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Cocoa Wars: The Bitter Truth Behind the Worldwide Chocolate Industry

Chocolate is one of the oldest and most widely consumed treats in the world, with it being enjoyed up to 4000 years ago by the ancient Mayans. It’s often used by the masses to help relax, but with such high demand across the globe it’s almost inevitable that the sweet treat has a shadowy underbelly. The exploitation of those working in the lower echelons of the cocoa farming industry is often overlooked and even encouraged by chocolate manufacturers. It has recently come to light that companies such as Hershey’s and Mars inc. are trying to sidestep the cocoa premiums that are designed to give cocoa farmers a fair wage, which has triggered a public backlash.

What Does the World of Cocoa Look Like?

Much like the world’s avocado industry, cocoa production is highest in countries which have less stringent ESG regulations than areas such as the US and the UK, with the majority of cocoa growers living below the poverty line. With 70% of the world’s cocoa beans being produced in West Africa, the Ivory Coast leads the way by a large margin, shipping over $3.5 billion of the bean last year alone. Following them is Ghana who exported close to $2 billion. On average, a single cacao tree can produce enough fruit to make between 1-3 pounds of chocolate each year, but with countries such as Switzerland consuming around 19.4 pounds of chocolate per capita every year, supplies don’t last long.

Due to the fact that the working conditions for cocoa farmers was unsustainable for many, the Living Income Differential (LID) was recently introduced. The LID is effectively a $400 premium on each tonne of cocoa that’s bought from Ghana or the Ivory coast, and with millions of tonnes being shipped across the globe each year this premium becomes a heavy toll on big chocolate. There has definitely been some controversy surrounding the implementation of the LID, with rumours circulating that the funds won’t ever even reach the farmers’ pockets, and it is with the LID that some further controversy has now surfaced as companies try to circumnavigate the charges.

How Have Tensions Risen Between Cocoa Producers and Chocolate Manufacturers?

In a letter penned by region regulators Ivorian Conseil de Café Cacao and the Ghana Cocoa Board, Mars inc and Hershey’s among others have been “named and shamed” as having flouted the LID, despite showing their initial support for the initiative. Hershey’s representatives responded to the claims by saying that Hershey’s still fully supported the LID and was looking to continue to contribute to “the sustainability programmes that are benefiting cocoa farmers today”. How they managed to keep a straight face while delivering this comment is unknown however due to the fact that less than a month before this response, the monolith of munchies committed to the extremely unorthodox procedure of buying so many cocoa futures that the market jumped nearly 13.5%. And unlike the majority of those who deal in futures, Hershey’s fully intend to receive the underlying asset when the contract expires, thus completely avoiding the LID. This trade will have long-term consequences for the cocoa futures market, with some analysts claiming that “the U.S. futures will remain off balance for the foreseeable future as other companies will almost certainly see the benefits of replicating what Hershey has done and the trade will be reluctant to hold short hedges on the market”.

In retaliation to such moves the Ivory Coast and Ghana have suspended all sustainability programmes with Hershey’s in an attempt to highlight the company’s nefarious methods and has also threatened to cut off all of Hershey’s licenses to operate in the countries. This may be the beginning of a tense and drawn out standoff between the West African nations and the buyers of the bean. On the one hand Hershey’s et al need to be kept in check, but on the other there is a large amount of cocoa going unsold.

And so the global cocoa feud continues. It is the hope of many that such duplicitous tactics will finally reveal the immoral business practices of big chocolate, who have a rap sheet which already includes child labour, deforestation and mass exploitation. Though the LID certainly needs better regulations, it is a good first step in helping those at the ground floor of cocoa production. The world cocoa market is on track to grow to $30.2 billion by 2026, and if chocolate companies aren’t held accountable now, many millions more lives may soon be affected.

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