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If cocoa prices have fallen, why isn’t your chocolate bar cheaper?

Dietmar Stoian says industry could reinvest savings in sustainable agroforestry systems with smallholders
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Forests News caught up with World Agroforestry (ICRAF) scientist Dietmar Stoian at 2019’s 4th World Agroforestry Congress in Montpellier to talk labels, value chains, and why the chocolate industry can do more to scale up sustainable agroforestry systems for cocoa farmers. Here’s what he had to say:

 

It’s 2019, the world feels like it’s changing at a rapid pace, so why agroforestry?

We are in a decade where we are working towards the Sustainable Development Goals, of which there are 17, and agroforestry works for all of them. So there is a huge opportunity to address social issues, like poverty and hunger, but also to address the sustainable management of land where we have major issues in certain continents and countries. Agroforestry is a good solution to actually rehabilitate and restore land, generate income for the people, and contribute to the Sustainable Development Goals.

 

Your work is in value chains. What do we need to do to make value chains more sustainable?

A value chain consists of all the different actors, starting from production — a farmer producing certain agricultural crops — processing and a long chain through to wholesale/retail to the consumer. All of the different value actors have an important role to play.

If we start with the very consumer at the end of the value chain, there is one Sustainable Development Goal which is exactly about responsible production and consumption. If the world all together moves toward more responsible consumption, that would then provide a very strong signal to all of the other value-chain actors that are producing the raw materials or certain kinds of food products or other types of product. That would need to be linked to some kind of incentive, such as monetary, price premiums that are paid for certain products that have a particularly good environmental footprint or social-responsibility element. That can link to certification systems that seek to reward social and environmental performance.

 

We’re seeing more and more consumers trying to be responsible. There are so many labels and now companies are even starting their own labels. Are we confused, are we helping by buying products that are labelled, and which label should we look out for?

That’s a very good question, I think it is really confusing. Worldwide there are hundreds, thousands of different labels and we cannot expect that consumers would be fully aware what each and every label stands for, how credible it is, the claims that they make in terms of their environmental performance, the social standards they adhere to. It is quite confusing. There is even a further push towards even more, newer labels. We should always ask the question first: is there market demand for that? Is there also a way we can communicate to the consumers or to other actors in the value chain in order to be aware that this label really stands for something different than what is already in the marketplace. We have to watch out that we don’t overwhelm the consumers.

 

Rainforest Alliance has recently announced they are going to launch a landscape label. Is this just another label on the market or are you seeing a bigger value in that?

It is a great idea to think about how you can get to scale. A landscape-level certification is interesting because of course you could cover tens of thousands of hectares and producers. There is a real value from that angle.

What I rather expect would not be too easy is if a certain landscape is certified and then something goes wrong because certain people in the landscape don’t adhere to a social or environmental standard. What does it mean for the certificate as a whole? Does the whole landscape then lose the certificate or do you have to expel those people from that kind of landscape? There are a lot of practical issues that could be difficult to solve.

At lower levels, there is something similar in forestry where there is a so-called group certification scheme, in which several groups of smallholders and enterprises can have one joint certificate, which brings down the cost and the level of effort. And at least it is possible, if one of the members doesn’t comply with the standard, to kick them out yet the remaining members still have the group certificate.

At the landscape level, I am not clear how you could use that mechanism. Another part is something like the denomination of a region, wherein certain landscapes have a brand name. Here in France, for instance, we have quite a few of them. It doesn’t really come as a certificate, it is just tagged on the wine or the olives or any other product that comes from here. If you want to use landscape certification as a marketing tool then you could use already existing systems, like the denomination of a region. If it is more to introduce environmental or social standards at the landscape level then we have to see what to do with those people who are not able, or who are not willing, to comply with those standards.

 

I think that’s a really good point. How do smallholders even sign up to those labels? Is it practical?

From the smallholder perspective there are many different aspects they have to think about. First of all, what does the label mean for what they are allowed to do and not allowed to do? In the case of organic certification, they cannot use synthetic fertilisers, they cannot use agrochemicals. That might bring down their productivity unless they have very good organic management procedures in place. So there is a capacity-building element linked to that

Another element is the cost for an individual smallholder. Most of the certification costs are prohibitive so you have to think about a level of aggregation, say, where smallholders’ enterprises — like cooperatives and farmers’ associations — would have a certain label that extends to their members. Then the costs can be shared by maybe hundreds or even thousands of smallholders. What is equally important when you have this level of aggregation, like a smallholders’ enterprise, is that it also helps to market the products. Each and every smallholder marketing on their own doesn’t give them a strong position in the value chain. But if they bulk together at the level of a cooperative or a farmers’ association then they have a much stronger position in the value chain that can be very well linked to certification.

 

Is that an opportunity for NGOs and other civil society organisations to play a role in grouping farmers together?

Definitely there is. But it takes very long. We did a study a few years ago for an international foundation — a global review of rural community enterprises in the agricultural sector, forestry, tourism — and we found that on average it took 40 years or more to become mature and relatively independent from NGO support. It doesn’t mean it couldn’t be shorter; I’m pretty sure if there is a clear strategy it could probably take ten years or so. But that is still a long time for a rural community enterprise to move to a level of being self-sufficient.

Yet we are living in a time where impact is expected in a very short term: two or three years. To show in that time with unorganised smallholders that after two or three years something is dramatically different is not easy. This is where organisations, smallholder-run enterprises are needed. But very often NGOs and projects go to where these organisations already exist, because they don’t want to start from scratch, so they can show in a short period of time the kind of impact that their funders are expecting. One problem with this is that it leaves outside all those who are not organised.

On a worldwide scale, amongst smallholders we estimate that there are up to 80–90 percent who are not organised. We don’t want to leave them behind. We have to focus specifically on them and funders need to be realistic that there is a much longer investment period needed in terms of constant support for these groups to become mature.

 

Some might argue that money is the root of all our problems, and the answer. Is that what we’re seeing here?

At this Congress, there is a very clear consensus that whatever we do needs an integrated approach. Integrated means bringing together biophysical, environmental, social, and economic elements. Everyone pleads for cross-sectoral collaboration: governments working with NGOs, NGOs working with the private sector, the private sector working with government.

We are also very clear about the magnitude of the challenge and the solutions that we have to offer. Everyone is aware that whatever solution that they are working on is only a part of a bigger picture and set of solutions, over very long periods of time, in an institutional framework that includes all the investors.

 

At the moment, the problems we face feel so large, with climate change and, more recently, the biodiversity threat about which we’re learning more and more how serious it is. Now the public are also starting to learn more about soil health and the impact on food security. What role do you see for big business in helping us combat these challenges

Big business definitely has a huge role to play. Just the cocoa and chocolate manufacturers alone are worth more than 100 billion USD, they [source cocoa] from between 5 and 6 million households, so there are about 25–30 million people who are directly dependent on cocoa production. So there’s already a linkage, in this sense. This means we have to find a way where the revenues that are generated by big business are at least partly reinvested. Not only through paying the right prices for the cocoa at the farm-gate but also reinvested in the production system. That gets us back to agroforestry.

A cocoa-based agroforestry system is in the interest of the smallholder because there might be shade trees that produce certain fruit, maybe fuelwood, maybe timber, which also protect the cocoa harvest, all of which automatically means the cocoa farmer can sell different types of products from the same production system. There’s also definitely more resilience against climate change and climate reliability [in an agroforestry system], so it is also in the interest of the chocolate industry because, in addition to the cocoa that they are buying from those systems, [agroforestry] helps to stabilise the overall production and livelihood system of the cocoa farmers.

We do see initiatives [in this direction]. There’s an overall commitment of the chocolate industry to make the cocoa sector sustainable by 2020, which is just around the corner. There are different definitions of sustainability that cover environmental, social and economic factors. Sometimes the view of big business might be that is all about sustainable sourcing, which means ensuring a certain level of volume and quality over a longer period of time. But that’s probably a narrow definition. Others are aware that you have to go beyond that to ensure that livelihood systems are more sustainable over time.

What we would like to see more of, which is emerging but still needs to gain more momentum, are investments in rejuvenation of cocoa-based agroforestry systems; a real investment in the productivity of the industry that goes beyond the cocoa. We need more integrated agroforestry systems. We are moving in the right direction but do we move at the right speed? I don’t think so, we have to accelerate. The world market price for cocoa has come down in the last two years or so, which essentially is a savings on the part of big business, because a lower cocoa price is not passed on easily to the consumer. The chocolate bar you buy in the supermarket is not cheaper, so that’s a saving for the business. I would like to see part of that money — of course they also need it for other parts of the business, such as reinvesting in processing plants — reinvested at the farm level, in these more long-term, more sustainable, cocoa agroforestry systems.

 

This is Part II of a II-part cocoa interview series. Read part I, an interview with Peter Akon Minang: ‘Bitter or sweet trade for Africa’s cocoa farmers?’ here.

 

Some of the answers have been slightly altered for better readability, with an effort not to change the meaning of the text.

 

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