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Cocoa is one of the most popular products around the world. It is used to make coffee, chocolate, and a variety of other popular products. This versatility makes it an especially profitable resource. The cocoa tree is native to the Amazon and has been domesticated by pre-Columbian cultures such as Olmecs and Mocayas and later used by Mayans for various purposes. The earliest evidence of cocoa beans being consumed shows that they were used as far back as 1500 BC. However, the modern use of cocoa did not occur until the 17th century. This paper will provide background information on cocoa, investments related to it, its relation to Fairtrade, as well as risks for humans and the environment related to it.
Cocoa beans grow in long pods that can have more than 40 seeds inside. The pods have thick skin which protects them from outside damage. After gathering the seeds, they are put through a fermentation process. Subsequently, the beans are dried, roasted, and then cleaned through an ancient process called “winnowing.” The trees themselves can only grow in rainy tropical areas around the equator.
One of the unique aspects of the tree is that it is able to produce pods over the whole year, which makes the harvest process almost continuous. It is done by using a long pole with a curved knife attached to the end of it. A person may be able to harvest hundreds of pods in one day. After the beans are prepared, they a shipped to facilities in a dry container. On arrival, they may be used in the production of coffee, chocolate, or any other related product (“History of cocoa,” 2018).
Cocoa production grew exponentially over the decades, with more than 5 million tons of cocoa beans being shipped worldwide today. Countries such as the Ivory Coast, Ghana, and Indonesia produce the largest amount of cocoa beans in the world. While there are three primary types of cocoa plants, the vast majority of the product is created from the Forastero variety. Criollo and Trinitario are used much less often due to lower yields during harvest and less resistance to disease. A hybrid of Criollo and Forastero plants also exists. It is called Trinitario and is considered to be the highest quality cocoa plant due to its high yields and strong resistance to diseases.
The investment market in cocoa is relatively large. There is a multitude of large companies that work in the cocoa industry, and the sales of cocoa are projected to gain $25 billion by 2019. The choices of investment depend on the region that the investor is most interested in. The United States market includes four large companies: Hershey Co., Rocky Mountain Chocolate Factory, Mondelez International, as well as Tootsie Roll Industries.
These companies are involved in the majority of chocolate production in the country and a portion of the international market. However, the largest cocoa investments come from Sweden with companies like Barry Callebaut, Nestle, and Chocoladefabriken Lindt & Spuengli having the largest market share of the cocoa investments. A person may invest in any of these companies through the purchase of cocoa futures or ETF (Whittaker, 2016).
There is a variety of significant issues related to the growth and production of cocoa. Perhaps the most important is the involvement of forced child labor that some countries utilize during the harvest and production of cocoa. This is a major risk to people and children especially as the conditions that enslaved children live in are highly harmful to them. Moreover, the practice of slavery is immoral, illegal, and unethical.
These practices were first reported in 1998, and over the last twenty years of international investigations, they have shown that more than three million children are forced to work on cocoa farms against their will. The primary countries that produce the product are also the most involved in child labor. Ivory Coast and Ghana have the highest number of children who work on cocoa farms. Conditions that legal farms operate in are also poor with farmers gaining wages that are too low to improve their quality of life (Bertrand & Buhr, 2015).
A risk for the environment and trees is also present due to the practice of cocoa farming. The increased demand for cocoa–related products around the world created a need for cocoa farmers to expand their territory. This expansion often leads to deforested virgin areas being used for farming. The areas never regrow their original plants, and it affects the environment of the area. Some species may lose their habitats, rare plants and trees may go extinct due to this practice. If this practice continues unopposed, a myriad of unique plants may disappear which could change the environment of these areas forever.
Further, it may contribute to the growing danger of climate change as plants that are more effective in the consumption of carbon dioxide are replaced by cocoa plants in service of profit. The effect would then also affect the cocoa farms due to their need for a very specific climate to properly harvest cocoa pods. The long-term dangers of this development should be considered to prevent such disasters, and tighter regulation is required to make any serious difference in this industry. With the use of child labor still being common in the top producing countries, it is unlikely that the majority of farms would be willing to follow them (Utomo, Prawoto, Bonnet, Bangviwat, & Gheewala, 2016).
The Fairtrade Foundation is an organization that is focused on providing workers from various industries with better pay, working conditions, and other aspects that allow for products to be created in legal and humane environments. Due to the previously described issues in the cocoa industry, the organization is very involved in the cocoa farming industry. Their efforts are spread between the Dominican Republic, Ivory Coast, and Ghana. They state that approximately 6 million people work on cocoa farms in the world and that to make their jobs more sustainable, improvements to the industry are required.
The organization was already able to certify three large farming communities and is currently working on others. This effort is not left unnoticed by the international investors who began to focus on purchasing cocoa from certified areas to avoid contributing to the unsavory practices of illegal cocoa farms. It is possible that the efforts of this organization would be used to lessen the risks that are associated with the industry (“About cocoa,” 2018).
Cocoa is a highly desired product around the world. Its beans are used in almost every country on earth in chocolate, coffee, and confectionery items. Its history spans millennia, and it became a staple product in our everyday life. However, the process of growing cocoa beans has not improved in a long time. There are serious issues associated with it, including child slave labor, poor working conditions, and permanent environmental damage. To change this, the Fairtrade Foundation began to improve the industry by establishing better pay and conditions for workers. Hopefully, future developments in this field will avoid the risks present in it at the moment.
About cocoa. (2018). Web.
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Bertrand, W., & Buhr, E. (2015). Trade, development and child labor: Regulation and law in the case of child labor in the cocoa Industry. Law and Development Review, 8(2), 503–521.
History of cocoa. (2018). Web.
Utomo, B., Prawoto, A. A., Bonnet, S., Bangviwat, A., & Gheewala, S. H. (2016). Environmental performance of cocoa production from monoculture and agroforestry systems in Indonesia. Journal of Cleaner Production, 134(10), 583–591.
Whittaker, M. (2016). Investing for (chocolate) lovers: How to buy cocoa stocks. Web.