ship [blog post]. Retrieved May 1, 2016, from http://www.theguardian.com/environment/blog/2012/may/11/carbon-neutral-chocolate

[20] Ibid.

[21] Leissle, K. (2013). Invisible West Africa: The Politics of Single Origin Chocolate. Gastronomica, 13(3), 22-31. Retrieved May 1, 2016, from http://www.jstor.org/stable/10.1525/gfc.2013.13.3.22?ref=search-gateway:521ecce351ea0879eb5addd32e7fa493

[22] Ibid.

[23] Martin, C. D., & Sampeck, K. E. (2015). The bitter and sweet of chocolate in Europe. Socio.hu, (Special issue 3), 37-60. doi:10.18030/socio.hu.2015en.37

[24] Ibid.

Multimedia  – Figures

  1. Torre, I., & Jones, B. (2014, February 27). The real cost of a chocolate bar [Digital image]. Retrieved May 1, 2016, from http://edition.cnn.com/2014/02/13/world/africa/cocoa-nomics-explained-infographic/index.html
  2. [The Change Chocolate supports an afforestation project.]. (2015, December 09). Retrieved May 1, 2016, from http://i1.wp.com/www.un.org/sustainabledevelopment/wp-content/uploads/2015/12/chocolate-e1449053074396.jpg?w=669
  3. Meadu, V. (2015, July 7). New manuals will help farmers in Kenya and Uganda earn carbon credits [Innovative training projects help farmers to sequester carbon and earn cash from carbon.]. Retrieved May 1, 2016, from https://ccafs.cgiar.org/research/annual-report/2014/new-manuals-will-help-farmers-in-kenya-and-uganda-earn-carbon-credits
  4. Harris, N., Payne, O., & Mann, S. (2015, August 6). Distribution of land-use change impacts across United Cacao’s production cycle [Digital image]. Retrieved May 1, 2016, from http://www.wri.org/sites/default/files/uploads/chocolate_graphic_v3_english.png

Multimedia  – Videos

  1. Carbon Control. (2012, March 10). How does the emission trading scheme work? [Video blog post]. Retrieved May 1, 2016, from https://www.youtube.com/watch?v=ReOj12UAus4
  2. Fair Trade Eastern Africa. (2015, December 15). Fairtrade Carbon Credits Animation [Video blog post]. Retrieved May 1, 2016, from https://www.youtube.com/watch?v=C49FY3OKEhk

Sources

Attunes, P. (2013, May). Ecosystem Services. Retrieved May 1, 2016, from http://www.ejolt.org/2013/05/ecosystem-services/

Center for American Progress Energy and Environment Team. (2016, May 12). Agriculture and the Paris Agreement. Retrieved May 12, 2016, from https://www.americanprogress.org/issues/green/report/2016/05/12/137310/agriculture-and-the-paris-agreement/

Fortyr, P. (2015, November 05). Sweet: Chocolate goes climate-positive with carbon insetting. Retrieved May 1, 2016, from http://www.landscapes.org/insetting-turning-things-sweet-with-climate-positive-chocolate/

Goodyear, D. (n.d.). The Future of Chocolate: Why Cocoa Production is at Risk. The Guardian. Retrieved May 1, 2016, from http://www.theguardian.com/sustainable-business/fairtrade-partner-zone/chocolate-cocoa-production-risk

Harris, N., Payne, O., & Mann, S. (2015, August 6). Tech tells you how much rainforest is in that chocolate bar. Retrieved May 1, 2016, from http://www.greenbiz.com/article/tech-tell-you-how-much-rainforest-chocolate-bar

Healy, K. “Cacao Bean Farmers Make a Chocolate-Covered Development Climb.” In Llamas, Weavings, and Organic Chocolate: Multicultural Grassroots Development in the Andes and Amazon of Bolivia. Notre Dame, Indiana: the University of Notre Dame Press, 2001.

Inderscience Publishers. (2016, February 26). Consumers care about carbon footprint: Do consumers care about carbon emitted during the lifecycle of consumer goods?. ScienceDaily. Retrieved May 1, 2016, from www.sciencedaily.com/releases/2016/02/160226133615.htm

Leissle, K. (2013). Invisible West Africa: The Politics of Single Origin Chocolate. Gastronomica, 13(3), 22-31. Retrieved May 1, 2016, from http://www.jstor.org/stable/10.1525/gfc.2013.13.3.22?ref=search-gateway:521ecce351ea0879eb5addd32e7fa493

Martin, C. D., & Sampeck, K. E. (2015). The bitter and sweet of chocolate in Europe. Socio.hu, (Special issue 3), 37-60. doi:10.18030/socio.hu.2015en.37

Mccabe, M. (2015). Fine Chocolate, Resistance, and Political Morality. Journal of Business Anthropology, 4(1), 54-81. Retrieved May 1, 2016.

Muriuki, T. (2014, January 21). Kenyans Earn First Ever Carbon Credits From Sustainable Farming. Retrieved May 1, 2016, from http://www.ecosystemmarketplace.com/articles/kenyans-earn-first-ever-carbon-credits-from-sustainable-farming/

Scott, M. (2016, February 10). Climate & Chocolate. Climate Watch Magazine. Retrieved May 01, 2016, from https://www.climate.gov/news-features/climate-and/climate-chocolate

Sylla, N. S. (2014). The Fair Trade Scandal: Marketing poverty to benefit the rich (1st ed.) (D. C. Leye, Trans.). Athens, Ohio: Ohio University Press.

Taylor, L. (2015, December 12). Paris climate deal might just be enough to start turning the tide on global warming. The Guardian. Retrieved May 1, 2016, from http://www.theguardian.com/australia-news/2015/dec/13/paris-climate-deal-gives-even-a-cynic-grounds-for-optimism

Torre, I. (2014, February 27). Cocoa-nomics explained: Unwrapping the chocolate industry. Retrieved May 1, 2016, from http://www.cnn.com/2014/02/13/world/africa/cocoa-nomics-explained-infographic/index.html

Vidal, J. (2011, May 11). UK’s Only Carbon-neutral Chocolate Arrives by Sailing Ship [blog post]. Retrieved May 1, 2016, from http://www.theguardian.com/environment/blog/2012/may/11/carbon-neutral-chocolate

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