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| Hershey's uses more certified sustainable cocoa, but farmers may not be seeing the benefits | Hershey's uses more certified sustainable cocoa, but farmers may not be seeing the benefits |
| (about 1 hour later) | |
| Hershey’s, which sourced 30% of its cocoa from certified sustainable sources last year, expects to hit 50% in 2016 – a full year ahead of schedule – on its way to a goal of 100% certified cocoa by 2020. | Hershey’s, which sourced 30% of its cocoa from certified sustainable sources last year, expects to hit 50% in 2016 – a full year ahead of schedule – on its way to a goal of 100% certified cocoa by 2020. |
| When it announced its goal three years ago, following a campaign by activist groups including the International Labor Rights Forum, Green America and Global Exchange, some feared that there would not be enough certified cocoa to meet the needs of Hershey’s, Mars, Ferrero and other sustainability-minded chocolate companies. | When it announced its goal three years ago, following a campaign by activist groups including the International Labor Rights Forum, Green America and Global Exchange, some feared that there would not be enough certified cocoa to meet the needs of Hershey’s, Mars, Ferrero and other sustainability-minded chocolate companies. |
| But supply has grown alongside a rising demand for sustainable cocoa. As JP Bilbrey, Hershey’s chief executive, tells the Guardian: “Capitalism is a wonderful thing. If you demand something, those that supply it to you will provide that particular product.” | But supply has grown alongside a rising demand for sustainable cocoa. As JP Bilbrey, Hershey’s chief executive, tells the Guardian: “Capitalism is a wonderful thing. If you demand something, those that supply it to you will provide that particular product.” |
| The next question is how much of a difference this sustainable sourcing is making in the lives of cocoa farmers. Hershey’s, which had revenues of $7.4bn last year, won’t say how much of its profits have trickled down to suppliers, nor will it say how much business it does with each of its three nonprofit certifiers: Fair Trade, Rainforest Alliance and UTZ Certified. | The next question is how much of a difference this sustainable sourcing is making in the lives of cocoa farmers. Hershey’s, which had revenues of $7.4bn last year, won’t say how much of its profits have trickled down to suppliers, nor will it say how much business it does with each of its three nonprofit certifiers: Fair Trade, Rainforest Alliance and UTZ Certified. |
| Certification alone hasn’t proven sufficient to lift the incomes of cocoa farmers, who are still poor, according to Hans De Groot, executive director of UTZ Certified, a nonprofit based in Amsterdam. | Certification alone hasn’t proven sufficient to lift the incomes of cocoa farmers, who are still poor, according to Hans De Groot, executive director of UTZ Certified, a nonprofit based in Amsterdam. |
| That’s a worry for the chocolate maker and the activists. If farmer incomes don’t rise, there’s a very real risk that the next generation of farmers will give up on the business. “Even with the highest premium paid for certified cocoa, farmers are way deep in poverty,” says Judy Gearhart, executive director of the International Labor Rights Forum. | That’s a worry for the chocolate maker and the activists. If farmer incomes don’t rise, there’s a very real risk that the next generation of farmers will give up on the business. “Even with the highest premium paid for certified cocoa, farmers are way deep in poverty,” says Judy Gearhart, executive director of the International Labor Rights Forum. |
| De Groot agrees. After visiting certified cocoa farmers in Cote D’Ivoire, he wrote: “There is still too much poverty to have a decent and sustainable life.” | De Groot agrees. After visiting certified cocoa farmers in Cote D’Ivoire, he wrote: “There is still too much poverty to have a decent and sustainable life.” |
| Using demand to supply sustainability | Using demand to supply sustainability |
| Certification is only part of Hershey’s efforts. It also works with several partners, including the Bill and Melinda Gates Foundation, US AID and Cocoa Action, to support efforts aimed at helping farmers and their families in West Africa. Its projects include Learn to Grow, a program that trains farmers on best agricultural, business and environmental practices, and CocoaLink, which distributes low-cost mobile phones to farmers. Last month, Hershey’s announced plans to distribute Vivi, a peanut-based supplement, to poor school children in Ghana. | Certification is only part of Hershey’s efforts. It also works with several partners, including the Bill and Melinda Gates Foundation, US AID and Cocoa Action, to support efforts aimed at helping farmers and their families in West Africa. Its projects include Learn to Grow, a program that trains farmers on best agricultural, business and environmental practices, and CocoaLink, which distributes low-cost mobile phones to farmers. Last month, Hershey’s announced plans to distribute Vivi, a peanut-based supplement, to poor school children in Ghana. |
| For now, the Ghanaian nutrition program is charity, but it could evolve into a business, Bilbrey says. “We’re going to experiment with this, and if turns out to be a good idea, where the kids can get some basic nutrition, as part of their lunch program, we’ll look to expand it.” | For now, the Ghanaian nutrition program is charity, but it could evolve into a business, Bilbrey says. “We’re going to experiment with this, and if turns out to be a good idea, where the kids can get some basic nutrition, as part of their lunch program, we’ll look to expand it.” |
| While these efforts are charitably-minded, they also have a business impact: they’re all aimed at securing a long term supply of cocoa. “We want to take cocoa farming from being a way for farmers to subsist to being an attractive vocation for the next generation,” says Leigh Horner, vice president for corporate communications and social responsibility at Hershey’s. | While these efforts are charitably-minded, they also have a business impact: they’re all aimed at securing a long term supply of cocoa. “We want to take cocoa farming from being a way for farmers to subsist to being an attractive vocation for the next generation,” says Leigh Horner, vice president for corporate communications and social responsibility at Hershey’s. |
| The trouble is that cocoa farming in West Africa, where more than 60% of the world’s cocoa is grown, is a difficult business. Most farmers work on small farms that have old trees farm practices that have not been modernized. They struggle with low and fluctuating cocoa prices, a lack of farmer organization, insufficient infrastructure, uncertainty over land ownership rights and a lack of market power, according to Cocoa Barometer 2015, a report by a group of nonprofits. | The trouble is that cocoa farming in West Africa, where more than 60% of the world’s cocoa is grown, is a difficult business. Most farmers work on small farms that have old trees farm practices that have not been modernized. They struggle with low and fluctuating cocoa prices, a lack of farmer organization, insufficient infrastructure, uncertainty over land ownership rights and a lack of market power, according to Cocoa Barometer 2015, a report by a group of nonprofits. |
| The International Labor Rights Forum reported in December that the average farmer with two hectares of land makes about $755 per year in Cote d’Ivoire and $983 per year in Ghana; this translates to $2.07 per day and $2.69 per day, respectively. | The International Labor Rights Forum reported in December that the average farmer with two hectares of land makes about $755 per year in Cote d’Ivoire and $983 per year in Ghana; this translates to $2.07 per day and $2.69 per day, respectively. |
| The report says: | The report says: |
| Despite myriad projects aimed at improving education, increasing productivity, and implementing cocoa certification, the collective impact has been limited and the industry has been unable to solve the root cause of the problem: the very low prices paid to farmers. | Despite myriad projects aimed at improving education, increasing productivity, and implementing cocoa certification, the collective impact has been limited and the industry has been unable to solve the root cause of the problem: the very low prices paid to farmers. |
| Related: McDonald's to axe deforestation from its global supply chain | Related: McDonald's to axe deforestation from its global supply chain |
| How can farmers be paid more? | How can farmers be paid more? |
| The challenge for industry and activists alike is how to get more of the value of chocolate to the cocoa farmers. Only one of Hershey’s certifiers, Fair Trade USA, actually guarantees a minimum price to cocoa growers. It requires that farmers be paid a premium of $200 per metric ton, which is about 10% above the market price. | The challenge for industry and activists alike is how to get more of the value of chocolate to the cocoa farmers. Only one of Hershey’s certifiers, Fair Trade USA, actually guarantees a minimum price to cocoa growers. It requires that farmers be paid a premium of $200 per metric ton, which is about 10% above the market price. |
| “We believe that a meaningful level of investment, channeled directly to farmers, is needed in order to make meaningful change,” says Elan Emanuel, senior manager of cocoa supply for Fair Trade USA. He acknowledges, however, that competing with other certifiers “can be a challenge for Fair Trade – it can be a tougher sell to explain to brands why it’s important to pay a fixed premium”. | “We believe that a meaningful level of investment, channeled directly to farmers, is needed in order to make meaningful change,” says Elan Emanuel, senior manager of cocoa supply for Fair Trade USA. He acknowledges, however, that competing with other certifiers “can be a challenge for Fair Trade – it can be a tougher sell to explain to brands why it’s important to pay a fixed premium”. |
| UTZ Certified and Rainforest Alliance, both of which certify more cocoa globally than Fair Trade, don’t guarantee a premium, but they say that their certified cocoa sells at higher prices because of the growing demand for certified crop. What’s more, they say, their training programs for farmers lead to higher yields and better quality cocoa, which delivers more income to farmers. | UTZ Certified and Rainforest Alliance, both of which certify more cocoa globally than Fair Trade, don’t guarantee a premium, but they say that their certified cocoa sells at higher prices because of the growing demand for certified crop. What’s more, they say, their training programs for farmers lead to higher yields and better quality cocoa, which delivers more income to farmers. |
| A independent study of cocoa farmers in Cote D’Ivoire commissioned by the Rainforest Alliance found that the net income – defined as a farmer’s revenue from cocoa sales, minus expenses – was significantly higher on cocoa farms certified by the RA. Certified farms, according to the study, received $403 per hectare – almost four times the $113 commanded by non-certified farms. Training in best agricultural practices accounted for most of the difference, the study said. | A independent study of cocoa farmers in Cote D’Ivoire commissioned by the Rainforest Alliance found that the net income – defined as a farmer’s revenue from cocoa sales, minus expenses – was significantly higher on cocoa farms certified by the RA. Certified farms, according to the study, received $403 per hectare – almost four times the $113 commanded by non-certified farms. Training in best agricultural practices accounted for most of the difference, the study said. |
| UTZ Certified’s Hans de Groot has argued that guaranteeing cocoa farmers a premium distorts the market by because it removes the incentive for them to adopt better agricultural practices. “If we want to bring good practices to scale, the market is an important pulling force,” he said. “Using a minimum price is not helping that practice to grow.” | |
| To better understand the issues around certification, the International Cocoa Organization commissioned a study by consulting firm KPMG in 2012. KMPG found that there are “more advantages than disadvantages of certification at farm, cooperative and also at community level”, but cautioned that “there is insufficient independent literature focusing on the impact of cocoa certification”. | To better understand the issues around certification, the International Cocoa Organization commissioned a study by consulting firm KPMG in 2012. KMPG found that there are “more advantages than disadvantages of certification at farm, cooperative and also at community level”, but cautioned that “there is insufficient independent literature focusing on the impact of cocoa certification”. |
| Put simply, we really don’t know whether certification – or the other farmer aid programs launched by Hershey’s and the rest of the industry – are doing enough to improve the lives of farmers and make cocoa farming an attractive way to earn a living, in the long term. | Put simply, we really don’t know whether certification – or the other farmer aid programs launched by Hershey’s and the rest of the industry – are doing enough to improve the lives of farmers and make cocoa farming an attractive way to earn a living, in the long term. |
| There’s no doubt that Hershey’s is trying – but trying isn’t succeeding. | There’s no doubt that Hershey’s is trying – but trying isn’t succeeding. |