Towards a sustainable cocoa chain: power and possibilities within the cocoa and chocolate sector

The cocoa tree is an important source of income for millions of farming families in West Africa, the largest supplier of cocoa. Cocoa is traded through a local and international supply chain, and is marketed as a variety of products at different stages in the chain. This report contributes in various ways to the debate on a sustainable cocoa economy.

The cocoa supply chain includes cocoa production and harvest, transporting the beans to the local grinder and exportation in the ports. Various external factors determine the actual price that farmers receive per ton of cocoa beans. The dominant factor is the daily international cocoa market price. Speculative activities from non-commercial traders are also likely to have an effect on the cocoa market price.

The paper indicates that an increase in the international market price does contribute to a higher income for the cocoa farmer, but it certainly does not guarantee the cocoa farmer a sustainable income. The low income of the farmer from cocoa bean sales is in part due to the activities of cocoa grinders and international and local intermediary traders. The paper states that a farmer could earn a decent income through higher "farm gate" prices and through raising productivity by improving production and harvest circumstances. This, however, requires financial means.

The paper notes that nine companies dominate the cocoa and chocolate supply chain. The fact that a few players dominate the market makes the misuse of purchasing and selling power possible. At the same time, the concentration of power in the global cocoa and chocolate market could have its advantages. These companies could work to bring about a sustainable cocoa economy.

The European Union (EU) has committed to the preservation and protection of biodiversity. Therefore, it is clear that it has a central role in creating and supporting the establishment of a sustainable cocoa economy. It could do so by providing financial support in three areas:

• institutional reforms to make the local cocoa sector more streamlined
• supporting cocoa farmers to improve the quality of their production
• establishing cooperative agreements between farmers

• are able to fix cocoa prices annually for all those involved in the domestic cocoa sector
• are able to regulate the licensing procedures for traders in an objective manner
• reinvest the income from export taxes in the cocoa chain to meet the needs of the small-scale cocoa farmers
• keep the internal cocoa chain as efficient as possible