(Image by Maria from PIxabay)

Buying ethical and affordable chocolate is really hard

Steven Bowen

05 Apr 2024

Those of you who celebrate Easter will have noticed that your easter egg has either got smaller or more expensive. But spare a thought for those who want to buy ethical chocolate - they have a different problem. How do you know your chocolate is ethical, and how much extra should you be paying?

This was the topic of a recent article in The Conversation entitled Buying affordable ethical chocolate is almost impossible – but some firms are offering the next best thing.

What causes the challenge? It's the long and messy supply chains. To quote Michael Rogerson who wrote the article ...

"Most of the world’s cocoa is grown in west Africa, where more than 2 million farmers work on around 800,000 farms. Many of these farms are remote and served only by motorcycle due to poor infrastructure. This contributes to the long and fragmented nature of cocoa supply chains."

In other words, monitoring production in remote areas is tough. But that is only part of the challenge.

The other issue is that cocoa is traded as a commodity. It's effectively traded by weight. And while some cocoa is ethically grown, it's often mixed with cocoa of an unknown origin before it reaches the chocolate manufacturer.

Now this doesn't mean companies shouldn't set up better systems. The big issues are human rights (including child labour and worker rights), and biodiversity loss. These are things that are measurable. For instance Tony's Chocolonely publishes the number of cases of labour abuses it finds every year. And UP-UP surveys every worker in its supply chains and states which single-estate plantation its cocoa comes from on its packaging.

So it's a problem with a possible solution. But the surging price of cocoa is making implementing this even more challenging. Bloomberg recently wrote that traded cocoa prices have surged by more than 250% over the last year. And higher cocoa prices means consumers pay more at the supermarket. Price sensitivity means that the chocolate manufacturers cannot easily pass on these price rises, and so they make the chocolates smaller.

Hannah Ritchie (of Our World in Data fame) wrote a good blog on this recently.

But, this debate also miss an important issue - making sure that cocoa growers receive a fair price. According to Enveritas, as of 2019, 44% of the world's smallholder coffee farmers are living in poverty and 22% are living in extreme poverty. The majority of coffee farmers living in poverty are concentrated in six East African countries.

Sourcing single-origin cocoa enables checks of working conditions at known sites. It’s better for the environment and leads to substantially higher pay for farmers. (Editors note - this is why I buy my coffee from Yallah in Cornwall).

But that is a solution that often struggles to work at scale. One alternative (or maybe parallel) approach is to learn from the wine and spirits industry, specifically cooperatives and appellations/protected region of origins. This could allow farmers to create a premium tier for their product, partly based on their ethical standards. This could help ensure that some of the brand value shifts from the brand owner to the cocoa or coffee grower. Helping the grower earn a fair wage.

We wrote about this back in July last year. It's not an easy proposition to deliver, and it's going to need cooperation between governments, growers and NGOs. But then the current approach doesn't seem to be working 👉🏾 https://www.thesustainableinvestor.org.uk/sunday-brunch-premiumisation-as-a-sustainablity-stratgey/

This article featured in What Caught Our Eye, a weekly email featuring stories we found particularly interesting during the week and why. We also give our lateral thought on each one. What Caught our Eye is available to read in full by members.

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