Gluttony and chocolate drive birthday parties, Valentine’s Day, Easter, Christmas and Halloween.
“All of our great celebrations of life are associated with chocolate,” says Carol Off, author of Bitter Chocolate: Investigating the Dark Side of the World’s Most Seductive Sweet.
Even three million tons of chocolate a year is not enough to satisfy the world’s voracious appetite. More than two thirds of it comes from Africa.
The chocolate craze began with the harvesting of cocoa by 16th-century Spanish settlers in Central America, where it was discovered. Five hundred years later, West Africa grows 70% of the world’s cocoa. The industry is valued at $105 billion. The Ivory Coast, Ghana and Nigeria are the world’s three largest producers. The Ivory Coast produces 41% of the world’s cocoa. It grows around $1 billion worth annually.
For more than two million small-holder African cocoa farmers—90% of which are family-owned farms no bigger than 5 hectares—cocoa is life. Aside from this, the chocolate industry is fragile. Small farms often struggle against bad weather conditions, pests and disease, which can cut yields by 40% annually, according to the International Cocoa Organization (ICCO). Ecobank predicts that this year’s delayed, but good, rains in the Ivory Coast will boost mid-crop yield to 350,000 tons: a 10% increase compared to the last 10 years. Despite this good fortune, the people who grow the cocoa complain they are being squeezed.
“Cocoa farmers in West Africa receive between 3.5% and 6.4% of the final value of a chocolate bar (depending on the percentage cocoa content), whereas the manufacturer’s share has increased from 56% to 70% and the retailer’s share from 12% to 17%,” according to the Fairtrade Foundation. It campaigns for a bigger share for the growers.
The World Cocoa Foundation (WCF) launched the African Cocoa Initiative (ACI) in mid-March. It encourages profitable sustainability by equipping 100,000 cocoa famers, over five years, with farming and management skills. The ACI increases farmers’ revenues and helps to raise low yields. The foundation’s member companies—Barry Callebaut, Ferrero, Kraft Foods, Lindt & Sprüngli, Mars and Nestlé—pay for it.
While the cocoa industry is lucrative, farmers in the Ivory Coast are being wooed by rubber. Cocoa farmers are replacing ageing plantations with rubber seedlings. Rubber—after around seven years—produces a monthly income, whereas the average cocoa tree bears 30 pods over two annual crops. This is nearly enough to produce 1kg of dark chocolate, according to the Hershey Company.
Ghana, which meets 18% of the global demand, is the second-biggest supplier of cocoa. Author Carol Off traveled to Ghana to investigate the cocoa industry. She wrote of falling abusive labor practices and better healthcare. On the other side of the coin, cocoa farmers are also accused of reporting lower yields and hiding beans to raise the market price. Illegal smuggling between cocoa producing countries is also rumored.
The Ghanaian cocoa industry is regulated by Cocobod, which ensures a fixed price at the beginning of each season. If prices fluctuate during the season, farmers are paid the difference. Farmers sell their cocoa beans to licensed buying companies. This regulation ensures that high-quality Ghanaian cocoa beans are highly sought after.
There’s an apparent paradox: Africa is the world’s leading cocoa supplier, yet the top 10 confectionary companies are outside Africa; most are based in Europe and the United States. While the challenges of producing in Africa are plenty, so are the opportunities.
Afrotropic Cocoa Processing, a Ghanaian manufacturing company, grinds over 6,000 metric tons of local cocoa beans annually. It sells its products—cocoa liquor, cocoa butter and cocoa powder—to international food manufacturers. A large percentage of European chocolate is made from Ghanaian cocoa. Switzerland eats the most chocolate. World-famous companies like Cailler-Néstle, Toblerone, Lindt, Teuscher and Sprüngli call it home.
Kraft Foods is the world’s largest chocolate manufacturer, and has manufacturing plants in South Africa, Swaziland, Botswana, Kenya and Namibia. It is leading by example with commitments of $150 million towards investment in manufacturing facilities in the Southern Africa region over the next three years. Cadbury, owned by Kraft Foods, buys its cocoa beans from Ghana and Nigeria and manufactures in South Africa and Namibia. By 2015, Nestlé, the third largest manufacturer, will add five African factories to its already existing 28. A two-fold increase in its products, in the last few years, has made it more competitive.
These companies understand that this investment is a stepping-stone into African markets. What if chocolate brands like CÔte d’Or and Toblerone, both owned by Kraft Foods, were being made in Africa? This development of skilled jobs would help to alleviate poverty and possibly decrease the cost of production.
During the last decade, Africa has boasted a 5% annual growth. While the continent is open to industrial growth, it only accounts for 1% of global manufacturing. Africa is a fertile terrain for private-sector investments in industry and manufacturing, with small manufacturers going where multinationals fear to tread. Africa has the capacity to become a manufacturing powerhouse.
Madécasse chocolate is the proof. It has created jobs by producing chocolate in Madagascar. While problems with electricity and water persist, the company is training up a skilled workforce. Maybe investing in chocolate is as simple as spotting the obvious that everyone else misses.