rethink sustainability

    Record cocoa prices and the unfair chocolate value chain – meet the entrepreneurs working to change things

    Record cocoa prices and the unfair chocolate value chain – meet the entrepreneurs working to change things

    This year’s record-breaking cocoa prices may not be an exception, but a taste of things to come. Extreme weather and shifting climate patterns have eaten into yields in Ghana and Ivory Coast, which account for around 60% of global production. Crop diseases and a lack of planting have also hit harvests, meaning supply shortages could be four times worse in 2023-24 than a year earlier.1

    The cocoa industry in some ways has itself to blame. Its development of single-crop areas – known as monocultures – has made cocoa a driver of deforestation2, robbing the world of natural carbon storage and speeding up climate change. This has also degraded soils and increased the need for pesticides, wreaking further damage on nature and harvests by killing off insects that can improve yields.3 The resulting threat to cocoa production is also a threat to millions of livelihoods – over 10% of Ghana’s population4 and 20% of Ivory Coast’s5 work in the sector.

    Chocolate-makers guided by regenerative agriculture are trying to do things differently. Firstly, they’re turning monocultures into organic, agroforests to produce their beans. Secondly, they’re bringing cocoa processing to the countries where crops are grown, delivering an economic uplift for communities. Finished chocolate is around five times more valuable than unprocessed beans, according to Ghana-based fairafric, but this side of the business has traditionally taken place in developed countries. Indonesia-based Krakakoa is taking a similar approach to fairafric, and like fairafric is not just creating well-paid jobs, but producing award-winning chocolate.

    We spoke to fairafric Chief Financial Officer Jonas Schaller and Krakakoa founder and CEO Sabrina Mustopo about how their companies are reshaping the chocolate value chain.


    How are fairafric and Krakakoa making cocoa and chocolate production more sustainable?

    Jonas Schaller, fairafric: We want to leave the Earth in a better state than we found it. The biggest obstacle to this is monocultures, which rob nutrition from soil within 20-30 years6. Agroforestry brings together different plants that create synergies: one provides nitrogen that another needs; one provides shade that another needs. It copies the rainforest and boosts biodiversity. This also creates better yields and better fruits, all while diversifying farmers’ incomes. By sourcing our cocoa from dynamic agroforestry, we can capture up to four times the carbon emissions from our supply chain over the long term.

    Agroforestry brings together different plants that create synergies… this creates better yields and better fruits, all while diversifying farmers’ incomes

    Beyond the farm, we aim for zero waste and are operating with nearly none. All our inputs are organic, we reuse all our water, and our packaging is biodegradable. We also recycle all cartons locally, with Ghana’s first recycling company. And our chocolate factory is the world’s first to be powered by solar panels.7

    Chocolate supply chain_ArticleLOcom-2.jpg©Courtesy of fairafric

    Sabrina Mustopo, Krakakoa: We work mainly around national parks, where a lot of deforestation happens. Farmers are not cutting down forests for fun – they’re doing it because they need money. We train farmers to grow cocoa in a different way, showing them how it can improve productivity and bean quality. We have historically paid a premium to market prices, and by giving farmers stability around income, we enable them to invest in pruning, sanitation and disease management on their farms, helping crop quality in the long term.


    How did your companies get started?

    Sabrina Mustopo: I used to be a consultant for agricultural developments. I saw that the way some businesses were set up created problems, so I started Krakakoa to see if business could be part of the solution. Indonesia is one of the world’s largest cocoa producers, but locally made chocolate has historically been poor quality, while high-quality produce was imported. Creating an integrated value chain seemed the way to change this – pay farmers more, cover the costs by capturing more value from production in the country of origin, and create better products.

    I pitched the idea around but nobody wanted to do it, so I did it myself. That was 11 years ago. The jump from being a consultant to an entrepreneur was not huge in some ways – I was used to solving problems, running with ideas, dealing with unknowns. The big change was putting my head on the line.

    Because we control the whole value chain, including the high-value end and the final price, we can pay farmers more

    Jonas Schaller: Our company was born out of frustration with the fact that, despite the efforts of development aid and promises from multinational chocolate companies, child labour and poverty are getting worse. Up to 60% of cocoa farmers in Ghana live below the poverty line.8 This is because what’s missing is value addition and job creation – nearly all cocoa beans produced in Ghana and Ivory Coast are exported for processing9. When people in developed countries buy chocolate, only a fraction of the value goes back to the country of origin.

    Our factory has created 150 direct jobs. We’re also creating business for other businesses, such as the recycling firm I mentioned. A wrapper factory also started up here to service our demand, and now has other clients. Creating better-paying jobs also creates demand for goods, which in turn creates supply. Development aid doesn’t create demand, so it isn’t a long-term solution. We hope we are writing a playbook for value creation from commodities in any country of origin.

    Read also: Let’s invest in nature


    You pay above-market prices and above minimum wage. How do you remain profitable?

    Jonas Schaller: The minimum wage in Ghana is basically below the poverty line. All our employees receive four times that, free healthcare for their family and pensions. But our production costs are still way lower than in EU factories. While set-up times and skilled labour shortages are driving up production costs in Europe, we create social impact and have competitive margins.

    Chocolate supply chain_ArticleLOcom-1.jpg©Courtesy of fairafric

    Sabrina Mustopo: Because we control the whole value chain, including the high-value end and the final price, we can pay farmers more. We’ve got one factory in southern Sumatra so there’s no reliance on third party manufacturers, meaning we’re in control of our margins.

    You also offer training and career growth for staff. Tell us more.

    Sabrina Mustopo: We focus on good agriculture practices – soil nutrition, managing cocoa tree structures, pest and disease management. Most farmers have had minimal training. We do a needs assessment to understand which topics are most relevant to different farmers. The first few we worked with required a lot of convincing, but once they see the results in their crops, word spreads.

    A lot of big companies are realising they need to get up to speed on changing deforestation rules, and that’s raising interest in brands such as ours

    Jonas Schaller: We encourage all our staff to build skills and a career with us. We opened Ghana’s first chocolatier school, offering programmes that educate people in how to work in this industry – they could go on to open their own school or chocolate business, or stay within fairafric. Our local management team is 100% Ghanaian. Farming is closely associated with poverty, but working in manufacturing is not.


    The EU will ban imports of products linked to deforestation from the end of 2024. How is this changing the chocolate industry, and how do you prove you are deforestation-free?

    Sabrina Mustopo: A lot of big companies are realising they need to get up to speed, and that’s raising interest in brands such as ours. Other requirements that have already kicked in, such as the EU’s Corporate Sustainability Reporting Directive and Science Based Targets Network rules, are where we really differentiate ourselves, as we can prove our environmental and social credentials – emissions, soil quality and biodiversity, providing training, paying good wages.

    Jonas Schaller: Our biggest market is Germany, but we also sell in France, Switzerland the UK and other parts of Europe, and we’re already in line with incoming EU regulations. We can prove this as we work with one co-operative, we’re on the ground and have a farm-to-factory concept. There’s not 20 intermediaries, as you normally get with chocolate. We physically see all elements of the process.

    Chocolate supply chain_ArticleLOcom-3.jpg

    Read also: How global food giant Nestlé is putting regenerative agriculture at the heart of sustainable food


    How much interest are big brands showing in your brands?

    Jonas Schaller: Retailers are changing their opinion because of the deforestation regulation. They’re also seeing that people will pay for premium, sustainable products. We’re experiencing a lot of B2B growth, with cookie producers and cereal producers showing interest because of our control of the supply chain. We’ve got more demand than we can meet – we’re profitable at 15% capacity usage in our factory and we’re increasing capacity every month. Investors are showing more interest too. We’re in the middle of a USD 4 million equity raise.

    We’re experiencing a lot of B2B growth, with cookie producers and cereal producers showing interest because of our control of the supply chain

    Sabrina Mustopo: Our sales and marketing have been focussed on Indonesia, but the next big wave will be European B2B customers. We recently merged with Slow Forest Coffee, which is expanding our reach into Europe. For consumers, Fairtrade was novel 20 years ago, but it’s become the expectation. And expectations are rising; people want more transparent information about where a product is from, not just certification. We know our farmers by name and we can provide their stories.

    Read also: Regenerative farming promises Nature revolution at Davos 2024


    How big a threat is climate change to the cocoa sector?

    Sabrina Mustopo: We could look at prices historically, but we’re in a place we’ve never been before because of climate change. My guess would be that prices will come down, but not to past levels.

    Jonas Schaller: People are waking up because of the price rises. Bean demand is climbing, but availability is falling. I think the current system is starting to collapse. Some studies say that if temperatures rise 2.5 degrees Celsius, there will be no cocoa production in Ghana. Our approach is carbon-negative and can be part of the solution, but people won’t farm that way unless it makes economic sense. The good news is there is a business case for this. It can end poverty and help fight climate change.


    Chocolate price hikes: A bittersweet reason to care about climate change | UNCTAD
    Cocoa and Deforestation - International Wildlife Conservation, National Wildlife Federation (
    Pesticides in cocoa farming | Make Chocolate Fair!
    Kuapa Kokoo, Ghana - Fairtrade
    World Bank Document
    Improving soil health and closing the yield gap of cocoa production in Ghana – A review - ScienceDirect
    Fairafric: A Chocolate Factory with Impact - Munich Startup (
    Frontiers | A Living Income for Cocoa Producers in Côte d'Ivoire and Ghana? (
    Cocoa facts and figures - Kakaoplattform

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