The Decibel - The reality of how your chocolate gets made

Episode Date: June 15, 2023

Chocolate may be sweet, but it comes at a steep cost. Labels that claim your favourite treat are sustainable can hide harsh realities for farmers. Millions of cocoa farmers in Africa and Latin America live in hunger and poverty because big corporations refuse to pay a fair price for their cocoa.In the face of this increasingly aggressive price war, some cocoa farmers have joined fair-trade, farmer-owned co-operatives. Together they are pooling their resources to better their communities and futures.Today, The Globe and Mail’s U.S. correspondent Adrian Morrow joins us to explain what he and the Globe’s Africa Bureau Chief Geoffrey York learned about the cost of chocolate.Questions? Comments? Ideas? Email us at [e-mail]

So this is where farmers bring their cocoa. That's the sound from inside a cocoa processing plant in the Dominican Republic. The Globe's U.S. correspondent, Adrian Morrow, was there this spring. When it first comes in, most of the cocoa is what they call wet, so it still has sort of a sheaf of white covering sort of around the bean. And so the first thing they do is they ferment the cocoa for about six days in a series of sort of fermentation tanks. And the fermentation is meant to kind of impart more flavour and

scent to the cocoa beans. This is an additional scale where farmers will put their cocoa beans. And then after they've sort of done that for a few days, then the beans go outside onto these big kind of drying tables that are covered over by tents and then they're they're kind of taken back into the plant indoors and they're bagged up in these 70 kilo bags and then loaded up into shipping containers to be sent off, typically sent off to to factories that will you know turn the cocoa beans into cocoa powder and and cocoa butter and then ultimately into chocolate.

This processing plant is run by a cooperative of cocoa farmers in the region. So you can see the process that he brings in. And you can really smell it when you walk into the processing plant, and especially as you get closer to the fermentation bins, it sort of smells like chocolate. In our part of the world, chocolate is one of life's simple pleasures. But the business of chocolate isn't as sweet. Along with the Globe's Africa Bureau Chief, Jeffrey York, Adrian looked at where our cheap chocolate comes from. Today, Adrian will take us to the Dominican Republic,

where some cocoa farmers are banding together to gain power. I'm Mainika Raman-Wilms, and this is The Decibel from The Globe and Mail. Adrienne, thank you so much for being back on the podcast. Thanks for having me, Manika. So where did you actually go to report on the cocoa industry? Yes, this is a project I did with Jeffrey York, the Globe and Mail's Africa Bureau Chief. And he went to Cote d'Ivoire, which is the world's largest chocolate producer in West Africa. And then I went to Duarte province in the Dominican Republic in and around a city called San Francisco de Macaris, which is a city of about 200,000 people

in the middle of the cocoa growing region. And it's a city where cocoa is so integral to the local economy that they actually have a statue of a hand clutching an enormous cocoa pod off of one of the town squares. And sort of around there are these low-lying forested mountains, the sort of very beautiful green, lush part of the country,

where cocoa farms are kind of all over the place, both in the valleys and sort of up on the hillsides. So I think a lot of us in this part of the world where I am and where you are, Adrian, I feel like we only know chocolate in its final form, but you actually got to see the process here. So can you just describe for us how is cocoa actually farmed? So it's grown on trees in what they call cocoa pods, which are these very large, they're sort of like the size of a, like a very, very large mango or a very large papaya. And it's kind of a hard shell. And then you have to take the pods off the tree and then cut them open, usually with a machete or some

other kind of knife. You crack open the pod and then inside there will be kind of a cluster of beans that are covered in a sort of white film that looks a little bit like cotton, but it's much softer and much moister. And that's sort of a very, very sweet film. And by fermenting that, it kind of helps impart flavor and scent to the beans. Because beans themselves are quite bitter when they're raw, when they sort of first come out. But that's sort of what it looks like. And then on the farms themselves, I mean, you can farm, and in fact, most larger operations do farm cocoa plantation style, just row after row after row of trees. But the farms that I was on, the smaller hold farmers, tend to farm cocoa integrated with the forest.

And so they'll essentially have a whole bunch of cocoa trees along with a whole bunch of other trees in a forest canopy. And so walking around on a lot of this land, you wouldn't necessarily know that it was a farm. You hadn't been kind of told so because, you know, you look around and see the cocoa pods for sure, and you can tell that these are cocoa trees, but it also very much feels like the forest. And so you were in the Dominican Republic there looking at this process. How much cocoa does the Dominican Republic there looking at this process.

How much cocoa does the Dominican Republic actually produce? Yeah, yeah. The Dominican Republic, it produces about 70,000 tons of cocoa per year, which for context makes it about the ninth largest cocoa producer in the world. It's a little bit smaller than, say, Cote d'Ivoire and Ghana, which between them produce the majority of the world's cocoa and have much larger harvests. And how big of an industry are we talking about? Like in terms of dollars, how big of an industry is this? Yeah, so the industry itself is worth about $140 billion US per year. But a relatively small percentage of that, you know, between about 6% and 7% actually is estimated to go back to the cocoa farmers themselves.

And I know you met a number of cocoa farmers when you were there, Adrian, in the Dominican Republic. So can you tell me about some of the people you met? Yeah. One person I met who was very interesting was named Marisol Villar. Buenos dias. Mi nombre es Marisol Villar. Soy la secretaria de la Secretaría de la Agricultura. And she had essentially grown up in a cocoa farming family where her father had a cocoa farm. She was one of five daughters, and he always told his daughters, don't become a cocoa farmer. You know, it's so difficult. Go off and find something else, you know, find another, you know, occupation. He found

it was so hard to make a living as a cocoa farmer that he basically ran a side hustle renting out plastic chairs for events kind of around the town and would sort of use that money to supplement his cocoa farming income because it was such a difficult life. And so Marisol and her sisters all kind of took his advice. They went off and got educations and got jobs doing other things. She left the community in Duarte province and went to Santo Domingo, which is the capital of the DR, and went to school and became sort of an office administrator, worked in a couple of other cities, sort of doing that. But then her father died of cancer when he was in his 70s. And when that happened, Marisol decided that despite everything, she actually was going to go take over the family farm and become a cocoa farmer

against all of her father's better advice. Wow. So she ended up there anyways in the end. So, I mean, it sounds like Marisol's father had a pretty tough go of it. Does the average cocoa farmer face the same kind of challenges that he did? Yeah, very much so. I mean, the top line number is on 6% to 7% of the cocoa industry's revenue going back to the actual farmers. That gives you an idea on a macro level. And on a micro level, what that kind of looks like is that you have these companies, essentially,

these large chocolate companies and cocoa producing companies that will do everything possible to bid prices down and pay farmers as little as possible, which means that on a lot of the farms, farmers either live these very sort of precarious lives one year to the next, or if they have a bad harvest, they have to, you know, try to take out loans or rely on family members to see them through. A lot of them have side hustles. So it's, yeah, I mean, that kind of precarious existence for cocoa farmers is pretty much the norm. So that's interesting. So the way you're describing here is essentially a power dynamic where the buyers, the corporations actually do hold kind of all the control here. The farmers seem to have, you know, next to none. Yeah, that's right. I mean, they do have a lot of power in terms of being able to set prices,

you know, or sort of force, you know, farmers to kind of be price takers. The DR, you know, what I was told is about 30% of their cocoa is sold through the fair trade system, which is, you know, is a reasonably large number, but it's still nothing close to a majority. Most of the cocoa is sold conventionally where farmers are sort of forced to kind of accept the price that they're offered. So if this job is so difficult and if it pays so little, I mean, I have to imagine that people might not want to do this work. Are there labor shortages in the industry? Especially in West Africa, one of the things that they see a lot of is child labor. And the reason for that is that a lot of

these farmers essentially say that they're not making enough money to be able to, you know, to hire laborers to come, you know, to come work on their land. And so as a result, they end up sending their children out into the field. And so when children should be in school, you know, in their kind of key developmental stages, instead they're being used as labor. And that's a huge sort of problem in the industry. But, you know, what the farmers say and what the NGOs say is that the only way that you can get rid of that problem is to massively increase the price that the farmers are receiving so that they don't have any sort of economic incentive to use their children. So with farmers in such a difficult position, though, I mean, companies must be getting pressure from their consumers globally, like to actually do something about this. What have they said in response? A lot of the major chocolate companies do say that they're that

they're doing things for farmers, either the point to sort of specific amounts of money that they said they put back into cocoa communities. You know, Hershey and Nestle both talked about what they called income accelerators, the notion, I guess, of returning more money to the farm gate. What Jeffrey York, my colleague in Africa found, though, is that when he was speaking with farmers in Cote d'Ivoire, some of them could remember getting additional money at a certain point or their pay going up, but the amount that it increased by was so small that it was immediately swallowed up by inflation. So, you know, there may very well be evidence that companies are doing a bit more or are trying to help out cocoa farmers. But certainly what Jeff found was that it was less than advertised or

less than what you would think when someone is talking about sustainability. Okay, wait a minute. I mean, we often see chocolate bars with labels about sustainably made chocolate. How does that work? These labels can mean very different things, sort of depending on what they are. So in some cases, you know, fair trade, if it's certified by a third party, you know, certification body, it can mean that that there are, you know, standards being applied. And certainly from what I saw in the Dominican, you know, the farmers that I met with, did seem to be getting a reasonable price for their chocolate. Not, you know, not anything amazing, you know, certainly by the standards of a country like Canada, but sort of enough that they told me they could get by on it. What you have, though, are a lot of corporations that will create their own sort of in-house, you know, sustainability programs that aren't necessarily verified by a third-party certification agency. And so it can be, I think, really confusing for consumers

when they see these labels on chocolate bars to differentiate between what actually comes from a program where you can, you know, go online and see what the standards are and see that these companies are being audited and somebody is kind of enforcing the rules versus a program that's being administered in-house that might be murky and, you know, where it's unclear whether much of the benefit is actually going back to farmers. So hearing all of this, I mean,

it makes me think about how much chocolate we eat in the Western world, right? How we're used to getting that chocolate for so cheap, you can literally get it anywhere. And I guess knowing all of this about where our cocoa comes from, Adrian, what does that mean for us in our chocolate consumption? I mean, I think a lot of it is it is a question of, you know, do ethics kind of factor into your, you know, your decisions as a consumer? I mean, for some people, they might not. You know, it might just be a pure sort of, you know, economic calculation. For other people, it might. And if you feel that sort of, yeah, those kind of ethics matter for you as a consumer,

what you can be doing is looking for certification labels on chocolate and then sort of figuring out what exactly that certification label means. Does it take you to a website where the standards are opaque? Does it take you to a website where the standards are clear? Is it certified by a third party? And does that third party seem credible? Or is it just sort of certified by the companies themselves? And what, I guess, what proof is there that incomes are actually going back to the farmers? We'll be back in a moment. I want to come back to Marisol. So she's the farmer who decided to follow her father's footsteps after he passed away, even though he had warnings for her, you know, that farming was a difficult life.

Did Marisol do anything differently as a cocoa farmer? She did. The first thing that she decided to do was, you know, her father died of leukemia. And she's convinced that the reason he got it was because of all the pesticides that he was spraying on his cocoa crop. And so when she took over the farm got it was because of all the pesticides that he was spraying on his cocoa crop. And so when she took over the farm, she got rid of all the pesticides. The other thing that she decided to do was to expand the amount of cocoa that she was growing, so she planted more cocoa trees around her plantation.

You know, the third thing that she decided to do, kind of on the advice of a neighbor, was to join a co-op. So, you know, previously her father father had been selling cocoa, sort of through cocoa brokers or cocoa buyers. And these worker or farmer-owned co-ops, the way that they operate is they essentially cut out that middleman. And so she essentially did all those things. And one thing that she discovered was that by having cut out the pesticides for her own reasons, and by joining this co-op, her cocoa could now be certified as organic, which meant that she could command a higher price for it. And then on top of that, you know, she also discovered over time that ironically, not spraying pesticides on the land over and over actually made her land

more productive. And so essentially, through all of these decisions that she made, she's managed to make the farm. She said it's, she makes about twice the amount of money, it takes in about twice the amount of revenue every year now than her father did when he was running the farm. So she was sort of a success story being able to turn, you know, being able to turn the farm around. So how exactly do these co-ops work? They're sort of like the old wheat pools that we used to see on the Canadian prairies, where you'd get a group of farmers who would get together and would pool all of their product, and then would essentially have these organizations negotiate prices for them.

So rather than just selling it to a sort of middleman business that would then turn around and resell the cocoa to a factory, they instead put all their cocoa together, negotiate prices with the factories directly. So it means that kind of the profit that comes into the co-op is then, you know, redistributed to the members. And it also allows them to do other things that they weren't necessarily able to do before kind of organizationally. So for instance, you know, they get some economies of scale by being able to pool their resources to have drivers go around and pick up cocoa and take it into the co-op. Okay, so it's helping farmers by helping them get a better price for their cocoa and by pooling resources.

So Adrian, what does the co-op actually do with the funds that they collect? The co-op sort of administers the premiums that they get through fair trade and through fair trade sales. And we'll use that to kind of build like the farmers will vote on what sort of projects they want to build with the money. So some of it, for instance, is that processing center, which makes their cocoa more uniform than if it was processed on the farm, which can command a higher price. Some of it is also doing kind of local development projects, like Marisol, for instance, initially didn't have a road going to her farm when she took it over. So she would have to load up the cocoa on a horse and ride through the forest to take her cocoa into town for sale. And that not only was obviously very cumbersome and time-consuming, but also it meant that a lot of her cocoa would start to spoil by the time it got there and wouldn't ferment properly, and so it commanded a lower price.

Yeah, so sort of joining these co-ops has allowed them to, a little bit more power in the market to negotiate and set prices, and it's also given them, you know, kind of the chance to work together and pool resources and kind of build things that previously weren't possible. We were talking before about fair trade and sustainable chocolate. So how do co-ops fit into those programs? Like, do they play a part in kind of regulating what that entails? Yeah, so for the most part, fair trade programs tend to operate through cooperatives, they work with cooperatives. So yeah, so the co-op is fair trade programs tend to operate through cooperatives. They work with cooperatives.

So yeah, so the co-op is sort of important in that that's kind of a link between farmers and the fair trade system. And then the co-op is kind of what gets evaluated or audited by the fair trade organizations to kind of make sure that they're complying with these standards. So it could be environmental standards related to having organic certifications. They also have policies against using child labor, things like that, that they have to abide by in order to be fair trade. I'm wondering, though, because it sounded like you pay a premium price if you're getting fair trade organic with a certification for the beans. But we talked before about how corporations don't really want to pay more for the beans that they're getting. So is it easy enough to get the companies to agree to pay

that? The short answer is no. I mean, for the most part, the kinds of companies that are paying this, that are willing to, you know, to buy fair trade and organic are these kind of niche companies that are relying on consumers in countries like Canada who want to buy fair trade and want to buy organic. One of the crops I visited, you know, they would try to sell as much as possible through the fair trade system, but they couldn't always get fair trade or organic buyers for all the cocoa that their members would produce. And so some of the cocoa would have to be sold as if it were just conventional cocoa using market prices. What they essentially told me was that cocoa purchasers, that these companies, what they'll essentially try to do is buy up as much cocoa as possible when the market rate is quite

low. And then when the market rate is higher, they'll try to buy nothing at all, or they will offer prices that are below market rates to buy the cocoa. And so they had a huge stockpile of, you know, thousands of bags stretching two stories tall in the back corner of their warehouse of cocoa from last July's harvest that they, you know, essentially hadn't sold because they couldn't find a fair trade, you know, enough fair trade and organic buyers to buy all that cocoa at those prices. And so they were just sort of holding on to the cocoa, hoping that they could find a buyer or that, you know, that the market conditions would change, you know, such that they could sell it. I mean, so it does really sound like there's a lot of power dynamics at play here, but something like the co-op really does make things better for farmers, it seems like, better for Marisol. Is that fair to say, Adrian? Yeah, that's right. I mean, all the farmers that I met, you know, in the DR who are part of these

co-ops said that things were much better for them since joining. Better, of course, is a relative thing. You know, the living conditions, the living standards are certainly different than, you know, than what you'd see in Canada. But they said compared to kind of their lives before, you know, things were better under the co-ops. And for Marisol in particular, I mean, how has her farm doing as opposed to how it was when under her father? So she still sort of has her business interests tightly interlaced with the rest of her family. You know, one of her sisters took over her dad's chair rental business. But she said that sort of overall the farm is contributing significantly more to that,

to kind of sustaining the family than it was, you know, under her father. I mean, she told me that her income had roughly doubled from the time that her father was owning it or was running it. For her, the next kind of step in the fight is climate related, where she said that the drought, you know, has been so bad this year that she's afraid that her reduction might go down by about half, just based on trees not producing as much because of the drought conditions. But she's sort of trying to continue innovating by planting more, you know, resilient cocoa tree hybrids, that sort of thing, and hoping to sort of, you know, to kind of keep her farm going that way. So yeah, her hope is that she can kind of keep the farm going, you know, keep it profitable enough to sort of keep it in the family,

you know, when she's ready to retire. Yeah. Adrian, thank you so much for taking the time to speak with me today. Thanks for having me. That's it for today. I'm Naina Karaman-Wilms. A special thanks to former intern Wafa El-Rayis in producing this episode. Our summer producer is Nagin Nia. Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show. Adrienne Chung is our senior producer, and Angela Pachenza is our executive editor. Thanks so much for listening, and I'll talk to you tomorrow.