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Cocoa: A Bittersweet Supply Chain

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Cocoa supply chain

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Cocoa: A Bittersweet Supply Chain

From bean to bar, the cocoa supply chain is a bittersweet one. While the end product is something most of us enjoy, this also comes with a human cost.

Based on how much cocoa comes from West Africa, it’s likely that most of the chocolates we eat have a little bit of Cote d’Ivoire and Ghana in them. The $130B chocolate industry relies on cocoa farming for supply of chocolate’s key ingredient. Yet, many cocoa farmers make less than $1/day.

The above graphic maps the major trade flows of cocoa and allows us to dive deeper into its global supply chain.

From Bean to Bar: Stages in the Cocoa Supply Chain

Cocoa beans go through a number of stages before being used in chocolate products.

  1. Harvesting, Fermenting, and Drying
    First, farmers harvest cocoa beans from pods on cacao plants. Next, they are fermented in heaps and covered with banana leaves. Farmers then dry and package the cocoa beans for domestic transportation.
  2. Domestic Transportation, Cleaning, and Exporting
    Domestic transporters carry packaged cocoa beans to either cleaning warehouses or processing factories. Cocoa beans are cleaned and prepared for exports to the chocolate production hubs of the world.
  3. Processing and Chocolate Production
    Processing companies winnow, roast, and grind cocoa beans and then convert them into cocoa liquor, cocoa butter, or cocoa cakes—which are mixed with other ingredients like sugar and milk to produce chocolate products.

Cocoa farming and trade are at the roots of the chocolate industry, and the consistent supply of cocoa plays a critical role in providing us with reasonably-priced chocolate.

So where exactly does all this cocoa come from?

The Key Nations in Cocoa’s Global Supply Chain

Growing cocoa has specific temperature, water, and humidity requirements. As a result, the equatorial regions of Africa, Central and South America, and Asia are optimal for cocoa farming.

These regions host the biggest cocoa exporters by value.

Rank (2019)Exporting CountryValue (US$, millions)
1Côte d’Ivoire 🇨🇮$3,575
2Ghana 🇬🇭
$1,851
3Cameroon 🇨🇲$680
4Ecuador 🇪🇨$657
5Belgium 🇧🇪$526

Côte d’Ivoire and Ghana are responsible for 70% of global cocoa production, and cocoa exports play a huge role in their economies. Although the majority of exporters come from equatorial regions, Belgium stands out in fifth place.

On the other hand, most of the top importers are in Europe—the Netherlands and Germany being the top two.

Rank (2019)Importing CountryValue (US$, millions)
1Netherlands 🇳🇱$2,283
2Germany 🇩🇪$1,182
3U.S. 🇺🇸$931
4Malaysia 🇲🇾$826
5Belgium 🇧🇪$719

In third place, the U.S. primarily sources its cocoa from Côte d’Ivoire, Ghana, and Ecuador. Mars, Hershey, Cargill, and Blommer—some of the world’s biggest chocolate manufacturers and processors—are headquartered in the U.S.

Finally, it comes as no surprise that the biggest importers of cocoa beans are among the biggest chocolate exporters.

Rank (2019)CountryValue of Chocolate Exports
(US$, millions)
1Germany 🇩🇪$4,924
2Belgium 🇧🇪$3,143
3Italy 🇮🇹$2,100
4Netherlands 🇳🇱$1,992
5Poland 🇵🇱$1,834

Not only is the Netherlands the biggest importer of beans, but it’s also the biggest processor—grinding 600,000 tons annually—and the fourth largest exporter of chocolate products.

Belgium is another key nation in the supply chain, importing cocoa beans from producing countries and exporting them across Europe. It’s also home to the world’s largest chocolate factory, supporting its annual chocolate exports worth $3.1 billion.

Breaking Down the Cocoa Supply Chain: Who Gets What

Without farmers, both the cocoa and chocolate industries are likely to suffer from shortages, with domino effects on higher overall costs. Yet, they have little ability to influence prices at present.

cocoa supply chain breakdown

Farmers are among the lowest earners from a tonne of sold cocoa—accounting for just 6.6% of the value of the final sale.

Low incomes also translate into numerous other issues associated with cocoa farming.

The Bitter Side of Cocoa Farming

The World Bank has established the threshold for extreme poverty at $1.90/day. Cocoa farmers in Ghana make $1/day, while those in Côte d’Ivoire make around $0.78/day—both significantly below the extreme poverty line.

Farmers are often unable to bear the costs of cocoa farming as a result of low incomes. In turn, they employ children, who miss out on education, are exposed to hazardous working conditions, and get paid little or no wages.

CountryCocoa Farmers Making $1/day or lessChildren in Cocoa Agriculture
Côte d’Ivoire 🇨🇮600,000
891,500
Ghana 🇬🇭800,000708,400

To make matters worse, cocoa farming is primarily responsible for deforestation and illegal farming in Côte d’Ivoire and Ghana—adding environmental issues to the mix.

These interconnected problems call for action, so what is being done to fight them?

Combating Cocoa’s Concerns

Mars, Nestlé, and Hershey—some of the world’s biggest chocolate manufacturers—have made several pledges to eradicate child labor in cocoa farming over the last two decades, but haven’t reached their targets.

In addition, organizations such as UTZ Certified, Rainforest Alliance, and Fairtrade are working to increase traceability in the supply chain by selling ‘certified cocoa’, sourced from farms that prohibit child labor.

More recently, Côte d’Ivoire and Ghana announced a fixed premium of US$400/tonne on cocoa futures, aiming to improve farmer livelihoods by creating a union for cocoa, also known colloquially as the “COPEC” for the industry.

While these initiatives have had some positive impacts, more still needs to be done to successfully eradicate large-scale child labor and poverty of those involved in cocoa’s bittersweet supply chain.

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Agriculture

Fertilizer: Why it’s More Important than You Think

Fertilizer usage dates back to as early as 6,000 to 2,400 BC and remains just as crucial for crop production today.

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The following content is sponsored by Brazil Potash


Fertilizer: Why It’s More Important Than You think

The global population is expected to reach nearly 10 billion people by 2050. So, in order to feed our growing world sustainably, increased crop production is essential.

Over recent decades, farmers have been able to more than double their production of crops thanks to fertilizers and the vital nutrients they contain. 

When crops are harvested, the essential nutrients are taken away with them to the dining table, resulting in the depletion of these nutrients in the soil. To replenish these nutrients, fertilizers are needed, and the cycle continues.

The above infographic by Brazil Potash shows the role that each macronutrient plays in growing healthy, high-yielding crops.

Food for Growth

Nitrogen, phosphorus, and potassium (NPK) are three primary macronutrients that are the building blocks of the global fertilizer industry. Each plays a key role in plant nutrition and promoting crop growth with higher yields. 

Let’s take a look at how each macronutrient affects plant growth.

NutrientWhy it’s needed?What does it do?What happens without it?
Nitrogen (N)Needed for the
formation of all plant
and animal proteins.
Nitrogen ensures that
energy is available
when and where it is
needed to maximize
yield and regulate
water and nutrient uptake.
Nitrogen deficiency in
crops causes stunted
and spindly plants, low
protein content in seed
and vegetative parts,
and fewer leaves.
Phosphorus (P)Vital for plant
photosynthesis.
Phosphorus allows
plants to convert the
sun’s energy into food,
fiber, and oil. It
improves how
efficiently the plant
absorbs water and
macronutrients such as nitrogen.
Phosphorus deficiency
causes stunted growth,
reduced crop yields,
low quality harvests,
and moisture stress.
Potassium (K)Essential for robust
high quality crops.
Potassium helps
regulate water pressure
in plant cells and
maximizes crop yields
by strengthening plant
stems to make them
more resilient to
drought, flooding, and
temperature swings.
Potassium deficiency
causes a slower growth
rate of plants, delayed
pollination and maturity,
underdeveloped leaves,
reduced crop yields,
weakened stalks, and moisture stress.

If crops lack NPK macronutrients, they become vulnerable to various stresses caused by weather conditions, pests, and diseases. Therefore, it is crucial to maintain a balance of all three macronutrients for the production of healthy, high-yielding crops.

The Importance of Fertilizers

Humans identified the importance of using fertilizers, such as manure, to nourish crops dating back to nearly 6,000 to 2,400 BC.

As agriculture became more intensive and large-scale, farmers began to experiment with different types of fertilizers. Today advanced chemical fertilizers are used across the globe to enhance global crop production. 

There are a myriad of factors that affect soil type, and so the farmable land must have a healthy balance of all three macronutrients to support high-yielding, healthy crops. Consequently, arable land around the world varies in the amount and type of fertilizer it needs. 

Fertilizers play an integral role in strengthening food security, and a supply of locally available fertilizer is needed in supporting global food systems in an ever-growing world.

Brazil is one of the largest exporters of agricultural goods in the world. However, the country is vulnerable as it relies on importing more than 95% of its potash to support crop growth.

Brazil Potash is developing a new potash project in Brazil to ensure a stable domestic source of this nutrient-rich fertilizer critical for global food security.

Click here to learn more about fertilizer and food production in Brazil.

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