Chocolate is a $100 billion industry yet the majority of these profits are enjoyed by a handful of multinational companies. Those who actually grow the cocoa beans and provide the raw ingredient for the world’s chocolate see but a miniscule fraction of these profits: 3% according to the image below.
The majority of the value of chocolate sales is captured by retailers and chocolate manufacturers while the farmers at the bottom of the supply chain receive the smallest share. This inequality lies at the heart of the chocolate industry today. One bean-to-bar chocolate company called Askinosie seeks to do things differently. This post examines some of the challenges inherent in the structural inequality of the cocoa supply chain then looks at Askinosie’s mission and how it attempts to combat the dark side of chocolate production.
The truth behind the chocolate bar
70% of the world’s cocoa is grown in only four West African countries: Côte d’Ivoire, Ghana, Cameroon, and Nigeria (Martin and Sampeck 50). The majority of this cocoa production is spread over two million small, independent family farms (Martin and Sampeck 50). Yet most of these farmers live well below the poverty line, a threshold defined by the World Bank as $1.90 per day (The World Bank). In fact, the typical average income for a family producing cocoa in Ghana is between $0.50 and $0.80 per day (Martin). These farmers work to survive on incomes that are volatile and irregular. Their wages are loosely tied to the weight of the cocoa beans, but even that is an oversimplification, as many other factors impact how much they earn (Martin). The profitability of their farms may fluctuate based on circumstances outside of their control: changing commodity prices of cocoa, weather and climate change, deforestation, political unrest and even war.
One major factor that determines how much or how little a farmer receives is the next step in the supply chain, the buyer. Farmers often have no choice but to sell cocoa to local buyers, a practice often rife with corruption and little oversight. In some cases, scales may be fixed to reflect an incorrect cocoa weight or farmers may not even be permitted to look at the scales when the cocoa beans are being weighed, relying solely only on the buyer’s word (Leissle 110).
Many of these farmers may not be the owners of the farms but farm workers, which ties into another pressing issue in cocoa production: the harmful exploitation of labor. The cocoa industry has had a long history of egregious labor practices, including the worst forms of child labor. Though many statistics have been put forth over the past few decades and studies have been conducted by independent organizations finding evidence of child trafficking and slavery, the exact number of forced child labor in cocoa production today remains difficult to measure (Berlan 1089). This in no way diminishes the gravity of the situation, and any evidence of the worst forms of child labor must be addressed and eradicated. The challenge is that many of these children work on family farms where they are expected to be involved in the daily activities of the farm and perhaps learn the necessary skills to one day take the farm over themselves (Berlan 1090). Often, farm work is simply considered to be part of the child’s chores. The difficulty arises when children are not enrolled in school and are involved in long hours and heavy work that harms their physical or mental health and safety. A common thread among all these cases is that farm owners simply do not earn enough to hire labor and therefore depend on unpaid labor for basic survival.
The Fairtrade Label
Certification systems such as Fairtrade tackle these issues directly by ensuring that all products bearing the Fairtrade label comply with its terms, such as sustainable and environmentally safe farming practices, fair labor conventions according to the International Labour Organization that prohibit discrimination, forced labor, and the worst forms of child labor. As long as producer organizations can pay a certification fee and comply with the terms, they are ensured a Minimum Price for cocoa and receive a Fairtrade Premium (Leissle 141). Though well-intentioned, the Fairtrade label is not without criticism and controversy. Charging a certification fee to growers only adds to their existing financial hardships. As for the Minimum Price paid to cocoa producers, it has been criticized as being too low and stagnant to significantly improve the lives of cocoa farmers (Leissle 142).
Nonetheless, Fairtrade has successfully raised consumer awareness of the inequality and human rights injustices in cocoa production. The dialogue and media attention it has created has stirred industry giants into action, forcing the largest players in the chocolate industry to take more corporate responsibility. Nestlé, Mars, Cadbury, and Ferrero have all committed to sourcing Fairtrade certified cocoa in some of their products (Leissle 147). Just this month, CNN published an article stating that Mondelēz had publicly pledged to use 100% sustainable cocoa by 2025, albeit through its internal Cocoa Life program (Wiener-Bronner). The fact that said cocoa would be certified by its in-house sustainability program, of course, raises the question of just how rigorous the program will be and if it will be transparent at all.
In fact, the lack of transparency in sourcing methods has been a constant criticism of the Big Five companies. For example, Hershey claims that a third of its cocoa comes from certified sustainable sources, however, little is known of their origins (Leissle 147). The ability of these multinational companies to pick and choose some, but not all, of their products to be Fairtrade certified is not a positive step towards eliminating the injustices in the cocoa industry. As Ndongo Sylla points out in The Fair Trade Scandal, certifying only products rather than the organizations themselves allows companies with unethical practices and a controversial history to maintain a positive public image without committing in any significant way (130). How do we differentiate between opportunistic companies that are jumping on the Fairtrade bandwagon and those that are morally committed to corporate activism and responsibility?
Askinosie & Social Responsibility
Askinosie is a bean-to-bar chocolate company founded in Springfield, Missouri by Shawn Askinosie who retired from a 20-year career as a defense attorney in 2005 in order to start making his own chocolate. The company sources the beans directly from cocoa farms and processes the beans itself into the chocolate products that they sell. While many small companies today employ the same bean-to-bar model, Askinosie is unique in its dedication to social responsibility. Shawn Askinosie states on the Askinosie website: “I can confidently say the greatest opportunity and challenge has been weaving social responsibility into everything we do; it’s not just a buzzword, it’s who we are. Askinosie Chocolate was born committed to fairness, sustainability, minimal environmental impact and community enhancement” (Askinosie).
What sets Askinosie apart is its direct trade model. It buys beans directly from the grower, eliminating the need for intermediary buyers and middlemen and allowing each step of this very short supply chain to be traceable (Leissle 154). This allows Askinosie to source fine flavor beans that meet its standards of quality. By having a say in every step of the post-harvesting process such as fermentation and drying, Askinosie is able to “ensure the resulting beans taste as perfect as possible” as well as spot defective beans before they arrive at the factory (Askinosie). The company is also able to control pre-shipment storing methods, the types of bags the cocoa beans are shipped in, as well as the actual importation and transportation of the beans themselves.
“Everything starts with quality–and an appreciation of farmers. We honor farmers as experts and craftsmen, so we treat them as such and consider them partners in our business. We work together with our farmer partners to create exceptional chocolate from exceptional cocoa beans.” (Askinosie)
Askinosie prides itself in knowing the name of every farmer it works with and being able to trace the beans directly to the source, whether that source is a single farmer or a cooperative of smallholder farmers. And in addition to paying farmers prices that are, on average, 35% higher than world market price and 25% higher than the Fairtrade price, Askinosie shares its profits directly with its farmers. In doing so, farmers are treated as business partners, sharing in up to 10% of the net profits of the company (Askinosie). Because every single origin can be traced to the exact source, the very farm or cooperative, growers are able to get a percentage of the sales of products made with those beans. Both sides benefit in this mutually supportive model. Askinosie can source excellent beans and control a large part of the process that impacts flavor and quality, and the farmers are able to earn more.
Askinosie also shares with the farmers its financial statements in what it calls its “Open Book Management policy.” In frequent trips to the farms, Askinosie shares the numbers and how each bean purchase affects the net profits of the company. These discussions “enable the farmers to connect the quality of their beans to the outcome of each chocolate bar,” showing farmers how improvements on post-harvest techniques can “ensure an even greater profit margin in the future, which means more opportunities for the farmers to share in a success they helped create” (Askinosie).
In sharp contrast to multinational companies that offer consumers vague or almost no information about its supply chains, Askinosie publishes a Transparency Report detailing its purchase history from its inception. Following in the footsteps of Taza Chocolate, the first company to practice direct trade and also publish an annual transparency report, Askinosie fully discloses yearly prices paid for beans, how much was paid directly to farmers, the amount of profit shared, and even details of Shawn Askinosie’s yearly visits to the farms (Leissle 153; Askinosie). Unlike Taza, however, Askinosie provides detailed figures about the farm gate price paid to farmers, which allows consumers to know exactly how much farmers receive (Leissle 157). This remarkable level of transparency not only enhances consumer trust in the company but also raises the bar for the industry as a whole.
Askinosie sources its beans from four origins: Davao, Philippines; Mababu, Tanzania; San Jose del Tambo, Ecuador; and Zamora, Amazonia in Ecuador. In each of these locations, Shawn Askinosie has built and maintained long-term relationships with each of the farmers who supplies his beans through the company’s direct trade practices (Askinosie).
In Davao and Mababu, Askinosie has worked to directly support the local communities through a sustainable lunch program called A Product of Change. In a pledge to ensure that local school children eat more than one meal a day, Askinosie sells local food products from those regions in its online store, storefront, and to other food retailers. 100% of the profits from those products go back to the schools to provide lunches for their students. In Mababu, Askinosie funded the first textbooks and computers at a local school and a deep water well delivering potable water to the entire village. In both Zamora and Mababu, Askinosie partners with female-led farmer cooperatives, recognizing and empowering a traditionally marginalized and undervalued demographic in cocoa production (Askinosie).
In addition to developing the communities of its farmer partners, Askinosie seeks to involve the local community of Springfield through the establishment of Chocolate University, which is funded by proceeds from chocolate tours at the Askinosie factory. This learning program for local elementary, middle school, and high school students provides a hands-on experience with the goal of inspiring the youth “through the lens of artisan chocolate making to be global citizens and embrace the idea that business(es) can solve world problems” (Askinosie). The program even takes a group of high school students every year to Mababu, Tanzania where students engage with cocoa farmers on the farms and learn about small business and direct trade, allowing them to witness sustainable business practices firsthand and inspiring them to be agents of change within their own communities.
Social responsibility lies at the core of Askinosie’s mission, which it successfully executes through its direct trade and profit-sharing with its farmer partners. Direct trade eliminates the need for middlemen, ensuring that farmers receive their just pay. The transparency of its pricing and sourcing practices allows the public to see that these farmers are receiving above market price for their cocoa beans, which in turn, allows them to hire employees on their farms and support their local economies.
The company also recognizes the importance of knowledge at all points in the cocoa supply chain. Askinosie team members in Springfield and farmer partners on cocoa farms alike receive financial education on the company’s numbers. The Transparency Report informs the public. Students of Chocolate University learn about corporate social responsibility, of the work that goes into cocoa farming, and the challenges in cocoa production. This level of transparency within the supply chain and the initiative to educate and inform consumers are refreshing in an industry that is often shrouded in so much ambiguity.
Askinosie should be lauded for its exemplary practices. However, so much more work needs to be done in the cocoa industry for large-scale change to occur. Direct trade is one step in the right direction, but it is limited in scale as top-quality beans are prioritized over bulk beans, which make up the majority of beans produced in the world and in whose production we find so many of the industry’s complex problems. Notice the absence from Askinosie’s selection of origins any West African country where these inequalities abound. This is likely due to sourcing challenges by any small craft company in this region of the cocoa-producing world, further indication of the many challenges in the global cocoa supply chain (Martin and Sampeck 55). The reality is that many consumers do not want to pay $10 for a bar of chocolate. And the market of cheap chocolate continues to perpetuate the system of structural inequality that exists today. Farmers depend on cocoa production for their livelihood and survival which are inextricably tied to global consumption and demand. Until the largest players in the cocoa industry start to adopt fair practices and corporate social responsibility on a global scale, until more consumers are made aware of the complexities behind that chocolate bar, the problems we see today, sadly, will continue to exist.
Scholarly Works Cited
Berlan, Amanda. “Social Sustainability in Agriculture: An Anthropological Perspective on Child Labour in Cocoa Production in Ghana.” The Journal of Development Studies, vol. 49, no. 8, 2013, pp. 1088-1100.
Leissle, Kristy. Cocoa. Polity Press, 2018.
Martin, Carla. “Modern Day Slavery.” Chocolate, Culture, and the Politics of Food, 27 Mar. 2019, Harvard University, Cambridge, MA. Lecture.
Martin, Carla, and Kathryn Sampeck. “The Bitter and Sweet of Chocolate in Europe.” 2016, pp. 37-60.
Sylla, Ndongo. The Fair Trade Scandal: Marketing Poverty to Benefit the Rich. Translated by David Clément Leye, Ohio University Press, 2014.
Askinosie Chocolate. Askinosie, http://www.askinosie.com. Accessed 2 May 2019.
“The Real Cost of a Chocolate Bar.” Raisetrade, http://www.raisetrade.com/real-cost-of-a-chocolate-bar.html. Accessed 2 May 2019.
“Fairtrade Certified Cadbury Dairy Milk.” Chocablog, http://www.chocablog.com/features/how-fair-is-fairtrade-chocolate. Accessed 2 May 2019.
The World Bank, 2019, http://www.worldbank.org/en/topic/poverty/overview. Accessed 2 May 2019.
Wiener-Bronner, Danielle. “Toblerone and Cadbury will be made with sustainable cocoa.” CNN Business, 29 Apr. 2019, amp.cnn.com/cnn/2019/04/29/business/mondelez-cocoa-sustainability/index.html. Accessed 2 May 2019.