Chocolate in meltdown

by Dave Goodyear, Producer Research & Impact Manager, Fairtrade Foundation

The Fairtrade Foundation is developing a series of briefings on key commodities, starting with cocoa.

Steady growth over the last hundred years has transformed the chocolate confectionery market into an $80bn a year global industry. But now, with demand forecast to outstrip supply, a crisis is looming for the industry.

Rising incomes in emerging markets like India and China, combined with anticipated economic recovery in the rich North, have led to forecasts of a 30 per cent growth in demand by 2020. This should be good news for farmers and businesses alike. But complacency and disregard for the livelihoods of more than five million small-scale family farmers who grow 90 per cent of the world’s cocoa mean that the industry may simply be unable to provide sufficient supply to meet the demand.

Even as cocoa prices rise, farmers have not been capturing their fair share.  Growers in West Africa are likely to receive just 3.5 to 6.4 per cent of the final value of a chocolate bar, depending on the percentage of cocoa content – a disastrous fall compared with 16 per cent in the late 1980s. By contrast, the manufacturers’ share has increased from 56 to 70 per cent and the retailers’ from 12 to 17 per cent over the same period.  As prices of food and other costs rise, this failure to capture sufficient value means that many cocoa farmers are abandoning the industry – unable to see a viable future for themselves and their families.

Many chocolate companies are waking up to the situation, and to the fact that Fairtrade can be part of a solution, helping to ensure decent incomes for farmers and a long-term supply of quality product to companies.

The first Fairtrade Foundation Commodity Briefing – Fairtrade and Cocoa – sheds light on the complex challenges in the cocoa industry and provides relevant and accessible information to anybody with an interest in cocoa.  

Read the full cocoa briefing here

Read the summary here