- did they over-deliver?
Paraphrasing a section of the abstract from Dr. Michael Odije’s research paper titled: ‘Sustainability Winners and Losers in Business-Biased Cocoa Sustainability Programmes in West Africa’ to set the tone of this article;
In 2014, ten of the world’s largest chocolate multinationals combined more than US$500million in funding to introduce a cocoa sustainability scheme called CocoaAction. In principle, CocoaAction and similar sustainability schemes sponsored by western multinational chocolate companies are interventions to empower cocoa planters and planting communities in West African countries.
But in practice, as this article will show, these schemes respond to diminishing returns in cocoa-producing communities, the prospect of diversification, and the resulting projection of a shortage in raw material. There are signs that diversification away from cocoa will benefit cocoa planters and their communities. Therefore, cocoa sustainability schemes are designed to help multinational chocolate companies at the expense of diversification in West African countries.
In April 2021, we heard the news that Mondelez and Olam have teamed up to establish a 2,000 hectare of ‘sustainable’ Cocoa farm plantations in Indonesia. To many people in the cocoa sector, the mere adjective ‘Sustainable’ pre-fixed to this development makes it lose any scrutiny about the actual intended and unintended consequences of this project. To not foretell what the intentions of Mondelez and Olam are, with their sudden vertical integration into establishing cocoa plantations, this article will highlight the counter-productiveness of this movement toward the ‘Sustainability’ objective they intend to achieve.
I will also highlight my opinion on the reason for this move by Mondelez and Olam. I will further add the consequence of this development on the cocoa-producing economies and the livelihoods of smallholder cocoa farmers. Finally, round-up by advising Ghana Cocoa Board and Ivory Coast on how this OLAM/Mondelez initiative plus China’s entry to Nigeria’s renewed energy to produce more cocoa, all steps to render the LID inactive. Whereas I may not have answers to everything, I will make a few suggestions on which hopes could save smallholder farmers some hope.
Olam and Mondelez’s Investment in cocoa plantations in Indonesia
Mondelez, in their Press release, highlighted their excitement to be partnering in establishing the world’s single largest ‘sustainable’ commercial cocoa farm in Indonesia. This 2000-hectare cocoa farm, according to Mondelez, is to “test a scalable approach for the future of ‘Commercial’ cocoa farming”. They added that this Nucleus farm would be used to test the ability of their advanced climate-smart (including irrigation systems) and plant science technologies to optimally use the land for the maximum output in cocoa production.
Mondelez informed of their future ambition to replicate this model across the region, and highlighted how ‘demand’ for cocoa is growing in Asia and has the potential for increased demand for cocoa production. They further added that this project was developed from their years of experience with “the company’s signature sustainable sourcing programme, Cocoa Life, and OFI’s ambition for sustainable cocoa, Cocoa Compass, to test a scalable approach for the future of commercial cocoa farming”.
First, Olam and Mondelez’s decision to move into commercial cocoa production isn’t very strange to me. As a profit-focused organisation, you would want to do whatever you can to own and control the entire supply chain you operate. Over 70 percent and 90 percent of the world’s and Ghana’s cocoa is cultivated by Smallholder cocoa farmers. In Ghana, Cocoa production has been left to smallholder farmers other than commercial farmers to help alleviate poverty. Smallholder cocoa farmers’ size already acts as a check on the world market price, i.e., if smallholder farmers produce less than commercial farmers, controlling supply will lead to world market price stability.
The effect of commercial farming in the cocoa sector is a direct intervention to drive down cocoa prices. As alluded to in their press release, their “Sustainable single largest farm” is intended to maximise production, increase supply, and drive down cocoa prices drastically. Mondelez and Olam’s entry into commercial cocoa production is intended to take the last power from cocoa farmers and cocoa-producing countries, render cocoa farmers extremely worse, and make smallholder cocoa farming an unsustainable business.
Again, what is Olam and Mondelez’s definition of sustainability? Continuous cocoa production regardless of its impact on smallholder cocoa farmers? Leveraging its financial and political power to outcompete smallholder cocoa farmers and pretend that it is sustainable? How is this sustainable when Mondelez has joined ‘The Voice Network’ to challenge the Ghana government on deforestation, yet has gone to Indonesia to implement the thing (cutting down trees to grow Cocoa) they spoke against in Indonesia?
Now let’s move to my step-by-step reason why this project negatively impacts smallholder cocoa farmers and cocoa-producing countries.
Are small-scale cocoa farmers and their farms being used by Mondelez as research materials against their economic and social sustainability?
Within the press release from Mondelez was their admission on how their “Single Largest sustainable commercial cocoa farm project” was facilitated by the experience they have gained through their signature sustainable sourcing programme called “Cocoa Life”. The Cocoa Life Programme was implemented in Ghana in 2008, making Ghana the first casualty of being used as a research for launching “the world’s first single largest sustainable Commercial cocoa farming”.
You would want to believe that whatever they learned from these farmers during their operations will lead ‘Cocoa Life’ in developing this new ‘technology’ and give it back to the smallholder cocoa farmers. Instead, Mondelez took the knowledge gained, developed the technology, and implemented it in Indonesia. Their decision to implement this programme in Indonesia, and not Ghana, can be attributed to several factors. Some of these include the fact that Ghana doesn’t incentivise commercial cocoa farming, and hence, doesn’t provide any of the current support they give to smallholder cocoa farmers to commercial farmers (Well, that is what Cocobod claims).
Secondly, Ghana’s cocoa sector is heavily regulated, and Ghana’s cocoa marketing company, per policy, is the sole buyer of all the cocoa cultivated in Ghana. So Mondelez wouldn’t want to suffer under a policy that takes off the power of control over cocoa beans they have produced. Third, Mondelez has signed on to ‘The Voice Network’, an organisation that claims to be the voice of the “voiceless cocoa processing, trading, NGOs, chocolate firms, etc.” who are so keen on ensuring that cocoa-producing countries work toward curbing deforestation”.
Imagine when Mondelez, Mars, Barry Callebaut, Fairtrade, Rainforest Alliance, Ferrero, etc. tell you they are ‘voiceless’ within the current Cocoa-chocolate value chain. Yet Mondelez turned around and started new sets of cocoa plantations in Indonesia – a country that, compared to Ghana, has lower afforestation records according to graph 1. From graph one, Indonesia has recorded continuous deforestation compared to Ghana since 1990. Of course, Indonesia has a forest cover of more than ten times Ghana’s, as shown in Graph 2; hence, until Mondelez depletes it to the levels where they can now come back and pretend to be concerned about deforestation, they will keep exploiting.
So, if deforestation is an environmental sustainability concern, as claimed by Mondelez through “The Voice Network”, and there is a consensus that the impact of deforestation is more global than local, then isn’t it hypocritical and counterproductive for Mondelez to join “The Voice Network” and yet cut trees in Indonesia? What due diligence does “The Voice Network” perform and keep performing on those who sign their agenda to virtue signal as sustainability champions? In contrast, do they practise the exact opposite of what they intend to achieve?
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Kwame is a Cocoa Farmer’s Son with expertise in international trade & policy, industrial policy, and project management, with a professional focus on the Cocoa-Chocolate Industry, The Smallholder Cocoa Farmer, and the digital economy.