Dark chocolate.
White chocolate.
Biscuits.
Hot chocolate.
Pralines, bonbons, chocolate cake, chocolate bars...
From sweets to cosmetics,
cocoa is everywhere
and 60-70% of it comes from just two countries,
Ivory Coast and Ghana.
When you get to farmer households,
you'll find that some may never even have tasted chocolate.
Cocoa farmers largely live
under the poverty line of $1.25 a day.
They really can't even afford the finished product.
The $100 billion chocolate industry
is plagued by child labor
and has historically been a leading cause
of deforestation in both West African nations
that receive a pittance for selling their beans.
The two countries alone represent less
than 6% of the global value,
including the taxes that the country is taking from exports.
The farmer is probably getting less than 2%.
But soon, even these small percentages
may be lost completely,
as the main importer of West African beans,
the European Union, gears up to ban cocoa
with a harmful impact on the environment and human rights.
If there was a legislation there
that prevented West Africans from selling their cocoa,
there would really be an issue
for the economies, for the farmers, for the governments.
And so, that has added to, I think,
what was initially more of a moral issue
and made it very much an economic issue.
And these attempts by developed nations
to force a cleanup of cocoa supply chain,
while potentially hurting the livelihoods
of West African farmers,
might not even achieve their desired goals.
Cocoa and chocolate world are stuck in colonialism,
making the poor nations poorer
and the rich nations richer.
And that has not changed at all.
Cocoa, a tree crop native
to Central and South America,
was introduced to Africa over a hundred years ago.
Colonial powers like France and Britain compelled
some of their colonies in Africa
to cultivate crops that they don't want to cultivate
because of the ecological costs.
After independence these countries
just keep on producing this raw material
which they export to Europe and America.
It's almost a classic colonial division of labor.
Cocoa has remained intertwined
with the economies of Ghana and Ivory Coast,
their fortunes often rising and falling
with the price of the crop.
After Ivory Coast, or Côte d'Ivoire,
gained independence in 1960,
its first president and the political elites
were cocoa growers who encouraged production.
In Côte d'Ivoire, in the 1950s, 1960s, '70s,
some of the richest men were actually cocoa farmers.
And there was a speech by the first president saying
if you want to be rich, plant cocoa.
But the global price of cocoa continued
to reduce in the early '60s
to the point that in 1965,
some cocoa planters in Ghana judged
that it makes no sense for them to harvest their cocoa.
The first president of Ghana, Kwame Nkrumah,
had seen his country's economic reliance
on a crop with such volatile prices as perilous.
He stopped funding new cocoa farms
and then tried to diversify.
Also tried to create a situation
whereby Ghana would be processing its cocoa.
Unfortunately, that didn't come to fruition
because of the 1966 coup against him.
The volatility of cocoa prices continued
to destabilize the Ghanaian currency.
And after a second coup in the '80s,
the government of Ghana made a pledge to its cocoa farmers
to never let the farmgate -
the price it would pay farmers for their cocoa -
slide below a certain threshold.
So there are two prices.
One is fixed by the government
and one is determined by the markets.
The price of cocoa on the international markets
is essentially affected by supply and demand,
with most of the supply coming from West Africa
and most of the demand coming from
the EU and also North America.
Cocoa is the main export revenue
for Ivory Coast and the third biggest for Ghana.
About 60% of this exported cocoa
ends up in the European Union,
mainly in the form of unprocessed beans.
While we talk about price of cocoa,
the world is changing.
Supply and demand is probably not the market of tomorrow,
because we have another element, which is sustainability.
So we see in Europe, there are even right now
regulation proposals to ban cocoa linked to deforestation.
Cocoa's connection
to deforestation dates back decades,
a direct link to the traditional method
of cultivation used in Ivory Coast and Ghana
called slash and burn.
Farmers just cut down these trees
and you burn the entire land.
Then you plant, harvest, and then move to another forest,
plant, harvest.
So after slash and burn planting,
you tend to harvest quickly
and you tend to use less labor.
The problem with this is
that the amount of forest is finite.
So in Côte d'Ivoire there's almost complete deforestation.
There's no new land for cocoa farmers to move to.
To try and reduce this deforestation,
Ivory Coast and Ghana have been forcing farmers
to replant cocoa on the same land,
even as the soil's nutrients get depleted.
But replanting on the same spot
requires more workers and more input to grow the crop,
shrinking farmers' already tight margins.
You now have to weed.
You now have to buy fertilizers, pesticides.
Second, third replanting,
you need to increase your use of fertilizers.
So if your cost of production keeps going up
and you have no control over the price,
then you have to look for a way of deflating
these extra costs,
which is one of the causes
of increases in child labor and child trafficking.
This is a way of deflating cost of labor.
Cocoa is not an easy crop to grow
and it competes for labor with other activities in the area,
like small scale gold mining, which is often illegal
and known locally in Ghana as galamsey.
Cocoa farmers often run farms as a family,
which is why cocoa poverty is such a big issue
because a farmer would support a family
of six or eight people.
Usually it's small-scale farmers.
So they plant in the farm and then they come home
and dry the beans before packaging them
and selling it to, in Ghana's case,
the Cocoa Board through licensed buyers.
The problem with this is
that most of the benefits,
it's mainly in the manufactured aspect of it,
while most of the costs - for example, ecological costs -
is mainly in the raw material aspect of it.
Most cocoa beans are processed
once they reach their final destination
in the factories of chocolate-making companies.
A study of the chocolate value chain by Oxfam showed
that the grinding and production of chocolate amounts
to more than 25% of the price of a bar.
While in the '70s, when cocoa prices hit record highs,
the farmers' share was nearly 50%,
today it's down to around 6%,
and that's likely to include taxes and fees of middlemen.
Today there's more middlemen.
They are basically squeezing out the profit
for cocoa farmers.
That's one way of explaining it.
Another way would be to say that there's more consolidation
of market power in the chocolate production,
as well as the retail part of the value chain.
One other way of doing it
is to look at the cost of production.
So the cost of producing cocoa now
and the cost of producing cocoa in the 1960s and 1970s,
it's not even close.
A new cocoa is demanded in the market.
Cocoa produced sustainably.
And we need to ensure that anyone
that feels that sustainability is just about deforestation,
it's not the case.
Deforestation or any human rights abuse
seen in the cocoa sector are the consequence of poverty.
And we need to tackle the root cause.
To tackle farmer poverty,
the government of Ivory Coast and Ghana
introduced an initiative in 2019
called a Living Income Differential, or LID,
which requires confectionary companies to pay a premium
of 400 US dollars on each tonne of cocoa they buy.
This money is then incorporated into the farmgate price
to bring a bigger slice of the bar to the farmer.
In the first year of the LID,
the farmgate price in both countries increased nearly 20%.
The World Cocoa Foundation
that brings together companies representing 80%
of the global cocoa market has welcomed the change.
This new tool is really effective
in getting farmers out of poverty.
We think that it is not possible to sustain
the cocoa industry at the detriment of the farmers.
So it's not a nice thing to do, actually,
it is the right thing to do
if we want to sustain the cocoa industry
for the benefits of all the members of the supply chain.
If you're a cocoa farmer,
your income increases by 20%.
You are now happy, and yes, there's more money in cocoa.
So if you are thinking of leaving cocoa,
there's no point leaving now.
The inevitable outcome of this would be
an increase in outputs.
So an increase in outputs would mean
a further reduction in market price.
And in fact, in the last cocoa season,
within Ghana's case, it had a record production actually.
So there was actually oversupply.
And so, that also gave less negotiation room
in terms of fixing pricing with their main buyers.
So this is actually good for cocoa buyers,
for multinationals who want more cocoa.
But I think it will be bad
for Côte d'Ivoire and Ghana in the long run.
In an effort to clean up the supply chain,
governments have also been trying to create mechanisms
to ensure the traceability of beans
to the farm where they were grown.
Ultimately, that would be the first step.
If we can trace the cocoa, that would help make
for a cleaner cocoa industry
and cleaner cocoa supply chain
where all the stakeholders along that supply chain
can be held responsible.
So that will be really the quickest fix,
to put it that way, even though it's taken a while,
but the bigger opportunity really
is to improve industrialization and manufacturing.
That would be a way of breaking the
neo-colonial patterns of trade.
So to break that chain would be
to process the raw materials in Africa before you export.
African economies have been locked
in similar trading patterns with other commodities,
like crude oil or cotton;
exporting raw materials for a low cost
and then importing finished goods.
But a growing taste for chocolate
and a rising middle class provides an opportunity
to keep more of the value of cocoa within Africa.
And so, in Ghana's capital, Accra,
an industry of artisanal chocolate makers has taken root.
It's a work of passion.
I've fallen so much in love with cocoa and chocolate.
When I started, it was very difficult to get information
on cocoa processing and chocolate production.
I had to go to the U.K. to learn how to use the chocolate.
However, in the last six years,
there's a growing small industry.
I think it's important
that now the current administration
is pushing the eating of chocolate and cocoa products.
Bioko Treats is a boutique chocolate brand
that caters to emerging local appetites,
but it hasn't always been a smooth ride.
Access to affordable funding,
you know, it's just about non-existent.
So the company cannot grow maybe as quickly as it should.
To have an impact
on the wider chocolate industry,
change needs to happen on a larger scale.
Hendrik Reimers is the founder
of Ghana-based chocolate maker, Fairafric.
With no bank willing to fund
what was perceived as a risky project,
his company went online to crowdfund a factory.
It was built in less than half a year
and has the capacity to produce 4 million bars
of chocolate a month.
Currently, the advantages of producing chocolate
in West Africa are not all that many,
rather to the contrary, we do face a lot
of infrastructure challenges. Where we are producing here
we had to bring our own internet,
we have to supply our own water,
own electricity most of the time,
we depend on our own wastewater management.
So technically speaking,
it will be much easier to produce chocolate in Europe
where all that infrastructure is already set up.
The choice of producing in rural Ghana
is one to make a statement and to show the world
that we can make world class chocolate here
where the cocoa grows as well.
Fairafric is the only large-scale factory
in Ghana producing chocolate for export,
but the company's ambition is to grow the domestic industry
so it can compete in the international market.
We set up a chocolaterie school
where we train local talents
in the art of praline making.
We exported the first shipment of pralines,
which the students have made after a year of training.
And one of the trainers said
this is the same quality that we have made in Belgium.
So that was one of the proudest moments I've ever seen,
you know, people seeing that they're getting
that kind of comparison, having made
like the same quality that is produced
in Switzerland and in Belgium here in rural Ghana.
I think that's a significant game-changer.
The company aims to source everything
within the African continent.
And the reasonably long shelf-life of commercial chocolate
has allowed Fairafric to overcome supply chain issues.
But despite the appeal of this model,
none of the multinational companies have followed suit.
The real reason that we see very,
very little infrastructure
in terms of adding value to resources
are the tariff kind of policies of Europe
that have always said you can bring in your commodities
without any duties paid,
but if you've made something out of it -
be it semi-finished products,
like cocoa mass or cocoa butter,
or even chocolate finished products -
then duties have applied.
So you've immediately been at a cost disadvantage
and it forced all the value addition
to commodities towards or into Europe.
And only since around like 20 years,
that has been changed
and the playing field was leveled.
If you consider this very issue of local processing,
it is reflective of the set of regulation
that has been put in place.
Depending on the way the government
is adjusting the regulation,
maybe tomorrow's picture would be different.
Government, for example, is pushing
to having national investors in it,
but is considering to reach out first
to the private sector
and try to reach the win-win agreement.
I think politically in the spirit
of African self-sufficiency, Africa rising,
the idea is one that anyone
can really easily embrace,
but the practice of it is one that's difficult to implement.
The more components there are in your products,
the more standards you have to meet.
The fact that you can just export raw beans
and get your dollars,
the quickness and ease with which you can do that,
is really hard to overlook.
Because of the export revenue component,
it means that there's always going to be a trade-off.
It's not just a matter of transforming the beans,
but getting it to a point where you can export and earn.
And alongside economic incentives
and regulations, the role of consumers
in shifting the whole industry
shouldn't be underestimated, as history shows.
Consumers, as far back as a hundred years,
have forced Cadbury to source their cocoa from Ghana
where slavery was already abolished.
The consumer is not used to the idea
of 'Made in Africa' yet, or 'Made in 'Ghana'.
If you tell someone 'Made in Germany',
that really rings a bell, that resonates
and it has a certain message.
And although it kind of looks simple to say,
look, we are adding a lot of value,
we create meaningful, well-paid jobs
producing chocolate here,
you only have that split second
when a consumer decides to buy chocolate.
It's been a major challenge,
but we've done a lot in terms of explaining that.
Almost everyone loves chocolate,
but it's important to ensure that it's cleaner,
less heavy on the environment,
but also fairer on the people that actually toil the land.