Averting a Cocoa Crisis
Is a global chocolate shortage on the horizon? An F&M graduate works with West African farmers as questions linger about the long-term cocoa supply.
The hot equatorial sun beats down on a grove of cocoa trees in Côte d'Ivoire—or Ivory Coast—a West African nation on the Gulf of Guinea. At the base of one of the trees, a couple of local farmers give visitors a tutorial on how to extract the almond-sized cocoa beans from the larger pods. One of the guests, Kip Walk ’84, gets into a rhythm as he slices and scoops the pods by the dozen and places the pulp-coated beans in a large bowl.
Walk is a sustainability executive with Blommer Chocolate Company, the largest cocoa processor and ingredient chocolate supplier in North America. He’s visiting Ivory Coast on a business trip to introduce agricultural practices and better farm management to cocoa farmers. The owner of this farm, a woman named Madame Sopi, invited him to lunch on this humid morning—with a catch.
“Of course, if you’re going to stay for lunch, you’re going to have to earn it,” Madame Sopi said.
Walk did as he was told, and went out to the field to start working with a smile on his face.
“Her confidence and leadership ability made me smile,” Walk says about Madame Sopi. “Her husband had left her so she was working a farm that she inherited from her father. It was an absolutely beautiful farm. She had taken the Blommer training for good agricultural practices and best farm management and really put it to use. She’s been successful in getting her farm certified under the Rainforest Alliance Program. She was running the farm like a business, which is one of our goals: to demonstrate that these farms can be a viable business option to these farmers long-term.”
Small farms like Madame Sopi’s are the backbone of the global cocoa industry because they produce the foundation for chocolate products. Approximately two-thirds of the world’s cocoa comes from West Africa, with Ivory Coast alone producing a third. The average farm produces roughly one metric ton of cocoa beans each year, which equates to only 15 or 16 burlap bags weighing around 150 pounds each. There are “millions of family-run farms contributing to this global supply chain of chocolate,” Walk says.
The supply chain has made headlines around the world in recent months as industry experts wonder whether a cocoa shortage is in the offing. Global demand for cocoa currently exceeds supply as residents in developing nations buy more chocolate and some cocoa farmers switch to different crops. Walk’s job is to encourage farmers to stick with cocoa and use sustainable practices.
“We’re seeing land developed for cocoa lost to other commodities such as rubber, palm and other food crops,” he says. “One of the long-term views is that if this were to continue and cocoa cannot demonstrate itself as a viable crop for smallholder farms, then we really are at a long-term supply risk. That’s one of the basic points that the industry is focusing on: surety of supply for the next several decades.”
Revitalization: The Key to Sustainability
Land expansion is no longer a viable solution for increasing cocoa production because little land is available and suitable for cocoa, so the industry is concentrating on farm revitalization. Walk identifies three primary ways to achieve this goal: Good Agricultural Practices (GAP); promoting stronger planting material via tree grafting or creating seedling nurseries; and Aspect of Inputs—engaging farmers to use fertilizers as well as proper management of pesticides and herbicides.
GAT includes proper tree pruning, disease and pest management of the trees, and harvesting at the correct time. Even something as mundane as pulling or preventing weeds allows the tree to utilize its energy for the production of fruit—the cocoa pod.
Grafting in West Africa and other countries is a relatively new technology, especially on family farms. Farmers select stronger material and graft it onto older tree stock. “The genetics of that graft become the primary and the new material brings additional production or disease resistance—whatever you’re selecting—and that farm can be revitalized in the space of about 18 months,” says Walk. “It’s extremely successful in countries like Indonesia and Ecuador.”
If all three methods—GAP, grafting/seedling nurseries and Aspect of Inputs—are used together, some farms could double or even triple their capacity over a period of years, according to Walk. “If that could be done, obviously the farmer sees an improvement in income by bringing more cocoa to the marketplace. The hope is that cocoa farming is then seen as a viable business as opposed to just a subsistence crop. The yield would very comfortably be able to compete against some of those other crops that are right now vying for the same land.”
Visiting the farms often poses logistical challenges for Walk and his colleagues in the cocoa industry. Typically, the family farms are approximately four to eight acres in size, and very dispersed. “That’s why most [sustainability] programs try to work with co-operatives, because you have a group of farmers already aggregated and working within a single structure,” Walk says. “In a country like the Ivory Coast where roads are challenging, it may take you three hours to go 10 miles down the road. Generally, the farm population is extremely welcoming. They're very pleased to see you’re there and willing to support them.”
A Long-Term Shortage?
A massive crane swings burlap bags of cocoa beans off a ship from the Ivory Coast on a blustery March day along the banks of the Delaware River in Camden, N.J. The ship has just completed a 14-day journey across the Atlantic loaded with 10,000 tons of cocoa beans. The creamy, sweet scent of cocoa fills the air as flatbed trucks line up to carry the cargo to a nearby warehouse.
Eighty percent of the American cocoa supply arrives through the Ports of Philadelphia and Camden, Walk says. Inside the warehouse, 65 workers and 26 forklifts move 200 tons of cocoa beans an hour into neat rows piled 20 feet high. “It’s organized chaos,” the warehouse manager says. Surrounded by thousands of bags of cocoa beans, Walk talks about a possible cocoa shortage in the future.
“Obviously there’s still chocolate on your shelves at the grocery stores,” he says. “There’s no real risk of those going away in the near-term. The real focus for the industry is at the farm level to avoid a long-term shortage.
“In 2000, the supply and demand was still in balance, but you could already see indications of an aging farm population, significant disease and pest pressure on the farms. It started to become a general view in the cocoa industry that the crop was at risk of plateauing from a production standpoint and potentially could even start to diminish. At Blommer, we started to look at ways to build the skill levels of the farmers to improve the yield per acre and produce additional income for the farmers.”
Walk didn’t set out to work in the chocolate world when he graduated with a degree in American studies at F&M. A high school social studies teacher: that was the plan. But after spending college breaks and summer vacations working in New York City at several commodity houses that traded cocoa, it happened—a full-time job in the land of chocolate. Before graduating from F&M, Walk accepted an offer to work as a broker at the Cocoa Futures Exchange in the World Trade Center.
In 1988, Walk left the frenetic trading floor of the Futures Exchange to work for Blommer, headquartered in Chicago. Twenty-five years later, he is still with the family-owned-and-operated company, now based outside Philadelphia, having worked his way up through the sales department, quality assurance, logistics, and procurement in the commodities division. In 2002, he began participating in the newly formed, industry-led international sustainability group World Cocoa Foundation, based in Washington, D.C., and took an active role in developing models that address the forecasted challenges in the supply chain. He chaired the organization from 2008 to 2011.
Meeting Demand in New Markets
The family cocoa farms in West Africa are a world away from the headquarters of chocolate companies of the United States. This is where beans are handpicked from cocoa pods, which are manually cut from the cocoa trees with a machete. Because children sometimes work on the family farms, the cocoa industry has had to address the issue of child labor
“The biggest issue is children doing work on their family farms that is not age-appropriate, such as 8-year-olds using machetes, 10-year-olds spraying pesticides, kids carrying heavy loads, and in some instances not being allowed to attend school,” Walk says. “Blommer, the industry at large and the certification groups are all actively working on mitigating and eliminating these issues through education, monitoring and remediation.”
At the other end of the supply chain are the two biggest consumers of chocolate: the European and United States markets. The growth potential and biggest targets for the chocolate industry are in Asia and India, according to Walk. “If China and India develop a real taste for chocolate—in China, chocolate is not a traditional treat but is growing in popularity—the demand for chocolate or cocoa products is going to continue to see positive growth over the next couple of decades.”
Sustainable farming will play a key role in meeting demand in these new markets. Large international groups, including The Rainforest Alliance, Fair Trade USA, and the World Cocoa Federation, are illuminating the importance of cocoa sustainability. Individual companies, such as Starbucks, General Mills, Costco and Blommer, also have their own sustainability initiatives.
Sustainable Origins is the Blommer initiative that encompasses all of the company’s work in sustainability. Blommer is involved in several private sustainability programs in Ivory Coast, Ecuador and Indonesia. More than 60,000 farmers are participating and have seen better crop yields and premium pricing. The company plans to invest an incremental $45 million in cocoa sustainability efforts by 2020 as a part of its Sustainable Origins program.
“We’re driven by an effort to meet rising consumer demand and to help our customers achieve their sustainability goals,” Walk says. “Blommer pledges to reach an additional 50,000 farmers worldwide, building on existing farmer programs to expand our current farmer base to over 100,000.”
Luckily for chocolate lovers, sustainable practices are increasing thanks to Walk and his colleagues. Still, only 15 percent of the world’s cocoa falls under one of the sustainability banners, Walk says. “There are certainly areas or programs where you can point to benefits of the implementation of those programs, but scaling it up is still going to be a challenge for the industry. There’s still quite a bit of work to be done.”
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