Thursday, 12 November 2015

Chocolethics - the unfair global market in cocoa

Consider this when next you pick up a bar of Cadbury's Fruit and Nut or a Mars bar, conveniently sold cheap at your supermarket checkout, the amount it costs you is the amount the cocoa picker gets for a whole day's work.  

In 2014 total global  sales of chocolate confectionery reached a staggering $100 billion  - an increase of 20 billion from 2012 ( Euromonitor International).  Very little of this money reaches the cocoa farmers and pickers who receive around $1.25 dollars a day for their efforts.  They work a whole day for the price of a chocolate bar in the UK or USA. 

While the profits of multinational chocolate companies have increased since the 1980s, the world market price for cocoa beans has declined by half with the cocoa producers receiving less and less of the massive turnover.  Nevertheless the price of cocoa can fluctuate in an insecure market affected by weather and harvests. With increasing demand for chocolate globally most recently chocolate producers have faced increasing commodity prices  as demand outstrips supply, leading to different marketing strategies such as reducing the size of a bar or the number of chocolates in a box. At the other end, the cocoa producers are at the mercy of big market intermediaries and have to accept the price offered, leading to economic insecurity and impoverishment for millions of cocoa farmers.

But much of the problem lies with the producers who have failed to invest in more efficient production or give support to struggling farmers. Disregard for the livelihoods of more than five million small-scale family farmers who grow 90% of the world's cocoa means that the industry may simply be unable to provide sufficient supply to meet the demand by 2020. Prices of chocolate is rising but these famers are not receiving any increased share.

Growers  will receive just 3.5% to 6.4% of the final value of a chocolate bar -  a fall compared with 16% in the late 1980s. The manufacturers' share has increased from 56% to 70% and the retailers' from 12% to 17% over the same period.  Something is wrong in the way the markets work. They certainly don't lead to an equitable distribution of revenue and investment.  Chocolate production has increased meeting ever rising demand, a demand fuelled by massive promotion of then end products, while little of this has filtered down to the producers.  It is a distorted market with big intermediaries dictating terms to the farmers.

Meanwhile massive amounts are spent on promoting chocolate.  Last year Cadbury spent £7.5 million in a one week promoting its new Dairy Milk Ritz and Lu products in the UK.  Mondelez International is little known in Britain, but is now the multinational corporation behind Cadbury. Mondel─ôz International has annual revenue of approximately $36 billion and operattes in more than 80 countries.  

Chocolate production has yet to prove good for the struggling farmers, but is it good for the consumer?  Some evidence suggests it is. 

Diet is a key lifestyle factor involved in the genesis, prevention, and control of cardiometabolic disorders. Cocoa products containing flavonol have been shown to have an encouraging potential to help prevent cardiometabolic disorders, and several recent studies have suggested that chocolate consumption has a positive influence on human health, with antioxidant, antihypertensive, anti-inflammatory, anti-atherogenic, and anti-thrombotic effects as well as influence on insulin sensitivity, vascular endothelial function, and activation of nitric oxide all of which are involved in cardiovascular function and disorders.  Higher levels of chocolate consumption were associated with a reduction of about a third in the risk of cardiometabolic disorders in a meta-analysis from several studies.  Several other studies have also shown a similar link.  But what these studies do not do is promote excess chocolate consumption, particularly where it is mixed with the possible harmful effects of excess sugar intake.

Whilst chocolate consumption might have healthy benefits, it is a bitter sweet in relation to the environment.  With lack of investment and support for good farming increased cocoa production is a threat to the environment with soil erosion, pesticides, deforestation and a threat to wildlife. It comes with a heavy cost in social terms and exploitation of farmers. 

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