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Cocoa-nomics: Why chocolate really doesn’t grow on trees

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Story highlights

CNN's Freedom Project returned to Africa's cocoa plantations to look for progress in fight against child labor

Chocolate industry worth an estimated $110 billion a year, but cocoa grown by some of world's poorest people

Cocoa farmers earn just a tiny fraction of the cost of the average chocolate bar

Global demand for cocoa outstrips supply, offering hope that the industry may do more to help growers

Editor’s Note: Click here for full tune-in details on CNN’s investigation into child slavery in the chocolate industry, ‘Cocoa-nomics.’ Or watch the trailer here.

CNN —  

“So tell me,” an old school friend asked, “if the demand for chocolate is so high, why are cocoa farmers so poor?”

We were sitting in the local pub, just days after I returned from a trip to the Ivory Coast, filming a CNN documentary about child labor and poverty in the chocolate industry.

Two years after CNN’s Freedom Project exposed Chocolate’s Child Slaves, it was time to return to the cocoa plantations to unwrap the chocolate supply chain, to investigate what progress has been made to stop child labor and to explore how farmers can get more money for their beans.

My friend didn’t know what he was letting himself in for. The answer to his question is neither simple nor short – and “cocoa-nomics” has become something of an obsession of mine.

The chocolate industry is worth an estimated $110 billion a year, and yet its key commodity is grown by some of the poorest people on the planet, in plantations that can hide the worst forms of child labour.

Accurate figures are impossible to come by, but up to 800,000 children are thought to work in the cocoa sector across the Ivory Coast; children who are both a symptom of and a self-perpetuating factor in a much wider problem – poverty.

In 1980 the international cocoa price was $3,750 a tonne – equivalent to $10,000 a tonne in 2013. Nowadays it is considered high at roughly $2,800 a tonne.

Over the same period, the value of cocoa within a chocolate bar has halved from 12% to just 6%, so although a farmer’s cocoa is essential to a chocolate bar, its value is a small part of the ultimate cost of production.

Most (70%) of a modern day chocolate bar’s value goes to the manufacturer because the majority of the costs are in marketing, research and development.

In 2012, as part of sweeping reforms to the cocoa sector the Ivorian government enforced a minimum price for cocoa at the farm gate; at 60% of the international market price, it’s about $1.5/kg.

No farmer will tell you it is enough, but it does mean they can budget ahead, and are less at the mercy of passing middlemen or traders.

Nick Weatherill, director of the International Cocoa Initiative, says the Ivory Coast’s reform of the cocoa sector was guaranteeing a steadier price, “at least in its first steps.”

“It may not be as high as the farmers would like, to jump out of poverty,” he says. “But at least it’s steady and they know what’s coming”.

A guaranteed minimum price was the first gust of a prevailing wind which is now sweeping over the cocoa plantations: For more than a decade the “big chocolate,” companies like Nestlé, Hershey, Kraft and Mars have suffered from a barrage of bad publicity – seemingly unwilling or unable to flex their corporate muscle to stop child labor.

Across the industry it was seen as everybody’s problem but nobody’s responsibility.

“So what has changed?” asked my friend, who by now was tucking into a hearty pub lunch.

Infographic: Cocoa-nomics explained

I’m afraid the answer lies in self-interest as much as corporate responsibility: Growing cocoa is becoming unsustainable. There’s a crisis brewing.

The average age of a cocoa farmer is about 51 (not much lower than the average life expectancy); and across the Ivory Coast plantations are old, diseased and in need of regeneration.

But regeneration requires investment, and the younger generation would rather migrate to the capital city, Abidjan, or switch to more lucrative crops like rubber or palm oil.

In West Africa, the cocoa supply is failing to meet increasing demand.