Making chocolate, like all sub-areas of agribusiness, isn’t an isolated affair. It’s a complicated, labor-intensive process that shapes the lives of multiple parties, often in jarringly dissimilar ways: Commercial chocolate retailed in supermarkets represents profit for corporations and the plight of cacao farmers.
As with most commodities, these details escape many consumers. Labels aren’t always transparent and, understandably, a person enjoying a chocolate bar wouldn’t think to ask what accounts for this contrast, let alone wonder if it existed at all.
According to the International Cocoa Initiative, over 95 percent of the world’s cacao is grown by small-scale farmers, with Africa as the largest cacao-producing region. This may be unsurprising given that cacao is a tropical crop. Yet what does it mean that the top five countries with the highest per capita chocolate consumption all hail from Europe? The economics of chocolate—the long, complex supply chain that fuels the global chocolate market—is made up of many similar disparities.
For example, it’s entirely possible for cacao farmers to never taste chocolate their whole lives, while corporate middlemen (whose job it is to buy and sell cacao) might never set eyes on a raw cacao bean. How can this happen? Again, it has to do with the economic system by which the raw materials for chocolate are bought and sold.
“Most of the time people don’t give farmers the ability to do the value adding themselves, and so there are a lot of consolidators that will then bring everything together and do it themselves and resell the beans, and it’s three times the price,” says Auro Chocolate co-founder Mark Ocampo.
Turning cacao beans into saleable outputs involves a long, convoluted supply chain, one with multiple intermediaries who can profit off the beans. The longer the supply chain, the greater the opportunity for the exploitation of cacao farmers since they get a smaller share of the overall price of a chocolate bar whenever an additional intermediary steps in.
“Most of the time people don’t give farmers the ability to do the value adding themselves, and so there are a lot of consolidators that will then bring everything together and do it themselves and resell the beans, and it’s three times the price,” says Auro Chocolate co-founder Mark Ocampo, who, interestingly, decided to start the company when he and business partner Kelly Go encountered an American artisanal chocolate brand that counted Davao as one of its major cacao bean suppliers.
The bean-to-bar model
The bean-to-bar chocolate movement, of which Auro Chocolate is part of, means that chocolate companies are involved in every stage of the production process, from the buying of the beans to the creation of the bar. Spearheaded by companies that are mostly committed to fair, ethical business practices, this trade model has the potential to end imbalances and injustices that plague the chocolate industry.
While the model in itself doesn’t guarantee ethicality or quality (many unethical mainstream chocolate brands are technically bean-to-bar), it’s a system that’s very much conducive to these things since a shorter and more focused supply chain allows for traceability, quality, and increased production transparency. These in turn should, ideally, ensure better pay and working conditions and put cacao farmers in a less vulnerable position.
The bean-to-bar model and private-public partnerships are mostly conducive to inclusive growth, which is key to sustainable economic growth. They are also one of the more socially responsible ways to overhaul an industry that’s built on cheap labor and exploitation.
But it doesn’t and it shouldn’t end there. Many modern consumers have become almost desensitized to these claims, which, while impressive in theory, don’t always necessarily translate to actual sustainable practice (see: free range eggs and Starbucks’ commitment to Fair Trade standards). One alternative way to treat these claims may be to consider them as minimum standards, and not just advocacies. To see better wages and working conditions for cacao farmers as norms, and then ask what else can be done to improve the cacao farmers’ agency and leverage.
To outrightly demand fairness, transparency, and basic human decency from companies is a futile petition, but the fact is that in the trenches of capitalism, futile petitions can have a life or death importance. So, again, the question: On top of paying better wages and ensuring an overall better production system, what are bean-to-bar chocolate companies doing to empower the farmers they’re working with?
On inclusive growth
The ‘value adding’ that Ocampo talks about makes a large part of this process of empowerment. To recap, remember that in the traditional chocolate production setup, where a good number of intermediaries motivated by their own special interests are involved, a lot of money and opportunities are taken away from farmers.
“For example, wet beans in Davao can cost around P30 to P35 per kilo. If you ferment and dry these beans, they can go up to P140 per kilo. Again, most of the time, people don’t give farmers the ability to do this value adding themselves, and so they don’t receive its benefits,” says Ocampo. This is a typical example of how “business is taken away from farmers,” which is really a massive part of a toxic culture that has long been embedded in the global chocolate industry.
It also perfectly illustrates why a commitment to an alternative supply chain—one that not only guarantees ethicality but also empowers farmers to make a business out of their farms—is more than just a philanthropic cause. Because the root of many of these problems is fundamentally economic, it makes sense to employ an economic solution as well. Some bean-to-bar companies like Auro are investing in the development of human capital by holding financial literacy and basic business administration classes, equipping farmers with tools that can allow for better business.
“We want to be able to not just work directly with farmers and pay them significantly higher, we also want to impart certain skillsets like creating organic farming inputs so they can then use them to grow their farms as well,” says Ocampo, who, through Auro, works with about 3,000 farmer families in Davao.
The bean-to-bar trade model and the mass of rising private-public partnerships push for and are mostly conducive to inclusive growth, which is key to sustainable economic growth. Needless to say, it’s also one of the more socially responsible ways to overhaul an industry that’s built, historically, on cheap labor and outright exploitation.
To be fair, it’s not a system without flaws and it will definitely take a lot of time before dramatic changes take place, but recognizing the need for equal business opportunities for all industry players is a step in the right direction.