Mondelez calls for ‘brave’ collaboration to bring cocoa supply chain out of poverty
EXCLUSIVE: The head of Mondelez's Cocoa Life sourcing programme has called on the cocoa industry to "be brave" when exploring new ways to enhance supply chain practices that ensure cocoa is sourced sustainably while bringing smallholder farmers out of poverty.
Last week, Mondelez announced that its Cocoa Life programme had grown 14% compared to 2016 to cover more than a third of the cocoa it sources. The Cocoa Life programme is committed to empowering 200,000 cocoa farmers by improving the lives of more than one million people in cocoa growing regions and communities.
The initiative has now reached 120,500 farmers across 1,085 communities, and therein lies the problem with attempting to improve climate resiliency across the supply chain. Speaking exclusively to edie, Mondelez’ Cocoa Life programme director Cathy Pieters questioned whether all smallholder farmers could be pulled out of poverty under current practices and called for the industry to rethink its approach to sourcing.
“We really need to understand the potential of the smallholder model,” Pieters said. “How realistic is it to work with millions of small holders that only own an average of two hectares of land? We need to be brave as an industry to see if there’s a sustainable answer.
“Can a family that lives on a small-hectare cocoa land ever get out of poverty? Or are there other solutions needed, such as aggregating land and creating a more controlled environment to implement practices? We need to be brave and look at innovative models collectively.”
Research suggests that cocoa growers globally earn around 6.6% of value of a tonne of cocoa sold, with growers in the Southern Hemisphere earning as little as 90p a day.
Since the launch of the programme in 2012, Mondelez has pumped more than $400m to accelerate the reach of the sourcing initiative, with an ultimate aim in place for it to cover the entirety of the company’s cocoa suppliers.
Pieters’ call for collaboration is built on the efforts that Mondelez has put in place to attempt to boost the prosperity of its suppliers. Since the launch of Cocoa Life, 68,200 community members have been trained on environmental practices, creating better yields and economic returns as a result. The company also piloted Community Resource Management Areas (CREMAs) in 36 communities to provide natural resource management and planning tools to its farmers.
Cocoa prices have tumbled to their lowest level for more than four years, and are closing in on the Fairtrade minimum price of $2,000 per tonne, which the Foundation established at a safety mechanism for its farmers. In turn, farmers often struggle to balance environmental considerations over a need to earn more income by producing larger quantities.
The latest Cocoa Life report outlines progress made against key issues such as climate change and deforestation as part of Mondelez’s wider Impact for Growth mantra to drive business growth while making a positive impact on the planet.
One key element of the Impact for Growth strategy is to address society in these global challenges, ensuring that communities benefit from any ambitions as well. In relation to Cocoa Life, child labour still remains an issue amongst small holder farmers in areas such as the Ivory Coast and Ghana.
Based on recommendations from human rights consultancy Embode, Mondelez is “evolving [its] efforts” to increase the number of Child Labour Monitoring and Remediation Systems from 137 communities by working with key partners, one of which is the Fairtrade Foundation.
In 2016, Cadbury, which is owned by Mondelez International, announced that Fairtrade certified Cadbury Dairy Milk products will no longer carry the Fairtrade logo on the front of packaging. Some organisations were concerned removing the Fairtrade logo, which has since been replicated by fellow brand Green & Black’s, would confuse customers.
However, Pieters claimed that the ambition to extend the Cocoa Life initiative across the entirety of Mondelez’s supply chain – thus negating the need to use certified Fairtrade sources – has actually strengthened relations with the organisation.
“We made a differentiation between the Fairtrade certification scheme and Fairtrade the organisation,” Pieters said. “We set up a whole new partnership with the Fairtrade Foundation to bring it into the Cocoa Life programme.
“We work with them on different levels, on the ground, specifically in Ghana, and as climate change adaptation becomes more critical we’re working with Fairtrade to start a programme to build stronger resilience amongst our suppliers. We moved from a purely transactional relationship to building a real collaborative partnership.”
Alongside work with NGOs and charity organisations, Mondelez is attempting to embrace the bravery Pieters is calling for through a global cocoa partnership with 11 other chocolate companies.
Buyers, producers and traders including Barry Callebaut, Blommer Chocolate Company, Cargill, CEMOI, ECOM, Ferrero, The Hershey Company, Mars Incorporated, Mondelēz International, Nestlé, Olam and Touton have all agreed to the Joint Framework of Action issued by the Prince of Wales’ International Sustainability Unit (ISU).
Under the pledges, companies have agreed to invest in more sustainable forms of land management, create active partnerships to protect and restore forests and invest in programmes for cocoa productivity that benefits the livelihoods of small-scale cocoa farmers. Updates on the pact are expected later this year.