Defining Sustainability in the Cocoa Sector
The Impact of Sustainability Discourses on the
Effectiveness of Private Sustainability Standards
Master Thesis Justus Dengerink
University of Amsterdam Student number: 5832616
Selective Master in International Relations Gijsbrecht van Aemstelstraat 27 Research Project: Global Politics of Sustainability 1091 TB Amsterdam, The Netherlands Research Supervisor: dr. L. W. Fransen E-mail: Just.Dengerink@gmail.com
Table of Content
1. Introduction ... 5
2. Theoretical Framework... 7
2.1 The Rise of Private Transnational Governance... 7
2.2 Zooming In: Private Sustainability Standards ...9
2.3 Sources of Standard’ Effectiveness...11
2.4 Sustainability Discourses and Standard’ Effectiveness ...13
3. Methodology ...15
3.1 Case selection ...15
3.2 Methodology & Methods ...16
3.3 Operationalization of concepts ...17
3.3.1 Sustainability discourses...17
3.3.2 Standard’ effectiveness ...19
3.4 Data Sources...24
3.5 Validity and Reliability...25
4. Case Description ... 26
4.1 Introducing the Cocoa Value Chain ...26
4.2 Challenges for the Cocoa Sector ...27
4.3 Sustainability Issues in Cocoa Producing Countries ...28
4.4 Sustainability Initiatives in the Cocoa Sector...29
5. Results... 32
5.1 Mapping Sustainability Discourses in the Cocoa Sector ...32
5.1.1 Modernism: Serving the Global Market...32
5.1.1.1 Raising Productivity ...32
5.1.1.2 Professionalization of Farmers...33
5.1.1.3 Intensification of Production Methods ...34
5.1.1.4 Increasing the Scale of Production...35
5.1.2 Absolute Idealism: Towards Global Governance ...36
5.1.2.1 The Need for Governance...36
5.1.2.2 Improving Labour Conditions ...37
5.1.2.3 Addressing Global Environmental Challenges...38
5.1.2.4 Making Cocoa Farming Attractive ...38
5.1.3 Subjective Idealism: Serving Local Needs ...40
5.1.3.1 Listening to Local Needs ...40
5.1.3.2 Addressing Poverty ...41
5.1.3.3 Towards a More Equitable Value Distribution ...41
5.1.3.4 Empowering Women Cocoa Farmers...43
5.1.4 Post-modernism: The Challenges of Mainstreaming Sustainability ...44
5.1.4.1 Access to Affordable Chocolate ...44
5.1.4.2 Ensuring Food Safety...44
5.1.4.3 Towards ‘Feel-Good’ Consumerism...45
5.1.4.4 Expanding the Fine Flavour Market ...46
5.2 Connecting Sustainability Discourses to Sustainability Standards...48
5.2.1 Fairtrade: Empowering Farmers, Local Needs...48
5.2.2 Rainforest Alliance: Environmental Focus, Market Friendly ...49
5.2.3 UTZ Certified: Business Orientation, Broad Coverage...50
5.3 The Effectiveness of Sustainability Standards in the Cocoa Sector ...52
5.3.1 Formulation of Standards ...52
5.3.3 Monitoring of Standards ...56
6. Analysis ... 59
6.1 The Impact of the Subjective Idealism Discourse on the Effectiveness of Fairtrade...59
6.2 The Impact of the Absolute Idealism Discourse on the Effectiveness of Rainforest Alliance ...60
6.3 The Impact of the Modernism Discourse on the Effectiveness of UTZ Certified...61
1. Introduction
The focus of this master thesis is on the role of private sustainability standards, a form of private governance in which corporate commitment to ethical standards is organized in sector-wide codes of conduct with external review. Private sustainability standards are no value-free concept.
It comes therefore to no surprise that there are many controversies around the contribution of certification to the improvement of social and environmental conditions in developing countries. The debates on the effectiveness of private sustainability standards generally revolve around three issues: the stringency of standards and their level of monitoring, the amount of benefits they have for certified farmers and the impact they have on power relations within the value chain.
In the first debate, some argue that the stringency of most existing private sustainability standards is high enough to improve the conditions of cocoa farmers and rectify some of the power imbalances in the value chain (Bacon, 2005). In contrast, others argue that instead of raising the bar on social and environmental conditions many standards merely ‘hold’ the bar as they do not go beyond existing regulation (Raynolds et al., 2007).
The second controversy revolves around the benefits sustainability standards have for certified producers. Although first evidence indicates that producers tend to be somewhat better off when participating in private standards, the current knowledge base on this subject is still very thin in terms of scope, method and depth of coverage (Blackman & Rivera, 2010; Resolve, 2012; ITC, 2011).
In the third debate, many scholars question whether involving mainstream businesses in attempts to empower marginalized growers is an effective strategy at all. While fair trade products were initially introduced to challenge and transform the corporate market system, the mainstreaming of these separate sustainable value chains through private sustainability standards would water down the fundamentals of fair trade and limit its transformative potential (Jaffe & Bacon, 2008).
This thesis looks at a fourth aspect that might play a role in determining the effectiveness of
sustainability standards: the role of discourses. Private sustainability standards do not only change the sustainability of production practices in developing countries, they also shape the minds of Southern stakeholders about what sustainability entails. They do not merely establish new regulatory frameworks to which Southern actors have to comply, they also shape the meaning of key normative concepts and induce discursive shifts that influence the way in which sustainability politics are framed. They are surrounded by discourses about what sustainability is and should be.
This thesis will have a closer look at the effectiveness of sustainability standards in the cocoa sector. For three reasons, the cocoa value chain presents an interesting case. First of all, cocoa production has been criticized repeatedly over the past two decades for its poor environmental, social and economic conditions. Issues as child labour, poverty and deforestation have repeatedly made the news. Second, because of this recurrent attention for the sustainability issues in the cocoa sector, businesses, governments and civil society actors have given their full support to the adoption of private sustainability standards. Therefore, the speed at which certified cocoa has been expanding is much higher than in other commodities. Third, the cocoa sector is an interesting case because relatively little research has been done on the effectiveness of sustainability standards in this sector.
Although the cocoa sector presents an interesting and unique case for measuring standard’ effectiveness, this thesis aims to produce results that will to a large extent also apply for other, related value chains of agro-commodities. The major private sustainability standards in the cocoa sector (UTZ Certified, Rainforest Alliance and Fairtrade) are also active in the coffee and tea sectors, in which producing countries face similar sustainability challenges. It is therefore expected that the role which discourses on sustainability play in determining standard’ effectiveness in these sectors, will be largely similar to the way in which sustainability discourses in the cocoa sector relate to the effectiveness of standards.
Taking the cocoa sector as a case study, this research aims to answer the following research question:
What is the role sustainability discourses play in determining the effectiveness of private sustainability standards in contributing to sustainable development?
To answer this research question, first a theoretical framework is outlined in chapter 2, in which the theories on sustainability discourses and the sources of effectiveness of private standards are described. Chapter 3 provides an overview of the cocoa sector, the sustainability issues that this sector is facing and the major private sustainability standards active in this sector. This is followed by an outline of the methodology in chapter 4 and a detailed description of the results on both sustainability discourses and standard effectiveness in chapter 5. Finally, chapter 6 analyzes these results by linking the overview of the effectiveness of sustainability standards in the cocoa sector to the major sustainability discourses found, after which the main research question is answered in the concluding chapter 7.
Theoretical Framework
This chapter provides an overview of the many ways in which discussions about the effectiveness of sustainability standards are embedded in wider theoretical debates about private standards as part of an emerging realm of private transnational governance. Moreover, it summarizes the body of knowledge political scientists have gathered on the sources of standard’s effectiveness, while showing how the role of ideology and discourse has received relatively little attention in this academic debate. Zooming in on the cocoa sector, it shows the variety of competing sustainability standards and the discourses in which they are embedded. It concludes with a set of research questions that will guide this thesis in exploring the importance of sustainability discourses for the effectiveness of sustainability standards in the cocoa sector.
2.1 The Rise of Private Transnational Governance
On the stage of global environmental governance, the power of intergovernmental and
transgovernmental regimes is increasingly challenged by a fast-growing regime of private transnational governance (PTG), in which the traditionally prominent role of governments has been replaced by alliances of non-governmental actors, such as businesses, nongovernmental organizations (NGOs) and consumer organizations (Gereffi, 2001). Three different but related developments have led to this recent rise of private governance in the global politics of sustainability.
First, traditional forms of global governance are facing a legitimacy crisis (Esty, 2002; Zurn, 2004). In a globalizing world with increasing cross-border interactions and fast-growing global trade, governments have increasing difficulty to exercise their power. This is clearly visible in the global politics of
sustainability, where Western governments have shown to have little control over the shift of
environmental impacts of production towards developing countries with their relatively underdeveloped environmental regulation and enforcement. As these Western governments are not entitled to address production conditions in these developing countries directly, they are dependent on the long and difficult route of intergovernmental negotiations (Vermeulen & Seuring, 2009; Dingwerth, 2008). Since the 1990s, a combination of enforcement limits and negotiation deadlocks within international public instititutions and a lacking capacity of national governments to enforce social and environmental regulations has led to a ‘regulation vacuum’ that was waiting to be filled by increasingly powerful private actors (Fransen, 2012). Second, the rise of neoliberal policies since the early 1980s has led to widespread deregulation in
previously government controlled sectors, especially in developing countries. Particularly in the agro-food sector, traditionally a bastion of government control, privatization has been widespread (Higgins & Lawrence, 2005). As market control is increasingly left to private actors, a move is visible from “producer-driven” chains, in which producers have most of the control over capital and knowledge assets, to more “buyer-driven” commodity chains, in which processors and name-brand distributors control the market (Gereffi, 1994).
Third, a shift is visible in how globally operating companies are addressed in relation to the externalities of their products. When sustainability gained prominence on the political agenda in the late 1960s and 1970s, commodity producers were mainly addressed by regulative approaches of national and local governments , while environmental NGOs and civil society actors pushed these governments to improve the effectiveness of these policies. Since the late 1980s and 1990s however, consumer organizations and NGOs started to directly address businesses on their societal responsibilities, responding to the growing consumer demand for “fair” and “sustainably” produced goods. Increasingly, businesses and other non-state actors started to work together on the negative impacts of global production chains, thereby doing away with the classical, adversarial image of environmental politics (Vermeulen & Seuring, 2009). Instead of lobbying governments to establish certain policies and rules non-governmental actors are increasingly joining forces to set and implement those rules themselves (Dingwerth, 2008).
The result of these developments has been the rise of private governance systems, in which “private actors are increasingly engaged in authoritative decision-making that was previously the prerogative of sovereign states ” (Culter, Haufer & Porter, 1999). Other names employed for essentially the same type of governance are non-state market driven (NSMD) governance systems, Sustainable Supply Chain Governance (SSCG) (Cashore, 2002; Vermeulen & Seuring, 2009). Today, these schemes constitute a relatively solid third pillar of global governance, thereby complementing the existing intergovernmental regimes and transgovernmental networks that govern environmental politics.
However, whether this rise of private governance is a desirable development is a controversial topic. Many private governance institutions are considered legitimate because they are portrayed as a contribution to the democratization of world affairs, by being the efficient alternative to purportedly “undemocratic” international institutions (Bernstein and Cashore, 2008). In the meantime, critics argue that transnational governance schemes export “Northern” ideas and rules, further weakening Southern interests by bypassing democratically elected governments (Friedrichs, 2005; Dingwerth, 2008).
Within the realm of private transnational governance (PTG) systems, different types or ‘generations’ of private governance approaches can be distinguished (Vermeulen & Seuring, 2009; Dingwerth, 2008). In the first generation of single firm approaches or unilateral schemes individual firms have been taking the lead in improving social and environmental conditions throughout the value chain. A second generation is formed by joint product approaches or bilateral schemes, where third parties assure independent control of sector-wide private sustainability standards. Well-known examples are MSC and Fairtrade. Cross sectoral approaches or multilateral governance schemes form the third and most recent generation of standards, where a wide range of private actors set standards that go beyond single products or sectors. Examples are the GAP standards for sustainable agriculture and the GRI for responsible investment.
2.2 Zooming In: Private Sustainability Standards
The focus of this master thesis is on the role of private sustainability standards, the ‘second generation’ of private governance in which corporate commitment to ethical standards is organized in sector-wide codes of conduct with external review. This type of private governance is also referred to as ‘voluntary private standards’, to differentiate them from public mandatory standards, public standards with a voluntary character and private standards that have been made mandatory by public bodies (Henson & Humprey, 2010). Another often-used term is ‘third-party certification’, which distinguishes the quality of these independently reviewed standards from first-party certifications, which are forms of internal corporate self-regulation and second-party certifications, where non-independent industry associations establish the standards and verify compliance (Gereffi et al., 2001).
Many of the first private sustainability standards originated from civil society. The first organic guidelines were designed by farmers associations, while the first Fair Trade standards had their origin in the social justice movement of the 1950s. However, it took until the 1980s before the different Alternative Trade Organisations (ATOs) that had emerged from the fair trade movement began codifying their mutually accepted standards by registering and certifying the use of Fair Trade labels (Giovannucci & Ponte, 2005). Until today, NGO’s play a large role in the development and practice of sustainability standards, thereby assisting small producers in developing countries to participate in global trade, while improving their social and environmental conditions.
Meanwhile, the opening of global markets via the WTO and its predecessors has allowed for the formation of global oligopolies: the strong concentration of market power in a limited amount of global retailers. As retailing in the agro-food sector becomes more oligopolistic, retailers have the option to minimize price competition and to compete as much as possible on other qualities of their products, such as quality, safety, variety, origin and convenience. Private sustainability standards have been increasingly employed by retailers to facilitate this process (Hatanaka et al., 2005) Retailers increasingly view agrifood standards as strategic business tools. They use private standards strategically, to open up new markets, coordinate their operations, decrease risks in the supply chain, ensure quality and safety to their consumers or to define niche products and markets that complement their own brands. Many retailers also use sustainability standards to protect their reputation as some of these standards, such as Fair Trade and organic, have been particularly successful at conveying a positive image to consumers (Giovannucci & Ponte, 2005).
Consumers are increasingly aware of the socio-economic plight of developing country farmers and the threats of tropical agriculture to global biodiversity. This has promoted the recognition of sustainability standards and has led to a fast-growing market value (Giovannucci & Ponte, 2005) Whereas the first sustainability standards for tropical commodities were developed for small yet receptive niche audiences of cause-conscious consumers, the target group for these standards has become much broader, as
growing numbers of consumers are willing to spend money on products that make them feel like they are acting in a socially responsible fashion. Slowly, a new politics of food is emerging, in which the calls of civil society for improved production conditions are increasingly complemented by the political practice of consumption as “a new way to save the world” (Hatanaka et al., 2005).
Often, multiple overlapping standards, developed by both social movement organizations and firms, co-exist and compete for adopters in the same sector despite being seemingly similar in their goals, design, processes and content. Examples of such a multiplicity of standards can be found in a range of fields, including coffee, cocoa, and many other agricultural, horticultural, forestry and textile products (Bartley 2007; Gulbrandsen, 2008). Others argue that what is taking place is a process of meta-standardization: while there is convergence at the level of core criteria and ‘rules of the game’, variety remains at the level of specialized attributes which allows standards to differentiate themselves from other standards (Reinecke et al., 2011)
There is considerable debate on whether such a multiplicity of private standards is beneficial. Some argue the competition between various standards will lead to a ‘race to the bottom’ in terms of regulatory standards and practices (Cashore et al 2005). As such a situation enables business to choose between different regulators, they might be inclined to always choose for the most lenient standards Moreover, the coexistence of multiple standards has the tendency to create confusion and increasing costs among those regulated (Fransen 2011). Finally, competing sustainability standards can also confuse the consumer base and threaten their support for private regulation through sustainability standards as a whole (Fransen & Conzelmann, 2013).
At the opposite end of the spectrum, scholars argue that fragmentation between sustainability standards may be even beneficial, as this might encourage a ‘race to the top’ in terms of standards and practices, which would increase their overall effectiveness (Bertels & Peloza, 2008; Overdevest & Zeitlin, 2014; Vogel, 1997). Such a multiplicity of standards could be seen as a division of labor, where different sustainability standards cater for different needs, each with their own unique advantages (Auld, 2014; Overdevest & Zeitlin, 2014). From this view, reducing standards’ multiplicity might in fact hamper learning and innovation and could lead to a single standard that is based on the lowest common denominator (Kolk et al., 1999).
Again others challenge this dichotomous view on standards multiplicity as either a source of innovation or confusion. Instead, they suggest there might actually be a productive synergy among higher and lower bar standards, where higher standards continue to differentiate themselves while the growing amount of mainstream standards can learn from the more established ones (Reinecke et al., 2011; Auld, 2010)
2.3 Sources of Standard’ Effectiveness
As with private governance in general, private sustainability standards are no value-free concept. It comes therefore to no surprise that there are many controversies around the contribution of certification to the improvement of social and environmental conditions in developing countries. These debates on the effectiveness of private sustainability standards generally revolve around three issues: the stringency of standards and their level of monitoring, the amount of benefits they have for certified farmers and the impact they have on power relations within the value chain.
First, there is substantial debate among scholars about the level of stringency of standard’ requirements. Some argue that the stringency of most existing private sustainability standards is high enough to improve the conditions of cocoa farmers and rectify some of the power imbalances in the value chain (Bacon, 2005). In contrast, others argue that instead of raising the bar on social and environmental conditions many standards merely ‘hold’ the bar as they do not go beyond existing regulation (Raynolds et al., 2007). Some scholars also find that standards lack sufficient monitoring and evaluation systems, as they often fail to consistently and accurately document their exact sustainability impact (Giovannucci & Ponte, 2005). A second controversy revolves around the benefits sustainability standards have for certified producers. Although first evidence indicates that producers tend to be somewhat better off when participating in private standards, the current knowledge base on this subject is still very thin in terms of scope, method and depth of coverage (Blackman & Rivera, 2010; Resolve, 2012; ITC, 2011). Many sustainability standards provide no guarantee that direct benefits, such as price premiums, necessarily reach farm labourers or local communities. As a consequence, these benefits are sometimes lost along the value chain or end up in the hands of the managers instead of the members of the farmer organization that is
involved in the certification process (Giovannucci & Ponte, 2005).
Finally, many scholars question whether involving mainstream businesses in attempts to empower marginalized growers is an effective strategy at all. While fair trade products were initially introduced to challenge and transform the corporate market system, the mainstreaming of these separate sustainable value chains through private sustainability standards would water down the fundamentals of fair trade and limit its transformative potential (Jaffe & Bacon, 2008). The limited participation of developing country producers in standard setting and monitoring procedures would reproduce power disparities between economic actors in North and South (Dingwerth, 2008). Moreover, the introduction of sustainability standards might even contribute to the further marginalization of smallholder producers, as many of them lack the resources to comply with these standards. (Sodano et al., 2008).
As these major debates on standard’ effectiveness show, there are considerable differences in how political scientists explain the impacts of private standards on sustainability. Within political theory, different schools of political thought offer contrasting and sometimes complementary perspectives on the effectiveness of sustainability standards.
The sociological perspective suggests that much of the effectiveness of standards depends on the ability of governance organizations to reflect prevailing norms (Cashore, 2002) or by advancing certain norms through processes of socialization and learning (Ruggie, 2003). A second view on standards’ effectiveness is provided by political institutionalists, who consider sustainability standards to be contested concepts, therefore judging their effectiveness of standards more on their capacity to advance certain interests or ideological perspectives (Bartley, 2007; Fransen, 2011). A third perspective on the effectiveness of private sustainability standards is provided by the more Neo-Gramscian and poststructuralist schools of political science, who focus on the importance of standards as discourses, producing and reproducing identities and relations (Merk, 2007; Spence,2007). In their view, standards are considered effective to the extent that they contribute to legitimizing capitalism and more business-friendly sustainability views.
From these three approaches, it becomes clear that the world of ideas a standard connects with - be it through norms, ideologies or discourses – is considered to be an important determinant of the effectiveness of sustainability standards. It is this relation – between sustainability approaches or
discourses on the one hand and standard effectiveness on the other – that forms the core of this thesis. A more detailed description of the concept ‘sustainability discourses’ is provided in the following paragraph.
An idea on how to operationalize the concept of standard’ effectiveness is offered by a fourth, more rationalist approach of standards’ effectiveness. Potoski and Prakash (2013) suggest two criteria that can be rightfully used to measure the effectiveness of standards: the stringency of the obligations imposed on the participants and the monitoring and enforcement mechanisms that ensure that participants adhere to the criteria of the standard. Each of these elements will be discussed below in more detail.
In assessing the stringency of standards, Potoski and Prakash (2013) differentiate between lenient club standards, producing little sustainability impacts beyond what is regulated by government, and stringent club standards, providing high levels of positive social externalities, beyond regulation. Other scholars suggest that standards who merely halt the decline in existing conditions can be seen to have a low stringency, whereas those standards with high stringency enhance sustainability (Raynolds et al., 2007)
Monitoring and enforcement mechanisms allow standard organizations to ensure that the target group conforms to the standards set by the organization (Breitmeier, Young & Zurn, 2006). In assessing the strictness of monitoring and enforcement mechanisms, Kalfagianni & Pattberg (2013) suggest five conditions for strict monitoring: (1) compliance with standard requirements is evaluated by independent auditing firms; (2) the auditing firm is accredited by an independent body; (3)the audit results are publicly availabe; (4) there is no distinction between rules that have to be implemented and rules that can be implemented voluntary and (5) there are severe consequences in the case of non-compliance.
2.4 Sustainability Discourses and Standard’ Effectiveness
Private sustainability standards do not only change the sustainability of production practices in developing countries, they also shape the minds of Southern stakeholders about what sustainability entails. They do not merely establish new regulatory frameworks to which Southern actors have to comply, they also shape the meaning of key normative concepts and induce discursive shifts that influence the way in which sustainability politics are framed (Dingwerth, 2008). They are surrounded by discourses about what sustainability is and should be. This thesis looks at the role discourses might play in determining the effectiveness of sustainability standards.
A discourse can be defined as ‘an ensemble of ideas, concepts and categories through which meaning is given to social and physical phenomena, and which is produced and reproduced through an identifiable set of practices’ (Hajer & Versteeg, 2006). Discourses analysis is the study of language-in-use. Using discourse analysis in environmental politics can therefore help to reveal the role language plays in politics. The analysis of discourse can be placed in the interpretative or social constructionist tradition in the social sciences (Guba & Lincoln, 1989) In this approach, reality is seen as socially constructed, which means there is no one single ‘truth’. Instead, there are many different realities, which are dependent on the way how people construct reality, the meaning they attach to certain phenomena. For discourse analysis in environmental politics, that means that it is not the environmental phenomenon itself that is important, but the way in which society makes sense of this phenomenon (Hajer & Versteeg, 2006). One reason why this social constructionist approach has some appeal to researchers of environmental policy and politics might be that it appreciates the ‘messy and complex’ interactions that make up the environmental policy process (Richardson & Sharp, 2001) Concepts such as sustainable development cannot be imposed top-down, but are contested in struggle about their meaning, interpretation and implementation (Hajer & Versteeg, 2006) Discourse analysis therefore allows one to see environmental politics ‘both as a process that seeks to generate an answer to a real world problem and as a critical struggle, where conflicts between discourses may be exacerbated, sidestepped or resolved’ (Richardson, 1995)
Two overarching discourses seem to dominate the academic debate on sustainability standards. On the one hand, sustainability standards are framed as the product of progressive civil society and social movements, as a means to achieve their goals of farmer empowerment, improvement of social conditions and environmental sustainability (Giovannucci & Ponte, 2005; Raynolds et al., 2007; Vermeulen & Seuring, 2009). On the other hand, a second discourse frames the same standards as a mainstream strategic tool for big buyers, manufacturers and retailers to increase their market power, increase the security of their supply and protect their reputation in an age of increased consumer awareness (Guthman, 2007; Fulponi, 2006; Hatanaka et al., 2005).
These views on sustainability standards coincide with two distinct collections of discourses on sustainable development: mainstream sustainable development (MSD) discourses on the one hand and critical discourses on sustainable development on the other (Adams, 2007). Within the mainstream, there is a broad consensus on what sustainable development entails. The mainstream has been essentially reformist and convergent in its propositions. It has sought to refocus existing development initiatives and policy action rather than transform their principles or practice. Sustainable development has been build on the premise that economic growth and environmental protection can be reconciled if the economy were organized around productive activities that do not harm the environment. MSD does not demand radical shifts in corporate or national wealth or power, or shifts in social or industrial organization. For
mainstream discourse, the rise of private sustainability standards is a continuation of ‘business as usual’. However, there are also countercurrents within the mainstream of sustainable development that offer a significant critique of the dominant model. This form of radical environmentalism argues for far-reaching social, economic and political change: by doing so it does not only condemn the environmental
degradation but also the society that did the degrading (Veldman, 1994). Instead of being economistic, technological, instrumental, technocratic, national and unitary these radical green ideas are more
ecological, institutional, communicative, deliberative democratic, international and diversifying (Christoff, 1996). Within this discourse of radical environmentalism, sustainability standards can be seen as a tool for progressive forces to empower farmers and reduce environmental degradation (Adams, 2007). In the realm of sustainability standards, these ‘radical’ social movement driven and more ‘mainstream’ industry-driven discourses are involved in normative disputes about sustainability, which is the main object of certification. These ideological differences in interpretation about what sustainability is, stimulate competition over conceptual ownership and moral authority (Shamir, 2008). Standards setters use the ambiguity of sustainability in order to position themselves vis-a-vis competing standards by emphasizing particular aspects of the concept, even when standards might in fact be increasingly similar. In these competing ‘standard markets’, two parallel processes are taking place. On the one hand, these different standards have a tendency to converge: they create ‘certification platforms’, adopt industry-level codes of good practice and increasingly use a common sustainability vocabulary. At the same time, these standards also tend to differentiate themselves, by targeting different producer groups, emphasizing different features of sustainability and offering different stringency levels (Reinecke et al. 2011).
It is this second process of standard differentiation that is central to this thesis. It will provide an analysis of the role ideologies, values and normative legitimacy play in explaining the emergence of these
differentiated standard markets. Analyzing discourses on sustainability, this thesis aims to unravel the way in which political struggles over the meaning of sustainability may lead to variations in the effectiveness of sustainability standards. The research question is therefore formulated as follows:
What is the role sustainability discourses play in determining the effectiveness of private sustainability standards in contributing to sustainable development?
3. Methodology
3.1 Case selectionThis thesis aims to contribute to the academic debate on the effectiveness of private sustainability standards in the global South. In studying the influence of sustainability discourses on standard’ effectiveness, it will focus on the case of the cocoa sector. Chapter 5 of this thesis provides an overview of the cocoa sector. For three reasons, the cocoa value chain presents an interesting case. First of all, cocoa production has been criticized repeatedly over the past two decades for its poor environmental, social and economic conditions. Most cocoa farmers are smallholders, with low productivity, small plot sizes and limited solvency. Many of them, especially in West-Africa, live under dismal conditions, well below the poverty line. Cocoa farming is generally hard work under harsh circumstances. Farmers make long hours of hazardous labour and often use agro-chemicals without sufficient protective equipment. Moreover, the production of cocoa leads to the deforestation of tropical forests, while its chemical use contaminates water and soils. (Hütz-Adams & Fountain, 2012).
Second, because of this recurrent attention for the sustainability issues in the cocoa sector, businesses, governments and civil society actors have given their full support to the adoption of private sustainability standards. What makes the cocoa sector exceptional is the fact that the speed at which certified cocoa is expanding is much higher than in other commodities. While in the coffee sector, the share of certified coffee has grown in a period of 10 years from 1 % in 2002 to 16 % in 2012, the share of certified coffee quickly catched up: in only five years it grew from 1 % in 2008 to 13 % in 2012 (Hütz-Adams & Fountain, 2012; Panhuysen & van Reenen, 2012; CBI, 2013).
Third, the cocoa sector is an interesting case because relatively little research has been done on the effectiveness of sustainability standards in this sector. While dozens of articles and reports have been written on standards in the coffee sector, only 17 reports have been written so far that relate to the effectiveness of standards in the cocoa sector, most of them of a more descriptive or theoretical rather than empirical nature (Nelson& Galvez, 2000; Ronchi, 2002; Laroche & Guittard, 2009; Tulane University, 2011; FAIR, 2012; Melo & Hollander, 2013; Abel & Vogel 2009; Vogel 2009; Krain et al., 2011; COSA/Rainforest Alliance, 2010; LEI Wageningen, 2012; LEI Wageningen, 2013; KPMG, 2013). Although the cocoa sector presents an interesting and unique case for measuring standard’ effectiveness, this thesis aims to produce results that will to a large extent also apply for other, related value chains of agro-commodities. The major private sustainability standards in the cocoa sector (UTZ Certified, Rainforest Alliance and Fairtrade) are also active in the coffee and tea sectors, in which producing countries face similar sustainability challenges. It is therefore expected that the role which discourses on sustainability play in determining standard’ effectiveness in these sectors, will be largely similar to the way in which sustainability discourses in the cocoa sector relate to the effectiveness of standards.
3.2 Methodology & Methods
For this thesis, a qualitative methodology is chosen, as the major concepts of this thesis - sustainability discourses and standard’ effectiveness – have shown to be difficult to quantify. Also, a qualitative approach is expected to do more justice to the subjective nature of discourses on sustainability and the multi-faceted nature of the effectiveness of sustainability standards.
For analyzing sustainability discourses, the method of Critical Discourse Analysis (CDA) is used, a type of discourse analysis that was developed by Fairclough (1992). In contrast to other, more poststructuralist types of discourse analysis who argue that discourses are at the base of all social realities around us, CDA considers discourses to be part of a social structure with both discursive and non-discursive elements (Jorgensen & Phillips, 2002).
The method of Critical Discourse Analysis (CDA) developed by Fairclough (1992) analyzes discourses by investigating three related dimensions. The first dimension is the text itself, which can be analyzed by looking at the formal features of the text. A close examination of these formal features, such as its vocabulary and the use of metaphors, may cast light on how discourses are activated textually and arrive at, and provide backing for, a particular interpretation (Jorgensen & Phillips, 2002).
The second dimension is the discursive practice, which covers all the processes in which the text has been produced and consumed. The analysis of discursive practice shows how authors of texts draw on already existing discourses and genres to create a text and how receivers of texts also apply available discourses and genres in the consumption and interpretation of texts. It identifies the different discourses and genres that are articulated in the production and consumption of the text.
The third dimension central to doing a CDA is the wider social practice to which the text belongs. For this part of the analysis, a consideration is needed about whether the discursive practice reproduces or, instead, restructures the existing order of discourse and about what consequences this has for the social practice (Jorgensen & Phillips, 2002). It examines the extent to which the discourses in the text may contribute to changes in the wider social reality of which the produced text is part.
To assess the effectiveness of standards in the cocoa sector, two complementary methods are employed. First, the method of content analysis is used to analyze effectiveness by studying both the manifest and the latent content of standards and standard-related policy documents. Second, a literature review of the existing empirical research on the impact of sustainability standards in the cocoa sector will shed more light on how these standards contribute to sustainable development among cocoa producers.
3.3 Operationalization of concepts
This thesis revolves around the relation between two major concepts: sustainability discourses and standard’ effectiveness. To be able to measure these broad concepts, it is important to clearly define and operationalize both concepts. In this paragraph, first the concept of sustainability discourses will be covered, followed by an elaboration on the concept of standard’ effectiveness.
3.3.1 Sustainability discourses
Core to this thesis is the idea that the way in which sustainability is understood might have an impact on the effectiveness of sustainability standards in the cocoa sector. To discover the role different ways of talking and writing about sustainability have in standard’ effectiveness, the concept of discourses is used. A discourse can be defined as ‘a particular way of talking about and understanding the world’ (Jorgensen & Phillips, 2002). Analyzing discourses is studying ‘language-in-use’. Looking at the role of discourses on sustainability may thus help reveal the role language plays in environmental politics (Hajer & Versteeg, 2006).
When talking about such a broad concept as sustainability, different actors will have different definitions in mind. Inevitably, concepts such as sustainable development are therefore contested in ‘a struggle about their meaning, interpretation and implementation’ (Hajer & Versteeg, 2006). Environmental politics can thus be seen as both ‘a process that seeks to generate an answer to a real world problem’ and as ‘a critical struggle, where conflicts between discourse may be exacerbated, sidestepped or resolved’ (Richardson, 1995). As the world of private sustainability standards presents both a collaborative effort at defining sustainability as well as highly political arena with diverging interests, the role of discourses might be key for its understanding.
For this thesis, the discourse analysis is based on three type of sources: policy discussions during recently held conferences on sustainable cocoa, interviews with representatives from the major actors in the cocoa sector and website material from organizations in the cocoa sector.
As there is no research available on the role of discourses in the effectiveness of private sustainability standards, this thesis draws on the existing literature on the role of discourses in environmental policy to create a framework that formed the starting point for the discourse analysis. For generating this general framework., use is made of the extensive work done by the Netherlands Environmental Assessment Agency (PBL) on the role of worldviews in conceptualizing sustainable development (de Vries & Petersen, 2008; Egmond & de Vries, 2011) . In their work, they used surveys from all over the globe to construct four archetypical worldviews, that were dominant in all these surveys. These worldviews were placed in a grid of four quadrants, with two axes: the vertical axis ranging from local /individual to global/collective, the horizontal from market/material to solidarity/immaterial. This framework is displayed in figure 3.1 and will structure the discourse analysis on the following pages.
Figure 3.1 Diverging Worldviews
Within this framework , four different sustainability discourses can be delineated. The first sustainability discourse is modernism, which is globally oriented and market-focused. This discourse stresses the need for free markets, competition and innovation to reach the ideal of more economic growth (de Vries & Petersen, 2008). It stresses worldly , progressive and businesslike values (Egmond & de Vries, 2011). It can be placed in a stream of growth-oriented environmental policies that can be called ‘market
environmentalism’ (Adams, 2009).
A second sustainability discourse is that of absolute idealism, which is a globally oriented and solidarity-focused discourse that stresses the need of regulated markets, cooperation of actors and sustainable resource use (De Vries & Petersen, 2008). It has much in common with the governance and technology-based group of environmental policies that can be called ‘ecological modernization’ (Adams, 2009). A third sustainability discourse is that of subjective idealism, which has a local orientation and a focus on solidarity. This discourse stresses the need for community-based solutions, listening to local needs and improving local livelihood opportunities (De Vries & Petersen, 2008). This stream of environmental thought has also been coined as ‘environmental populism’, due to its participatory and community-focused orientation (Adams, 2009).
The fourth sustainability discourse is that of post-modernism, which has a market focus, but is locally oriented. The core values related to this discourse are freedom, ambition, achievement and
self-enhancement (Egmond & de Vries, 2011). Challenges are resolved through regional trade, consumerism and protectionism (de Vries & Petersen, 2008). The consumption and performance of the individual are central to this sustainability discourse.
3.3.2 Standard’ effectiveness
The second concept that needs operationalization is the effectiveness of standards. Standard’
effectiveness can be defined as the degree to which standards contribute to the improvement of social, economic and environmental conditions of the producers participating in that standard. It comes to no surprise that measuring such a broad concept can be done in various ways:
1. First, one could look at the formulation of the standard. Who is drafting the standard? How high are the standard requirements? In how much detail are its indicators formulated? How much room is there for interpretation?
2. Second, effectiveness can be measured by looking at the adoption of the standard. How many producers are actually certified? What is the market share of products carrying the certification label? What is the growth potential of the standard?
3. A third way of measuring standard’ effectiveness is by looking at the level of compliance of a standard. To what extent do producers actually comply with the standard requirements? What percentage of producers does have to face corrective measures or even leave the certification program because of non-compliance?
4. Standard’ effectiveness could be measured by looking at the monitoring of the standard. Is compliance with the criteria voluntary or obligatory? Within which timeframe should the criteria be met? How independent is the organization auditing the process? What are the consequences of non-compliance?
5. Another way of looking at standard’ effectiveness is studying the micro-level impacts of standards. What changes have these standards brought about in the conditions of certified producers? How do these changes compare to conditions among non-certified producers? Are there any spill-over effects to non-certified producers?
6. Finally, the effectiveness of standards can be studied at the level of macro-level impacts. What has been the contribution of the adoption of sustainability standards to macro-processes, such as economic growth, biodiversity levels, water pollution and deforestation?
These six aspects of standard’ effectiveness can be seen as chronological parts of the certification process, as presented in figure 3.2. To capture the effectiveness of this certification process, one would ideally cover all of the six constitutive elements.
Figure 3.2: Stages of the certification process
In this paragraph, each of these six possibilities of measuring standard’ effectiveness will be discussed in more detail , after which an assessment is made of their feasibility for measuring the effectiveness of the
major sustainability standards in the cocoa sector.
At the level of formulation of standards, three criteria are often used to describe the effectiveness of standards. The first of these two criteria is the stringency of the obligations imposed on the participants of standards. This is described in the literature as the degree to which the indicators laid down in the standard raise the bar, enhance sustainability or produce positive social externalities (Kalfagianni & Pattberg, 2013; Potoski & Prakash, 2013). From this perspective, sustainability standards can be positioned on a continuum ranging from low stringency, business as usual or baseline standards which merely halt the decline in existing conditions and exclude worst practices on the one hand, to high stringency, premium standards that are leading the way and are far ahead of common practices on the other side of the spectrum (Muradian & Pelupessy, 2005; Raynolds et al., 2007; Fransen, 2010). The literature also suggests several criteria to measure the level of stringency: whether both performance and management indicators are part of the standard; the degree to which the standard goes beyond existing regulation and the level of ambition of the targets laid down in the standard (Kalfagianni & Pattberg, 2013; Potoski & Prakash, 2013).
The second criterion that is often mentioned to describe the level of effectiveness at the level of formulation of standards is the level of specifity or prescriptiveness. This is the degree to which standards prescribe specific practices as opposed to allowing for more flexible interpretations (McDermott et al., 2007; Auld, Gulbrandsen & McDermott, 2008). Standards could thus be positioned on a scale from low specificity, where the criteria are rather vague and open for interpretation to levels of high specificity, where the criteria embodied in the standard are very detailed and leave very little room for interpretation (Kalfagianni & Pattberg, 2013).
A third criterion that is often mentioned to be relevant for the effectiveness of standards at the level of formulation is the drafting process of standards: which actors are actually participating in developing the standard? Two factors are considered to be of high relevance to this drafting process. On the one hand, the balance between business involvement on the one hand, which is assumed to lead to less stringent standards, and the participation of civil society on the other, which might push for higher levels of stringency (Fransen, 2010). A second aspect that is considered to be relevant is the level of participation of countries of origin and producers in drafting the standards, as it is their well-being that the standards aim to improve (Kalfagianni & Pattberg, 2013).
At the second stage of certification, the level of adoption of standards, measuring effectiveness can be done in a few ways. First, one can look at the amount of producers that have been certified according to the standard. However, in some cases only a share of the total amount of certified produce is actually sold on the market as certified, as the demand for certified products is often lower than the supply of certified produce. A second way of measuring the adoption of standards, is by looking at the market share of certified products that can be attributed to a certain standard. A third route could be taken by comparing the growth potential of different standards, as the adoption level of some standards might be stagnating,
while that of others experiences a steep growth. Another aspect of major relevance to the level of adoption of standards are the requirements for producers and companies to participate in these standards. Not only the cost of certification might be a barrier to both companies and producers, but also the entrance requirements for farmers and the additional expenses on inputs, labour and equipment which might be needed to comply with the standard’ requirements (Jaffee, 2008; KPMG, 2010). A third element that might be key to the level of adoption of standards is the level of services provided by the standard initiative. These services may include the provision of a premium, the distribution of inputs and equipment, the allocation of subsidies and the supply of credit to producers (Aidenvironment, 2012; ITC, 2011).
The third stage of certification, the level of compliance, can be measured in multiple ways to shed more light on the effectiveness of standards. First, one could look at the compliance rate of individual producers: the percentage of standard’ indicators certified farmers comply with. As many standards make a
difference between obligatory and voluntary indicators, this criterion could be made more specific by looking at both the share of obligatory indicators and the share of voluntary indicators they comply with. Also, standards often differentiate between indicators that need to be complied with from the first year of certification and indicators that may be complied with in later years of the certification process. To be sufficiently specific, one should thus measure the compliance rate of producers differentiated for the year of certification, for both voluntary and obligatory indicators. A second way of measuring the level of compliance is by studying the levels of non-compliance among the whole group of certified producers for each standard. Depending on the consequences of non-compliance, one could measure the share of producers that had to take corrective measures or leave the certification scheme because of their non-compliance. Here again, a differentiation of producers in years of certification would be wise, as for most standards compliance becomes more demanding over the years.
Much has been said in the literature on standard’ effectiveness at the fourth stage of certification, the level of monitoring. This can be measured by looking at the measures taken by the standard organization to ensure that the target group conforms to the indicators set by the standard (Breitmeier, Young & Zurn, 2006). A few criteria are often used to measure the strictness of monitoring procedures. First, strict monitoring requires a third-party auditor which is accredited by an independent body (Raynolds et al., 2007). Second, the monitoring process should be as transparent as possible. This requires audit results to be publicly available for all audits . Ideally, strict monitoring would also require the absence of any rules that have to be implemented on a voluntary basis. A larger share of obligatory indicators increases the strictness of monitoring (Kalfagianni & Pattberg, 2013). As monitoring processes differ within standard
organizations for standards that are targeted at smallholder producers, producer groups or plantations, it is important to differentiate the level of monitoring for these different type of standards (Raynolds et al., 2007).
The level of micro-impacts is essential to measuring the effectiveness of standards. Review studies show the wide range of reports and articles that has been written on the impact of private sustainability
standards at producer level (Blackman & Rivera, 2010; KPMG, 2010; ITC, 2011; Aidenvironment, 2012; RESOLVE, 2012; IDH, 2013). Most of these impact studies are only based on a small number of observations and focus mainly on either the social, the economic or the ecological impacts of cocoa certification. Moreover, the majority of these contributions lacks a comparison of the situation before and after certification and the inclusion of a non-certified control group in their sample (Blackman & Rivera, 2010; Aidenvironment, 2012).
Although of high importance to the measurement of standard’ effectiveness, the level of macro-impacts of sustainability standards is highly understudied. Only a few studies have looked at the impact of certification on the more systemic sustainability issues that many of the private sustainability standards aim to address (Marx & Cuypers; 2010; Auld, Gulbrandsen & McDermott, 2008; Visseren-Hamakers & Pattberg, 2013). More research in this direction could provide a valuable contribution by clarifying the impact private standards might have on major problems such as deforestation, rural poverty and declining biodiversity.
For the purpose of measuring standard’ effectiveness in the cocoa sector, it might be a valuable exercise to assess the feasibility of measuring effectiveness at each of the previously described stages of certification:
1. An analysis of the first stage of the formulation of standards can be based on the publicly available standard documents and codes of conduct of the three major standard organizations in the cocoa sector: UTZ Certified, Rainforest Alliance and Fairtrade. Additional information on the actors involved in the drafting of the standards is also digitally available.
2. An indication of the level of adoption of standards in the cocoa sector can be based on digitally provided information by the standard organizations and publicly available reports on
sustainability initiatives in the cocoa sector. Information on the requirements for participation in cocoa standards and the level of services provided by standard organizations can be retrieved from impact studies, standard’ websites and academic articles comparing these sustainability standards.
3. Measuring the level of compliance poses a serious challenge to the researcher. Information on the share of indicators individual farmers comply with is normally only collected in the internal control system (ICS) of the organization implementing the standard in the country of origin and is normally not accessible. The only type of information that is collected by standard
organization are the audit reports of the external, third-party auditors, who produce reports which only give the aggregate numbers on non-compliance for the whole group of certified producers. As none of the standards has made these audit reports on certified cocoa farmers available, measuring the level of compliance cannot be considered to be feasible in the scope of this study.
independence of the auditor and the transparency of the monitoring process can be assessed based on information made available on the websites of the respective standards. The share of obligatory and voluntary indicators can be assessed based on the publicly available standard documents and codes of conduct of the three major standards in the cocoa sector.
5. Measuring the effectiveness of standards on the level of micro-level impacts also seems a feasible option. Even though the amount of available impact-studies in the cocoa sector is much lower than in the coffee or forestry sector, there is sufficient empirical material to draw tentative conclusions on the micro-level impacts of cocoa certification.
6. The measurement of standard’ effectiveness on the level of macro-level impacts proves to be virtually impossible within the scope of this study. As sustainability standards in the cocoa sector address many different sustainability concerns, which are also addressed by a wide range of other initiatives in the sector, it is very difficult to attribute changes on a macro level to specific standards. So far no attempt has been done to measure macro-impacts of cocoa certification.
Based on the ‘feasibility check’ presented here we can narrow down our measurement of standard’ effectiveness in the cocoa sector to the range of what is possible. Figure 3.3 displayed below presents an overview of the stages of certification that will be analysed and the indicators that were selected to measure each of these aspects of standard’ effectiveness in the cocoa sector.
Figure 3.3: Stages of certification and indicators included in the analysis for this research
The operationalization of each of these ‘stages of certification’ into a set of distinctive and measurable effectiveness indicators will help to make a detailed comparison of the effectiveness levels of the major standards in the cocoa sector.
3.4 Data Sources
The data sources used for this thesis can be divided in two categories: those used for the discourse analysis on sustainability discourses in the cocoa sector and those used for the analysis of the effectiveness of sustainability standards in the cocoa sector.
For the discourse analysis, three types of data were collected. First, the websites of the major actors in the cocoa sector (businesses, NGO’s, standard organizations and sector organizations) were screened to collect their mission and vision with regard to sustainability in the cocoa sector.
Second, use was made of reports of policy discussions among these stakeholders during two major conferences around sustainability in the cocoa sector that were recently held: the CHOCOA conference on the the 28thof March 2014 and the World Cocoa Conference in the week of the 9th
until the 13thof June 2014, both held in Amsterdam.
Third, use was made of a number of 15 interviews with key actors in the cocoa sector, as is made visible in table 3.1.
Table 3.1 List of interviews held
Type of Actor Number of Interviews
Private company 3
Sector organization 2
Certification Organization 4 Civil Society Organization 3
Research Institution 3
Total 15
For the measurement of standard’ effectiveness, three types of data were used. First, use was made of the standard documents of each of the major sustainability standards in the cocoa sector: UTZ Certified, Rainforest Alliance and Fairtrade.
Second, use was made of publicly available reports and the websites of standard organizations for information on adoption levels and monitoring.
Finally, all available empirical studies on the impact of private sustainability standards on the conditions of producers in the cocoa sector were collected to be able to perform a literature analysis to assess the level of micro-impacts.
3.5 Validity and Reliability
The methods employed in this research pose several challenges in terms of validity and reliability. For example, the method of discourse analysis poses some challenges concerning content validity as the inductive nature of this method inhibits the development of specific indicators that represent the systematized concept of sustainability discourses on wants to measure. Also, the interviews with stakeholders might lead to a social desirability bias: interviewees might be inclined to paint a brighter picture than the reality which they are facing, leading to more concerns about whether you measure what you want to measure.
For the method of discourse analysis there are distinct challenges in terms of reliability. For a research like this to be reproduced in a similar way by someone who has read its methodology section, there should be a very clear description of what steps were taken within the discourse analysis to come to a certain amount of discourses. However, the inductive character of discourse analysis inhibits the
development of clearly defined, replicable steps which can ensure that another researcher doing the same research will come to similar conclusions.
Both the validity and reliability challenges described above can be addressed by increasing the robustness of the research. An often used method to increase robustness is the use of triangulation, using different indicators, data sources and methods to answer the same research question. As suggested earlier, a variety of data sources (standard documents, policy documents and stakeholder interviews) can be used to analyze the concepts discourses and standard effectiveness from different sides. Also a differentiation in methodology, using both discourse analysis and content analysis, might help to achieve more robust results.
To increase validity, open questions were used within the stakeholder interviews, while allowing
interviewees to speak in their own words. Within these interviews, care was taken to distinguish accounts from legitimations. For the content analysis, care is taken to make a clear distinction in the categories of documents used.
To specifically address threats to reliability, this thesis provides an extensive framework for the way in which the analysis of the sustainability discourses has been structured. For the content analysis, transparency has been pursued on the criteria applied to measure the different aspects of standard’ effectiveness, to further increase the reliability of the research.
4. Case Description
4.1 Introducing the Cocoa Value Chain
Cocoa is a tree crop cultivated in more than 40 tropical countries in Africa, Asia and Latin America. While two countries in West-Africa, Cote d’Ivoire and Ghana, account for 60 % of world production, Cameroon, Nigeria, Indonesia, Ecuador and Brazil are also large cocoa producing countries. Over 90 % of global cocoa production is cultivated by an number of 5.5 million smallholder farmers, with another 14 million rural workers who directly depend on cocoa for their income (Hutz-Adams & Fountain, 2012). As is made visible in figure 4.1, the cocoa chain has the typical shape of an hourglass. At the base, we find the millions of smallholder farmers and their workers. Farmers sell their fermented and dried cocoa beans directly (or in the case of Ghana through local buying companies and a state-eld marketing company) to a limited amount of large trading companies who dominate the cocoa sector, such as Cargill, OLAM and ECOM. Some of these trading companies also process the cocoa they buy, others sell them to one out of a selected group of cocoa processors or grinders, such as ADM, Cargill or Barry Callebaut. These
companies sell the processed cocoa products, such as cocoa powder, liquor and butter, to again a small group of globally operating chocolate manufacturers, such as Mondelez, Mars, Hershey and Nestlé. The final products are then sold to the large retailers, such as Wal-Mart, Tesco, Carrefour, Sainsbury’s or Ahold, who supply these chocolate products to a large consumer market, mainly in Europe and North-America.
4.2 Challenges for the Cocoa Sector
The cocoa sector is currently facing a series of related challenges. Currently, one of the major threats to the sector is the likelihood of an upcoming supply-demand gap: a substantial shortfall between supply and demand is expected by 2020 (Hutz-Adams & Fountain, 2012).. While the demand for cocoa continues to grow, production in West-Africa, the largest cocoa producing region, has been declining by 2 % annually in recent years.
This decreasing supply is the consequence of different processes that deserve attention. First, the cocoa sector is facing an ageing farmer population. The average age of cocoa farmers in West Africa is around 50 years. With a life expectancy around 60, the current generation of cocoa farmers will soon start passing away. However, there is a lack of interest among the younger generations to become a cocoa farmer. They find the hard work and limited rewards of cocoa farming discouraging and choose instead for more profitable crops, such as palm oil (Laven & Boomsma, 2012). Others, especially young men, leave the countryside and look for alternative employment in the cities. As a result, it is not unlikely that there will soon be a shortage of cocoa farmers to be able to meet global demand.
Another reason for the concerns about future security of supply is the low and stagnating productivity on most smallholder farms in West-Africa. Whereas cocoa plantations in South America can annually produce up to 2000 kg per hectare, farmers in West-Africa produce on the same hectare of land only 350 to 450 kg per year. This low productivity has several interrelated causes. First of all, the state of many cocoa farms is below standards. Many farms have ageing trees that are in need of replacement. But when new cocoa trees are planted, the planting material is often of low quality, resulting in low yielding trees. Moreover, the intensive mono-cropping and the lack of shade on most farms result in serious forms of soil degradation, further decreasing the level of productivity. A second cause of low productivity levels is the lack of knowledge among cocoa farmers on good agricultural practices, such as pruning, weeding and applying agro-chemicals, which might increase productivity. Thirdly, farmers struggle to get access to the inputs they need to farm better: farming equipment, fertilizers, pesticides, insecticides and protective clothing. As a result of the low use of agro-chemicals, cocoa farmers in West-Africa have a hard time to control pests and diseases, leading to serious crop losses. Finally, there is a pending shortage of workers in rural areas, who are needed to provide the extra labour that might spur farmers productivity.
A third major concern for the cocoa sector is the recent lack of public investment in the cocoa sector. Insufficient funds are allocated to the public structures, such as research institutes, extension services and marketing boards, which are essential to making the cocoa sector flourish. Moreover, the quality of public services in most cocoa producing regions is increasingly below standard: the quality of education is low and there is limited access to affordable health care. Finally, little of the tax revenues from the cocoa trade are re-invested in local infrastructure, such as roads and warehouses, which are key to the growth and success of the cocoa sector.
4.3 Sustainability Issues in Cocoa Producing Countries
On top of the current challenges in the cocoa sector, the past decade has seen growing attention for a range of issues that threaten the sustainability of the sector. Although at first most attention was drawn to social issues such as child labour, slavery and trafficking, this focus has recently shifted to also include environmental and economic aspects of sustainability.
In the environmental domain, four sustainability issues are dominating the picture: deforestation, soil degradation, biodiversity loss and climate change. The continuous expansion of cocoa production into new, fertile areas has led to large-scale clearing of virgin forestland to plant cocoa trees. In Ghana, cocoa cultivation has played a big role in contributing to the 2 % annual decline in forested areas (Hutz-Adams & Fountain, 2012). This deforestation process, coupled with inappropriate agricultural practices and mono-culture growing of crops has led to the rapid erosion and fertility loss of Ghana’s soils (MWH, 2006). Moreover, the expansion of cocoa farms into primary and secondary forests has contributed to the process of biodiversity loss in many cocoa producing countries. Climate change also poses a serious risk to the sustainability of the sector. A report by the International Centre for Tropical Agriculture (Climate Change / CIAT, 2011) shows that the cocoa-growing regions in Ghana and Ivory Coast will see a temperature increase of up to 2.0 °C by 2050, resulting in a major reduction in climate suitability for cocoa.
In the social domain of sustainability, the cocoa sector is facing a broad variety of issues. Human rights violations such as child labour, forced labour and trafficking are declining as a result of recent efforts of the industry. Recent research (Tulane University, 2011; Republic of Ghana, 2008) shows that child labour is still very common in cocoa-growing areas in Ghana: in these areas more than 50 % of children in agricultural households do work in agriculture On top of that, the working conditions of farmers and their workers are often very poor, with excessive hours and hazardous circumstances. Finally, gender inequality is a big problem in the sector, as women do close to half of all the work on the cocoa farm but receive only a fraction of the support and rewards which male cocoa farmers are getting.
In the economic domain, the major concern is the income of the cocoa farmer. The average income of West-African cocoa farmers is far below the level of absolute poverty. This is 1070 dollar a year in Ghana and This is 1070 dollar a year in Ghana and only 342 dollar per year in Cote d’Ivoire. To lift their incomes above the level of absolute poverty, it would require a 213 % income increase for Ghanaian farmers and a stunning 967 % income increase for Ivorian farmers (Hutz-Adams & Fountain, 2012). Another major issue is the role of price fluctuations, which prevent many cocoa farmers from receiving a stable income. To become resilient against these shocks, farmers need to move away from being only a cocoa farmer to a more diversified portfolio of crops. Also, the lack of access to financial services makes it difficult for farmers to save money or get loans, which makes them more vulnerable to this price variability.
