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Mondelēz to invest extra $600 million in sustainable cocoa

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Mondelēz (NASDAQ:MDLZ), the owner of brands including Cadbury and Milka, is bringing its total investment into the Cocoa Life programme for sustainable farming to $1 billion.

  • Mondelēz has pledged an extra $600 million to invest a total of $1 billion in its Cocoa Life programme.
  • There are many human rights and environmental abuses linked to cocoa farming, which Mondelēz is addressing with its scheme.  
  • Working conditions of farmers remain poor despite some sustainability initiatives have been running for decades, suggesting stakeholders need to take a different approach.

Expanding the company’s sustainability programme

The Cocoa Life programme is intended to address systemic environmental and human rights issues in the cocoa farming sector. Mondelēz, the owner of consumer brands including Cadbury and Milka, started it in 2012 and plans to increase the number of farmers it works from from 2oo, 000 today to around 300,000 by 2030.

The scheme operates in six key cocoa-growing countries – Ghana, Côte d’Ivoire, Indonesia, India, the Dominican Republic and Brazil – across three areas of intervention, which are sustainable farming, community empowerment and deforestation.

The scheme’s activities include training farmers, distributing seedlings, educating community members on child labour, providing training for financial literacy and business management, mapping and monitoring farms to conserve forests.

Mondelēz said that the goals to reach by 2030 are increasing the number of farming households reaching a living income, enhancing child protection systems and access to quality education in Cocoa Life communities, and stopping deforestation on Cocoa Life farms globally.

The actions being taken under the scheme include developing a mechanism that supports a decent price for farmers, engaging in public-private partnerships for quality education and making forest conservation more attractive.

Mondelēz said that, so far, Cocoa Life has led to higher cocoa yields, farmers’ net incomes have risen by around 15% in Ghana and by around 33% in Côte d’Ivoire. In terms of child labour concerns, 61% of the communities that are part of the programme are covered by child labour monitoring and remediation systems.

Dirk Van de Put, chairman and chief executive of Mondelēz International, said: “As one of the world’s leading snacking companies, it is a priority to continue making our most important ingredients, such as cocoa, right, and Cocoa Life sits at the heart of this strategy.”

He added: “While we are excited about the promise of our investments, we are calling for more sector-wide effort and actions to drive greater impact, including new private-public partnerships, as we aim to catalyze ground-breaking collaboration to help move cocoa forward together.”

Cocoa farmers face human rights and environmental abuses

Six million people earn their livelihood from cocoa farming, with 60% of the commodity being sourced from Côte d’Ivoire and Ghana alone. The global price of cocoa, however, has been fluctuating wildly due to weather events and politic upheaval in Côte d’Ivoire, as well as speculators betting on price futures.

As a result, farmers cannot plan for the medium or long term as they do not know how much they will be paid on any given year. The sector is also struggling to attract younger generations due to the poor financial returns, according to the Fairtrade foundation. Many farmers only earn $0.78-$1.00 per day, which is well below the international poverty line of $2.15 per person per day established by the World Bank.

Child labour is also a significant problem in the sector . Several investigations have exposed child labour and even slavery in Côte d’Ivoire, Ghana, Cameroon, Guinea, Nigeria and Sierra Leone. 

In terms of the environmental issues, climate change is expected to reduce the amount of land suitable to produce cocoa, while increases in rainfall may create conditions for the spread of pests and diseases. Cocoa farming is also linked to deforestation. A study by the World Cocoa Foundation and Mighty Earth found that 10% of Ghana’s entire tree cover was cleared between 2001 and 2014 to make space for cocoa crops.

More work needs to be done

Working conditions remain poor despite the various sustainability schemes that have been running for years. According to a consultation paper published in September 2022 by the Cocoa Barometer Consortium, most sustainability programmes and proposed legislations “only aim to address living income in cocoa through either indirect approaches… or by skipping living income directly and trying to tackle issues such as child labour or deforestation without a holistic approach to solving the underlying poverty”.

It said that companies have mainly focused on increasing farm productivity, but this strategy did not have an inherent positive effect on the net income of cocoa farming households. The paper said: “After two decades, these are devastating outcomes, considering this has been the key strategy of the cocoa industry to solve its biggest challenge.”

Representatives of Côte d’Ivoire and Ghana themselves have expressed discontent on how many companies in the industry, which is valued at over $100 billion per year, are not following through with their commitments to the Living Income Differential (LID).

The two countries imposed a $400-per-ton surcharge on cocoa in 2019 to tackle farmers’ poverty, however some buyers have been renegotiating a separate quality premium.

All industry stakeholders need to increase their efforts and review their strategies to address the human rights and environmental issues in the sector, which are disproportionately hitting farmers.

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