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Barry Callebaut CEO: US legal risks no reason not to act on cocoa sustainability

By Oliver Nieburg+

Last updated on 06-Dec-2016 at 13:03 GMT2016-12-06T13:03:10Z

 Antoine de Saint-Affrique, CEO of Barry Callebaut

Antoine de Saint-Affrique, CEO of Barry Callebaut

The legal risk of acknowledging there is child labor and extreme poverty in the chocolate industry’s supply chain is no reason not to act, says Barry Callebaut’s CEO.

The world’s largest cocoa processor last month committed to sourcing fully sustainable cocoa by 2025 , and pledged to bring 500,000 cocoa farmers out of extreme poverty and eliminate child labor in its supply chain.

Speaking to ConfectioneryNews in Abidjan, Antoine de Saint-Affrique, CEO of Barry Callebaut, said he did not see legal risks as a result of the announcement and added the move would not necessarily mean increased chocolate prices.

US legal risks

Barry Callebaut announced its sustainability strategy ‘Forever Chocolate’ to a group of journalists in Côte D’Ivoire on November 23.

23% of the world crop

Barry Callebaut processed around 900,000 metric tons in its fiscal year 2015/16, which represents about 23% of the world crop. Its customers include industry giants such as Nestlé and Mondelēz International.

It comes as companies such as Nestlé, Cargill and ADM are facing legal challenges in the US for allegedly aiding and abetting child slavery on Ivorian cocoa farms - claims they firmly refute.

De Saint-Affrique said: “Is there a risk coming with it? [Barry Callebaut’s new strategy] Well, we don’t think so, because we have been doing the right thing all along.

“But would that risk be a reason not to act as the leader of the industry? Well, that wouldn’t be the right thing to do ...,” he said.

The CEO added that Barry Callebaut had always condemned slavery and the worst forms of child labor, and had always been remediating and monitoring to guard against the practices before the Forever Chocolate strategy.

“We’ve done every steps forever to make sure this doesn’t happen … the issue is obviously not solved in the industry, so we need to take it one step further,” he said.

The company sourced 23% of its cocoa supplies from sources it calls sustainable in 2015/16, up from 17% the prior year. It hopes to move to 100% by 2025.

Zero child labor

Barry Callebaut has also pledged zero child labor in its supply chain by 2025.

Tulane University found 2.03m children in hazardous cocoa work in Ghana and Côte D’Ivoire during the 2013/14 cocoa year, up 18% from 2008/09, it reported last year.

De Saint Affrique said the Tulane report also showed numbers of children in education in the two countries was rising.

He added that the increase in child laborers had come as more farmers entered cocoa as the price increased between Tulane's two survey years.

See HERE for details on Barry Callebaut's Forever Chocolate strategy. Source: Barry Callebaut.

Implications for chocolate prices

Asked if chocolate prices and the cost of Barry Callebaut’s products would rise due under its sustainability strategy, the CEO said: “I don’t think you’re going to see specific price changes linked to sustainability.”

He said it was a “big misconception” that sustainability has to be more expensive.

“Moving to scale into sustainability gives you actually the leverage to do it in a way that is economical, which is so important to move it from niche to norm,” he said.

Nicko Debenham, vp of cocoa sustainability at Barry Callebaut, previously said cocoa sustainability may have an impact on chocolate prices, but maintained it would not be “indigestible for a consumer”.

Confectionery retail prices in nine major Western economies combined were up 2.4% year-on-year for the 52 weeks up to November 5, 2016, according to IRI.

Latin America shift?

Under its ‘Forever Chocolate' strategy, Barry Callebaut hopes to bring 500,000 farmers out of the World Bank’s definition of extreme poverty ($1.90 a day) by 2025.

It hopes to achieve this by doubling yields on cocoa farms and encouraging farmers to cultivate crops other than cocoa.

“In the long run, you may also have to increase the size of the farms. Living on farms of two to four hectares is very constraining in terms of revenue, especially when you live there with an average family of six,” said de Saint-Affrique

He said doubling the productivity in African cocoa from 400 kg per ha to 800 kg would have huge impact on the African market, which already accounts for 70% of global production.

“You see huge progress in Latin America and huge progress in particular places like Ecuador. But Ecuador will not supply for the entirety of the world in cocoa. So you need Africa, and the leverage you can get out of Africa is far bigger given the size of Africa.”

A report last year from Hardman Agribusiness called Africa’s cocoa market “structurally blighted” and suggested future cocoa demand would likely be met by an organized, professional sector in Latin America.

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