Easter is this week, with its usual egg-hunting and chocolate-bunny traditions in the US, but also with some bitter new realities.
A fresh outbreak of avian flu in the US has wiped out tens of millions of hens in the past few weeks, causing a shortfall in the eggs typically sold for dying and decorating — and reminding us once again about the vulnerability of our food supply.
And while there is no shortage of chocolate confections on store shelves, consumers will be paying more, and these higher prices are a harbinger of growing environmental and social burdens imperiling the industry.
Illustration: Tania Chou
Let us not sugarcoat this: Major candy makers such as Hershey Co, Mars Inc and Nestle SA need to overhaul their production practices if they want to continue feeding the world’s chocolate habit. One good example for these legacy brands to follow is the Dutch start-up Tony’s Chocolonely, one of the fastest-growing chocolate brands in the US and Europe. This small chocolatier — with US$110 million in revenue last year compared with Hershey’s US$8.9 billion — is pioneering ethical business practices and climate-smart farming methods that could save an increasingly unsustainable industry.
At the heart of the challenge is production of chocolate’s key ingredient, cacao. Nearly 70 percent of the world’s cacao beans are grown in west Africa — mostly in Ghana and Ivory Coast — where increasingly hot and dry conditions are hurting farm yields and pushing up costs. Severe deforestation is on the rise as farmers seek more arable land.
Meanwhile, demand for cacao is surging. A recent National Confectioners Association report shows that consumers devoured nearly US$37 billion in candy worldwide last year — a more than 10 percent increase since 2020 thanks to social media campaigns and stress-eating during the COVID-19 pandemic.
The biggest part of the candy surge was chocolate, with US$22 billion in sales last year.
Hershey is one legacy chocolate brand that has seen strong recent sales while feeling the pinch in its supply chain. Having raised prices last year, the company recently announced more increases across all its products due in part to soaring costs for ingredients.
Yet Tony’s Chocolonely chief officer Henk Jan Beltman has not raised his chocolate bar prices since 2019 and says he has no plans to do so any time soon.
Here is why: The company has pioneered strong relationships and long-term contracts with its farmers. The contracts offer living wages that reduce a rampant trend in illegal child labor, as well as offer assistance to farmers as they adapt to new environmental pressures and avoid the devastating impacts of deforestation.
According to a recent University of Chicago report, more than 1.5 million children are currently working illegally to produce cacao in west Africa, in part because of the low “farmgate” prices for the beans — the market price set by the countries of origin, which is kept to a minimum under pressure from industry.
Beltman says that because cacao farmers are not allowed to set prices for their beans, it creates a “poverty trap” and has led to a form of modern slavery.
Major chocolate brands have acknowledged the crisis of child labor, yet have not done enough to solve it.
Exacerbating this poverty trap is the stripping of ecosystems. Ivory Coast has lost more than 80 percent of its forestlands over the past 50 years as trees have been razed for new cacao farmland. Forests are essential to soil health and ground moisture, and tree canopies help farmers manage rising temperatures.
A Harvard University study found that by 2050, vast areas of Ghana and Ivory Coast will become unsuitable for agriculture as the area slowly turns into a desert climate. That could cut the global cacao production by nearly one-third.
Already, some of the cacao farmers he sources from in the region have abandoned the northern farmlands of Ghana and Ivory Coast, and moved southward into the cooler regions where rainfall is better, Beltman says.
Tony’s Chocolonely has devised five sourcing principles that guide its business relationships with cacao suppliers in west Africa within an aim toward building climate resilience. Most notable among them is that the company uses supply-chain mapping software to track all of the beans it purchases back to the farms of origin — a practice that enables the company to ensure quality, monitor growing practices and soil health, and rid its supply chain of slave labor.
The company also supports farmer co-ops, and helps train farmers in agroforestry practices and reforestation programs that integrate cacao farms with resilient, tree-rich ecosystems.
Crucially, the company also commits to long-term contracts with its farmers, locking in prices that are 25 to 40 percent above the farmgate price over a minimum of five years so that farmers can invest in sustainable farming practices and guarantee returns.
These contracts have benefited the company’s bottom line. Tony’s Chocolonley products are priced marginally higher than Hershey’s, at US$0.81 per ounce (28.3g) compared with US$0.71 per ounce. Yet Tony’s has increased its sales between 20 and 22 percent each year from 2019 to this year, while avoiding the volatility of market prices in the past few years that caused large brands to announce successive price hikes.
Tony’s Chocolonely’s sourcing principles have been so successful that a number of other emerging chocolate brands, including Germany’s Jokolade and Delicata in the Netherlands, have adopted them. The world’s major chocolate brands should recognize this positive trend among young industry pioneers and follow suit.
Every large purveyor of chocolate should be signing on to three principles in particular: traceability, agroforestry training and long-term farmer contracts that offer fair living wages. Without these measures, the industry can’t survive, let alone grow, in a hotter, dryer future.
Beltman says he is driven by a keen awareness that “chocolate is a very special kind of product, a Willy Wonka product — one that doesn’t provide consumers with calories they need, but with calories they love.”
This is what makes chocolate the right sector of the food business to pioneer world-bettering practices and products.
Consumers should be more willing to support these forward-thinking brands because the higher price is so well justified. Indeed, consumers hold important responsibility here: to be more discerning with the brands they buy and to ensure, to paraphrase Wonka himself, that good deeds shine in a weary world.
Amanda Little is a Bloomberg Opinion columnist. She is a professor of journalism and science writing at Vanderbilt University.
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