The chocolate industry is afflicted by a number of issues ranging from child labor, low standards of living for cocoa farmers, and environmental degradation. In recent years, consumer dialogue around choosing a brand of chocolate on merits other than price has gained momentum. Now more than ever before, consumers want to know how ethical the chocolate they are purchasing is. Many smaller chocolate companies believe in careful sourcing of beans and labor as a way of assuring their customers that their chocolate is indeed ethical. A company that seeks to eliminate questionable practices while promoting economic growth and prosperity for the farmers and workers is Madécasse. In this article, I will briefly elaborate on the prevalent issues that plague the chocolate industry, then closely examine the operations of Madécasse and discuss how this company is tackling such issues. Lastly, I will elaborate on responses from a survey study done among students asking about their opinions on the Madécasse brand.
Prevalent Problems in the Chocolate Industry
Child labor is a major problem in the chocolate industry. It is common across West Africa and other cocoa growing regions to have children working on plantations. A large portion of child labor is rooted in family and socioeconomic pressures. This personal connection makes it harder to tackle the problem. Regardless, many large corporations look past the issue and benefit from low labor costs. Despite international efforts to end such practices, it is a reality that child labor is a prevailing problem in cocoa plantations (Berlan, 1091).
Standards of living for cocoa farmers are low as a result of their minimal and volatile incomes. In 2016, the chocolate market sold an estimated $100 billion, yet only $12 billion was allocated to the value of the raw cacao (Leissle, 30). This serves to show how little of the value extracted from chocolate in the global market is given to farmers. Cocoa farmers are subject to price fluctuations as well as oligopolistic power in cocoa purchasing. This leaves farmers powerless and suffering from price instability.
Environmental degradation is prevalent in cocoa growing regions. Farmers seeking to maximize profits to earn livable wages, commonly employ practices that contribute to environmental problems. For example, excessive use of fertilizers and pesticides or clearing cocoa fields to begin growing other cash crops (Marshall, R. Scott, et al., 7). These practices also affect endemic species that have to adjust to changing landscapes.
How does Madécasse approach these problems?
The founders of Madécasse are Brett Beach and Tim McCollum. They spent two years in Madagascar while they were volunteering for the Peace Corps and fell in love with the country’s culture, people and landscape. Years after returning to the U.S they decided that they wanted to give back to Madagascar by fueling economic growth for its people. They landed on the idea of creating a chocolate company entirely run in Madagascar to provide jobs and fair wages. They sought to leverage the high quality cocoa already in the region to produce high quality chocolate. They wanted to create chocolate entirely made in Madagascar that could be sold in global markets, but whose profits would be more evenly distributed along the supply chain.
The founders of Madécasse call their business model the Direct Trade model. This model seeks to maximize the value added to the final product in Madagascar. Essentially deliver four times the value as other companies would. This business model is composed of four main parts: 1. Building strong relationship with cocoa farmers; 2. Collaborating with a chocolate factory in Madagascar; 3. Sourcing ingredients and materials from Madagascar; 4. Exporting the finished product to global markets. It is through this holistic four fold system that the founders of Madécasse were able to create a model that delivers four times the social and economic benefit than the standard Fair Trade system (Marshall, R. Scott, et al., 15). The video below summarizes what the brand is about and their business model. It shows the artisanal values that the company holds and how closely they work with the people from Madagascar.
Step 1: Relationship with Cocoa Farmers
Madécasse partners with 70 cocoa farmers in the Sambirano Valley of Madagascar. The founders had to invest time and money when determining which farmers to partner with, as they were looking for farmers committed to fostering long-term relationships. Madécasse provides training to farmers on fermentation and drying of cocoa beans. By introducing these farmers to new techniques, equipment and training, Madécasse helps them substantially increase the value of the beans they are selling. It is estimated that on average, Madécasse offers farmers a price that is 20% higher than the market price for cured beans. It is worth nothing that farmers are allowed to sell to other buyers, however they rarely choose to. The partnership in turn provides farmers with financial stability through higher income streams to help cover costs and provide for their families.
Step 2: Collaboration with Chocolate Factory
Madécasse partners with a chocolate factory in Antananarivo, the capital city of Madagascar to process the high quality beans they sourced from local farmers. This factory employs 20 Malagasy men and 20 Malagasy women, in addition to a full-time manager. The process of making chocolate begins with trucks that bring the beans into the factory, where they are roasted in large batches. Ingredients are then added to create a wide range of flavors in the Madécasse product line. The chocolate is conched on site. It is then wrapped in foil and inserted into the wrapper and placed in 12 count display boxes. All the processing steps are done by hand in the factory.
Step 3: Sourcing from Madagascar
As mentioned previously, all of the beans and materials for making the chocolate and processing it are obtained from Madagascar. The only material that is imported is the French wrapper paper but otherwise all color printing is done on site. It is important to highlight that Madécasse’s production chocolate has resulted in the establishment of secondary industries in Madagascar. These secondary industries include utilities and packaging. In this way, along with the direct benefits to the farmers, Madécasse generates much greater social impact than exporting Fair trade cocoa alone.
Step 4: Exporting the finished product to global markets
The finished boxes of chocolates are transported in trucks owned by the chocolate factory. Madécasse chocolates are shipped to international markets, mostly to the United States and Europe. In terms of the U.S, the chocolates are shipped overseas and they arrive in Brooklyn where they are then distributed to stores all over the country. As of July 2012, there were more than 1,250 stores in the U.S carrying Madécasse chocolate, including 300 Whole Foods stores (Marshall, R. Scott, et al., 17)
Social and Environmental Impact
Madécasse’s measure of social and environmental impact is measured in “bars.” For example, the company estimates that it takes about 18 minutes to produce a bar. Of those minutes, farm labor accounts for 8 minutes of 43%. This shows that the labor in Madagascar is almost doubled due to Madécasse’s business model. This additional labor is met in the form of utilities or packaging and it essentially increases the number of people employed in the country. Additionally, $0.88 per bar is kept in country as opposed to $0.13 per bar kept when using the fair trade system. This means that seven times more profits are staying in Madagascar (Marshall, R. Scott, et al., 19). In terms of environmental impact, Madécasse is committed to preserving the natural environment. It is common in Madagascar for farmers to turn cocoa plantations into plantations of other more profitable cash crops. This damages the ecosystem of the area by eliminating the biodiversity that exists. To prevent this, Madécasse trains farmers on how to increase crop yields and use techniques that will allow them to get more money for the cocoa they grow. Additionally, the company started to collaborate with Conservation International organization and the Bristol Zoological Society to monitor species like lemurs that live in cocoa plantations in Madagascar. These efforts help protect endemic species in the area (Mironska and Steuwe, 89).
In an effort to increase transparency and objectivity in measuring social impact, Madécasse entered into a partnership with Wildlife Returns organization. This third party entity helps in tracking the environmental and social impact of the company’s activities. The company published the first iteration of their analysis in 2017. The report outlines specific economic benefits as well as interviews with farmers who work with Madécasse. These farmers cite how much the company has done to train them and allow them to obtain higher crop yields and subsequently how much more they pay them for their cocoa (Madécasse Impact Report, 5-9).
The market for ethical chocolate is growing rapidly. This makes it ever more pressing for Madécasse to project to customers what makes their model for producing chocolate unique. In an effort to test if the story Madécasse is selling to customers is working, I interviewed two students to gauge their response to the brand. I first showed them the bar of chocolate and had them look at the wrapping that had the certifications listed and comment. Next I had them taste it and comment on the flavor. Lastly, I had them read “Direct Trade” tab on the website that explains what makes them better than the conventional “Fair Trade” system and comment (“Madécasse Direct Trade”, 1). Part of it is reproduced below.
Fair trade is a label. It’s used by large companies, to verify that farmers who live thousands of miles away from where the chocolate is made are paid a fair price for their cocoa … We go way beyond fair trade. We know the farmers we work with on a daily basis. And they know us. We share meals in their homes and we share a vision for prosperity.
The first student commented on the lemur on the wrapper and wondered if it was endemic to Madagascar. The student commented on the direct trade certification but did not know how it differed from fair trade. In terms of flavor, they liked the taste and said it tasted much more bold than regular dark chocolate. Lastly, after reading the website the student said he would be more willing to buy the bar because he saw the value of a direct trade system as opposed to the traditional fair trade certification. The second student had similar initial thoughts about the wrapper and the flavor. However, this student’s ending conclusion was distinct. The student felt that the direct trade website was not convincing enough. He felt that the fact that it was their “direct trade” certification instead of an institutional certification took away from their credibility. These varying conclusions speak to the fact that the company should consider doing more to explain the validity of their system.
Madécasse has a unique business model that strives to produce the maximum economic and social benefit for the people in Madagascar. Through their Direct Trade model they are able to educate farmers, provide higher cocoa prices to them, and create new jobs for locals in Madagascar. However, the small survey shows that Madécasse should strive to tell their story to attract customers as to why their brand is unique. As a whole, it is encouraging to see brands like Madécasse who are making an effort to tackle the issues that prevail in the chocolate industry.
Berlan, Amanda. “Social Sustainability in Agriculture: An Anthropological Perspective on Child Labour in Cocoa Production in Ghana.” pp. 1088-1100
“Madécasse Impact Report (2017).” Madécasse, 2017, madecasse.com/wp-content/uploads/2016/09/Madécasse-2017-Impact-Report.pdf.
“Madécasse Direct Trade”, Madécasse, 2019, http://www.madecasse.com/direct-trade
Marshall, R. Scott, et al. “Case 3. Madécasse: Competing with a ‘4x Fair Trade’ Business Model.” Case Studies in Social Entrepreneurship: The Oikos Collection Vol. 4, pp. 54–86., doi:10.9774/gleaf.978-1-78353-049-6_5.
Mironska, Dominika, and Inga Steuwe. Journal of Corporate Responsibility and Leadership, vol. 5, no. 2, ser. 2018, 3 Jan. 2018. 2018, doi:http://dx.doi.org/10.12775/JCRL.2018.013.
Leissle, Kristy. Cocoa. Polity Press, 2018.
Madécasse Cocoa Bars. Digital image. Couture Candies. 2019 http://www.couturecandies.com/madecasse-dark-chocolate-mint-crunch-2-64-oz-bar/
Madécasse Save the Lemur. Digital image. FoodBev. June 8, 2016. https://www.foodbev.com/news/madecasse-launches-line-of-bars-to-help-protect-endangered-lemurs/
Madécasse Teaching Farmers. RSF. July 5, 2015. https://rsfsocialfinance.org/2015/07/09/madecasse-breaks-the-mold-by-making-chocolate-at-the-source/
“We Are Madécasse.” YouTube, Madécasse Chocolate & Vanilla, 20 Oct. 2013, https://www.youtube.com/watch?v=JUxhgqyYuGk.