Mars moves to cut cocoa deficit
Mars is aiming to help 1m cocoa farmers double their production as the world’s biggest confectionery company ramps up efforts to eliminate a projected “cocoa deficit” in 2020.
Like other food and drink producers, the $110bn chocolate industry is struggling to balance demand, which roughly tracks global economic growth, with supply, at a time when more land is being used up by urbanisation and other crops.
As a result, increased supply will have to come from improved yields on existing plantations. But providing the 5m or so cocoa smallholders, most of whom are in Africa, with the necessary technical knowhow and inputs is a huge logistical challenge.
“This is about interventions getting to 1m farmers,” said Barry Parkin, global procurement and sustainability head at Mars Chocolate. “That’s a huge challenge when they are very remote. So this needs to see industry pulling together, so we are looking at bringing partners on board.”
That means helping farmers access higher-yielding plantlets, inputs such as fertilisers and training. Mars is already working with several groups, including Rabobank, on microfinance for inputs.
Other branded manufacturers and agri-traders are also accelerating efforts to reach smallholders at the roots of their supply chain, spurred by what Fiona Dawson, managing director at Mars UK, called the “economic imperative”. Without investing time and resources in helping farmers increase yields, the supply-demand imbalance will widen further and costs will rise, she said.
Assuming flat supply and demand in line with gross domestic product growth implies a deficit of 1m tonnes by 2020.
Olam and Armajaro, the agri-traders, both have programmes targeting farmers while Nestlé, the world’s biggest food company, has invested SFr110m in similar efforts. Kraft of the US, another big buyer of cocoa, is also involved in several sustainability programmes.
Mars is sticking by its commitment to purchase only certified cocoa by 2020, and estimates it will be buying a quarter of its needs or 90,000 tonnes this way next year. But the broader initiatives highlight inadequacies with the certification system.
It is estimated that less than 5 per cent of the nearly 4m tonnes of cocoa now traded is certified. For manufacturers to meet publicly stated commitments, this would need to rise to roughly half by 2020.
“The question mark hovering above everyone is, is certification going to do what it’s supposed to do or is it just part of the solution? That is, should it concentrate more on how the farmer attains certification rather than the certification itself,” said Nicko Debenham, director of development and sustainability at Armajaro Trading.
As one of the biggest buyers of cocoa beans – spending about $1bn a year – Mars is aiming to help the 1m farmers it reaches to double or triple yields. If successful, that would eliminate the projected 2020 shortfall. But it is a huge leap from the estimated 1 per cent of farmers that currently receive help on inputs and training.
Mr Parkin said the additional costs of ensuring sustainable cocoa would not be passed on to consumers.