The “equatorial” gold – cocoa, cocoa trade and its players

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Cocoa, also known as “brown” or “equatorial” gold, is one of the most popular consumer goods in the Global North. As the basis for chocolate sweets, each person in Germany consumes about 4.5 kilograms of pure cocoa powder per year. Cocoa is usually grown in rainforest areas. The cocoa beans are mostly harvested by small farmers. Fair trade is still not very common in the cultivation of cocoa. This is where fairafric comes in and pays cocoa producers not only fair prices, but also leaves the added value in the country of origin by producing chocolate from tree to bar with certified ingredients in Ghana.

Seven million tons of chocolate are consumed worldwide every year. The most important ingredient for our chocolate, the cocoa bean, thrives best in West Africa. The main producing countries are the Ivory Coast and Ghana. The market price for the export of unprocessed cocoa beans is around 2,000 US dollars per ton. However, the added value takes place in the chocolate-producing countries such as the USA, Germany, Switzerland and Belgium. By producing chocolate locally in Ghana, fairafric manages to raise the income to over 10,000 US dollars – four times as much – per ton. 

How is cocoa powder produced?

fairafric purchases its cocoa powder from its partner Chocomac Ghana Limited, the only organic certified Cocoa Initiative in Ghana. This initiative consists of about 1400 farmers from the Volta and Suhum region, where our new solar powered chocolate factory was built. You can read more about our factory building here: https://fairafric.com/factory-update. Our cocoa farmers receive an organic premium of 600 US dollars per ton of cocoa and are regularly trained in organic cocoa cultivation, sustainable yield increase and the correct fermentation of the beans. In addition, their income can be diversified by planting coconut trees. By tracing the beans back to the farms, fairafric can guarantee the highest possible transparency. Since 2018 our cocoa farmers have been shareholders of fairafric GmbH.

Cocoa powder is obtained from the cocoa beans of the ripe cocoa fruit. After harvesting, the cocoa beans are covered with banana leaves, fermented and then dried. Raw cocoa is immediately processed into cocoa powder, whereas the beans of “normal” cocoa are roasted before further processing. Raw cocoa is therefore understood to be unroasted cocoa and not – as many people think – cocoa powder without sugar. Raw cocoa powder is somewhat maltier, less bitter in taste and not alkalized. The advantage of raw cocoa is also that antioxidants and valuable trace elements are not destroyed during roasting. The majority of the 100% cocoa powder offered in the trade consists of roasted cocoa beans.

Fair cocoa trade and its obstacles

In the international trade with conventional cocoa powder, US groups such as Cargill and ADM as well as the Swiss group Callebaut dominate the market. They act as intermediaries for cocoa producers and chocolate production companies. The global cocoa market is one of the most unstable in the world. The price is determined by the major commodity exchanges in New York and London depending on world market demand.

The certified fair trade pays the importer a minimum price of 2400 US dollars per ton. In addition to this minimum purchase price, fair trade producers receive a fixed fair trade premium of 240 US dollars per ton of cocoa beans, which must be used for defined projects. Ingredients for Fairtrade chocolate must consist of at least 51 percent Fairtrade raw materials. The remaining raw materials should at least be compatible with fair trade standards – that means for example a sustainable production system and the renunciation of child labor. However, these criteria are bold for consumers and leave open questions as to their feasibility.

For this reason, in addition to the Fairtrade seal, many other certifications have been launched by fair trade organizations such as GEPA, Weltpartner or El Puente, which offer even “fairer” conditions. You can find more Information about fair trade lables here: https://fairafric.com/fairtrade.

Due to increasing public awareness, politicians are also striving for supposed improvements in the global cocoa trade. In its free trade agreement with various African countries, the European Union waives import duties on unprocessed cocoa beans. In return for market access to the EU, the Economic Partnerships (EPAs) already concluded and planned require West African countries to open their local markets to EU imports. Further information on EU imports to Ghana can be found here: https://fairafric.com/de/eu-importe-nach-ghana. For cocoa products, on the other hand, customs duties of around eight percent are levied. As a result, few companies produce chocolate in the countries of origin, but in Europe. This means that no processing industry with qualified jobs can develop in the cocoa’s countries of origin.

Apart from the lack of jobs in local chocolate production, the cultivation of cocoa is often not a profitable business. Many families involved in cocoa production live below the poverty line. The per capita income of conventional Ghanaian cocoa producers is a converted 0.76 Euro per day. In West Africa, where about two thirds of the global cocoa production takes place, small farmers often form cooperatives in order to survive. Since the income is usually not sufficient for urgent investments such as new cocoa trees, no optimal yields can be achieved and unpaid or underpaid child labor takes place. This is a vicious circle that Fair Trade can counteract.

In Ghana and the Ivory Coast alone, where cocoa powder for the chocolate market in Europe is mainly produced, around two million children work for the much-loved cocoa under often unworthy cultivation and working conditions. The cocoa harvest is characterized by physical strain and the handling of dangerous tools such as machetes and chemicals. Even though child labor is prohibited in West Africa, it is still common practice. More about child trafficking for cocoa production: Documentary “Chocolate – The bitter business” https://www.zdf.de/dokumentation/zdfinfo-doku/-schokolade-das-bittere-geschaeft-100.html.

Players in cocoa production and trade at fairafric

The light-brown organic cocoa powder for our fairafric chocolate is produced by cocoa farmers inside Yayra Glover Ltd – the only organic certified initiative in Ghana – and carries the COI (Certificate of Inspection). The COI allows the export of organic products to Europe and is issued by the Certifying Party Ghana and ECOCERT – an organization for organic certification. Through our partner Overall Logistics the cocoa powder arrives at our solar-powered chocolate factory. Our organic and sustainably produced cocoa powder has a fat content of ten to twelve percent and is available in deposit buckets in the sizes 150 g, 1 kg, 3 kg, 5 kg and 25 kg. Together with our partners, it is our concern to ensure that farmers can manage their farms sustainably. At the same time, we are constantly working to optimize our business processes in the field of sustainability – for example, our chocolate has been produced in a climate-neutral way since the end of 2018. However, organic cocoa farming does not mean harvesting less. Following internal training of the cocoa farmers in sustainable organic cocoa farming, yields are increasing significantly. We can trace our cocoa beans back to the farm. The farmers are always striving to achieve outstanding quality, and through targeted feedback and exchange we can support them and learn from each other. Our products are proven to contain no genetically modified ingredients. Cocoa beans pass through many hands of intermediaries before they arrive at the manufacturer’s factory. In many cases, the only thing that can be said with certainty is which country the beans came from. Working only with the organically produced cocoa beans of our partners means that we know at any time who cultivated and harvested the beans. This is an existential part of the certification. fairafric works with 1400 farmers who we know receive the best possible training in sustainable agriculture. The quality of the cocoa we test after each harvest is outstanding.

Conclusion

The production of the majority of popular chocolate products on the market is in most cases anything but fair. Prices are determined on the big stock exchanges and small producers work under unworthy conditions for a pittance. Fair trade counteracts this by paying fixed prices per ton and financing social projects through premiums. However, the differences between the individual fair-trade-labels are sometimes enormous and their diversity very complex. Moreover, fair trade does not necessarily mean sustainable production. Customers who really want to buy fair chocolate are therefore advised to inform themselves and ideally combine fair trade and organic labels. Our fairafric chocolate is organically certified and sets higher standards than the usual seals in fair trade. For this reason, we do not have an extra fair trade certification. In addition, fairafric not only trades fairly, but also produces in Ghana to create real added value for the local population through qualified jobs.