Mars revises its cocoa sustainability program to focus entirely on farmer incomes

Today, Mars is announcing a pilot program aimed at doubling the incomes of 14,000 farmers in its cocoa supply chain by 2030. The program will focus on Côte d’Ivoire and Indonesia, regions in which the most of the world’s cocoa is cultivated. The programs were designed in collaboration with USAID, the Fairtrade Foundation and farmers’ organizations in both countries. Last year, Ben and Jerry’s announced a similar program targeting 5,000 farmers in Ivory Coast.

Between 2010 and 2020, dozens of sustainability commitments have been made by the world’s top chocolate makers. Most of these programs had a single objective: to increase cocoa productivity in West Africa.

None of these programs achieved the intended result of increased cocoa productivity and subsequently large-scale impact on farmers’ livelihoods. After a review of 1,500 farmer income programs, only three were found to result in a small increase in farmer income.

According to Barry Parkin, director of purchasing and sustainability at Mars, “the vast majority of programs have failed. Think of how much money and effort we have invested in this area over the decades, and they have all failed. So you know what that tells us – it’s extremely difficult to do. And that is why many smallholder farmers still live in poverty.

The company is now taking a multifaceted approach to achieving a living income in farming communities. Where previously focused on increasing cocoa productivity, programs will now introduce farmer financing, long-term purchasing relationships, income diversification and agroforestry efforts in a more aggressive attempt to cross the threshold of living income (for which an increase of 100 to 200% of current income levels is necessary).

“The metric we’re going to measure is revenue,” Parkin says. “We have to come up with a living income. It will be a success or failure for me.

Current Cocoa Challenges in West Africa

West Africa produces most of the world’s cocoa. It is also a hotbed of deforestation, which has largely contributed to climate change. The world’s best chocolate makers won’t be able to meet climate goals without tackling deforestation in their supply chains.

Côte d’Ivoire produces 42% of the world’s cocoa, generated by around 1.2 million small farmers who support a fifth of the country’s population. And rural poverty in the country is on the rise – running counter to GDP growth.

When farmers are poor, they deforest to survive and rely on family and unpaid labor to make ends meet. In other words, the underlying cause of deforestation and child labor in West Africa is poverty. According to Fairtrade, the average household income in Côte d’Ivoire is less than half of a subsistence income. As a result, as cocoa trees become unproductive, cocoa farmers deforest to grow their crops on new land – just to survive.

Moreover, financial flows are opaque. According to the African Union and the United Nations, cocoa is among the top 10 illicit financial flows from the continent. This report concluded that despite deep poverty, “Africa was a net creditor to the rest of the world”, no doubt linked to its extractive colonial past. Moreover, a complicated taxation system in West Africa means that only 70% of the international cocoa price actually reaches farmers.

Doubling farmers’ incomes through adapted and transparent interventions

The Mars Sustainable Cocoa pilot program aims to double household income in Côte d’Ivoire to reach subsistence income by 2030, targeting income growth from $1.09 per person per day to $2.49 per day. person per day. The efforts build on Mars’ mint program in India, which has increased revenue by 250% and covers about half of the company’s mint supply.

The program goes beyond cocoa production to a more holistic set of solutions: boosting non-cocoa incomes, expanding village savings and loans programs, improving farming techniques and investing in agroforestry. Additionally, Mars will assist with farm financing and provide long-term buying relationships to provide stable income. And the company says it will regularly and transparently report its findings.

Taryn Holland of the Fairtrade Foundation, who co-developed the program framework with Mars and the cooperative partners, shares: “Our starting position is that no two farmers are the same. Previous approaches used the concept of the “average” farmer; we say the average farmer does not exist. Each comes with its own unique context, its different vulnerability profile.

In order to achieve these goals, Mars must be able to track the flow of cocoa throughout its supply chain. It reports that 44% of the current cocoa supply chain is traceable back to the farm, with a target of 100% by 2025.

What about low cocoa prices?

Over the past year, cocoa prices have been extremely volatile. African farmers received 20% less in 2021 for their cocoa. Without price protection in place, program gains can be undermined overnight.

In the March pilot programs, farmers in Côte d’Ivoire will receive a floor price of USD 2,400/MT (the current government export price is USD 2,189.25 per MT according to Fairtrade). This applies to 9,000 farmers in the initial pilot program.

Holland shares: “Over the past year, particularly with COVID, the decline in demand for cocoa and all the pricing challenges we’ve had has meant that [the Fairtrade premium] has been a really valuable tool to safeguard and protect peasant organizations.

So why aren’t cocoa manufacturers paying a floor for all commodity cocoa, if earning a living income is so central to the goals of these programs? Mars declined to share details.

Parkin said, “We’re happy if prices go up industry-wide, we’re supportive of that. We are happy to work with home governments to find ways to achieve this. In the meantime, we pay bonuses which help a little – but not enough…. If we also have slightly higher cocoa prices, that will help. »

How this scale?

The Mars Sustainable Cocoa pilot program will initially reach 3.5% of farmers in their supply chain. The aim is to scale up successful interventions as lessons are learned. The Mars Responsible Cocoa program – which focuses on managing supply chain risks like monitoring child labor and deforestation – covers approximately 50% of the company’s supply chain (target is reaching 100% by 2025). It has not been revealed whether these farmers currently receive a base price for their cocoa.

So how are these programs evolving? Are small cocoa farmers forever destined for poverty? Mars and Fairtrade believe that to achieve sustainable living income, multidimensional interventions must take place that address climate vulnerability, income resilience and gender dynamics.

Parkin concludes: “The bottom line is that a smallholder model in West Africa, which is completely cutting edge in terms of performance, is not going to survive. It has to improve. This does not mean that there will not be small cocoa farmers in West Africa. But it will have to be what it will look like at the end of this project. Smallholders who are not part of this transition need to do something else. »

Julio V. Miller