Part 1: The value of cocoa

Without cocoa, there can be no chocolate. And without the family farmers who grow these crops, there would be no cocoa. Millions of these family farmers live in poverty. Pricing is only part of the problem. Small-scale farming practices also play a significant role.

The most important ingredient in chocolate is cocoa. The cocoa plant originated in Latin America in what is now Ecuador, where it has been revered for 5,000 years. From the Amazon region, cocoa spread throughout South and Central America.

In the 16th century, the Spaniards travelled to Mexico and brought cocoa back to Europe. The people soon realised that they had discovered something extraordinary. The cocoa tree was introduced to colonial territories in the tropical belt, where it was cultivated by slaves, particularly in Brazil.

By the middle of the twentieth century, with the abolition of slavery in Brazil, the invention of milk chocolate in Europe and the proximity of Africa, cocoa cultivation shifted to West Africa.

Today, 70 per cent of the world's cocoa is produced in Ghana and Côte d'Ivoire, grown by two to three million family farmers. But because the price of cocoa is too low and outside of their control given their growing conditions, many of these families live in abject poverty.

Who sets the price?

Cocoa has been traded on the stock market since 1925 and the market determines the price. Over the course of its history on the market, the global market price of cocoa has fluctuated considerably. In 1973, for example, it was at 661 US dollars per tonne. Just four years later, the price was 5,010 dollars. By 2000, it was back at around 700 US dollars. The current price of cocoa ranges from 1,200 to 2,000 dollars per tonne.

But producing countries also set their own prices for producers. For example, in October 2021, Côte d'Ivoire set the purchase price at the family farmer level for the 2021/2022 season at 825 CFA per kilo – the equivalent of 1.33 Swiss francs. This was 17.5 per cent lower than the previous year.

To live off this price, cocoa farmers need vast tracts of land and a good harvest. The latter can be achieved through efficient cultivation methods and expertise - but most families lack this expertise. They make their living from farming alone, but they learned how to farm from their parents, who in turn learned it from theirs. None of them have been trained in agriculture. And only a handful are familiar with efficient cultivation methods based on scientific, evidence-based findings.

Togo is following in its neighbours' footsteps

The family farmers we work with in Togo face the same challenges as those faced by families in Ghana and Côte d'Ivoire. After all, the price of cocoa in Togo is typically based on that of its two neighbouring countries. Togo is a minor player in the cocoa market.

The families who supply us with cocoa grow their crops on an average of 1.5 hectares of land. Their yield is 300 to 400 kilos per hectare, and rarely more. That's not enough to earn a living wage if they sell their cocoa at market prices.
gebana cannot do anything to change the market price. The market is too big and gebana is too small. But we can at least pay a better price to the family farmers who work with us. And we have already started to do just that.

In part two of our series on cocoa and chocolate, you can read about what we're doing increase the price for these families and the obstacles we've had to overcome in the process.

Sources

Heartbreak as Ivory Coast sets lower cocoa purchase price – Africa News https://www.africanews.com/2021/10/02/heartbreak-as-ivory-coast-sets-lower-cocoa-purchase-price/ (accessed on 8 February 2022)

Neue Serie: Rohstoffe einfach erklärt - heute: Kakao-Future – Der Aktionär (New series: Commodities explained in simple terms – today: Cocoa futures – the shareholder) https://www.deraktionaer.de/artikel/kolumnen/neue-serie-rohstoffe-einfach-erklaert-heute-kakao-future-20227215.html (accessed on 8 February 2022)

Cocoa Barometer 2020 https://www.publiceye.ch/fileadmin/doc/Schokolade/2020_VOICE_Cocoa_Barometer.pdf (accessed on 15 September 2021)

Produced in the south – consumed in the north https://www.kakaoplattform.ch/about-cocoa/cocoa-facts-and-figures (accessed on 8 February 2022)