{"id":25965,"date":"2017-11-15T21:28:42","date_gmt":"2017-11-16T02:28:42","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/a-world-without-chocolate-what-cargill-is-doing-to-ensure-we-can-get-our-sweet-fix\/"},"modified":"2017-11-15T21:28:42","modified_gmt":"2017-11-16T02:28:42","slug":"a-world-without-chocolate-what-cargill-is-doing-to-ensure-we-can-get-our-sweet-fix","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/a-world-without-chocolate-what-cargill-is-doing-to-ensure-we-can-get-our-sweet-fix\/","title":{"rendered":"A World without Chocolate? What Cargill is doing to Ensure we can get our Sweet Fix."},"content":{"rendered":"

Chocolate is one of the most popular items in the world, the US market alone represented $18.8BN in sales in 2016[1]<\/a>.\u00a0 This food, which brings joy to so many is made from a very unique and complex plant called Cocoa. Cargill one of the largest agribusinesses in the world is a major producer of Cocoa and is further expanding its focus on this area with its recent acquisition of ADM\u2019s US business for $440M[2]<\/a>.\u00a0 However, as Cargill moves deeper into the Cocoa business it faces the risks of a product that is highly exposed to climactic changes.<\/p>\n

Cocoa can only be produced within 20 degrees of the equator and requires a wet and temperate climate with over 50% of the worlds Cocoa production concentrated in Ghana and Cote d\u2019Ivoire[3]<\/a>.\u00a0 These two countries are expected to see a major climactic shift by 2050 which would require growers to move their production into areas that are mountainous and not allowed for farming[4]<\/a>.\u00a0 As illustrated in the below figure a signification portion of the Cocoa arable land in Ghana and Cote d\u2019Ivoire will move from excellent to marginal or good by 2050, with 89.5% of land becoming less suitable to cocoa cultivation [5]<\/a>.<\/p>\n

Figure 1 Suitable Land for Cocoa Production in Ghana and Cote d\u2019Ivoire[6]<\/a><\/p>\n

\"\"<\/a><\/p>\n

The CEO of Cargill is keenly aware of the issues facing his company and the agribusiness world, in a recent WSJ interview he said \u201cclimate change is here, and it\u2019s going to change how and where food is grown. Today, the U.S. corn belt is in Iowa, Illinois, Indiana. In 50 years, it may be in Hudson Bay, Canada\u201d[7]<\/a>. Cargill is likely to face volatility in its Cocoa production in the form of more severe and more frequent draughts[8]<\/a> with crises already occurring such as in 2015 when Ghana saw production of only 690k tones vs 1M expected[9]<\/a>.\u00a0 Given the CEO\u2019s focus and the acute risks to Cocoa, Cargill is facing these challenges head on by establishing 5 primary targets for Cocoa production sustainability by 2030.\u00a0 These 5 pillars center around the concept that sustainability is not only a question of technological innovation to improve yield and adapt but that it relies also on education and community engagement.<\/p>\n

Figure 2- Cargill Cocoa Sustainability Goals[10]<\/a><\/p>\n

\"\"<\/a><\/p>\n

Cargill\u2019s programs to increase Cocoa sustainability have already shown to be successful.\u00a0 Their coaching program which pairs farmers together to share learnings around best farming practices resulted in 49% increase in yields[11]<\/a>.\u00a0 Cargill is also leveraging technology to assess the environmental impact of the farming of Cocoa.\u00a0 Primarily leveraging GPS technology, Cargill \u201cconducted a risk assessment of 2.3 million hectares of forest to evaluate habitat type and tree cover loss, as part of its global efforts to eliminate deforestation across agricultural supply chains by 2030\u201d[12]<\/a>. The introduction of this GPS technology is also being leveraged to track farmers produce to understand production levels and ensure product is sourced from farms that meet their standards.<\/p>\n

One of the unique aspects of Cargill\u2019s Cocoa sustainability program is that it is comprehensive in nature.\u00a0 It aims to educate farmers, connect them to the community and create stability in the market. As an example, in 2013, Cargill along with the IFC introduced a mobile payment program for farmers to receive the payments for their cocoa crop via their mobile phones[13]<\/a>.\u00a0 This helps to speed up payments and engage farmers in mobile banking.\u00a0 Although this may not seem relevant to supporting the supply chain, Cargill firmly believes that meeting \u201cthe direct needs of people in in cocoa communities in a transparent, credible and, measurable way\u201d[14]<\/a> will enable them to achieve their sustainability goals. \u00a0There is no crop, there are no improvements in production without the farmers themselves.<\/p>\n

Overall Cargill\u2019s strategy to combat the risks they face in cocoa production are comprehensive and are tied to specific goals for the coming years, however the biggest drawback is their lack of transparency.\u00a0 As a private company Cargill does not disclose extensive details about their cocoa business, how it is directly being affected by climate change or many tangible metrics on their sustainability program.\u00a0 To drive forward they should increase awareness around the issue through greater transparency to support overall efforts in sustainable cocoa production.<\/p>\n

Remaining Questions:<\/p>\n

1-\u00a0\u00a0\u00a0\u00a0\u00a0 Given that over 50% of Cocoa production occurs in just two countries, what opportunities can Cargill explore to diversify away this concentrated risk and explore other sustainable growth methods in new countries or regions?\u00a0 Are there areas that were once not suitable for Cocoa but with the changing climate now are?<\/p>\n

2-\u00a0\u00a0\u00a0\u00a0\u00a0 One of the primary recommendations made by different scientists is that farmers should diversify their crops to limit their downside[15]<\/a>.\u00a0 How will this diversification affect the ability of Cargill to grow its Cocoa business?<\/p>\n

Word Count: 776<\/p>\n

[1]<\/a> Oliver Nieburg, \u201cChocolates Plight Does not Look Set to Improve in the US, says Euromonitor\u201d, January 23 2017, Confectionary News, https:\/\/www.confectionerynews.com\/Article\/2017\/01\/23\/US-chocolate-volumes-sales-set-to-decline<\/a><\/p>\n

[2]<\/a> Reuters Staff, \u201cUPDATE 3-Cargill buying ADM’s chocolate unit in North American expansion\u201d , September 2 2014, http:\/\/www.reuters.com\/article\/archer-daniels-ma-cargill\/update-3-cargill-buying-adms-chocolate-unit-in-north-american-expansion-idUSL1N0R30UJ20140902<\/a><\/p>\n

[3]<\/a> Michon Scott, \u201cClimate & Chocolate\u201d, February 10 2016, NOAA, https:\/\/www.climate.gov\/news-features\/climate-and\/climate-chocolate<\/a><\/p>\n

[4]<\/a> Michon Scott, \u201cClimate & Chocolate\u201d, February 10 2016, NOAA, https:\/\/www.climate.gov\/news-features\/climate-and\/climate-chocolate<\/a><\/p>\n

[5]<\/a> Michon Scott, \u201cClimate & Chocolate\u201d, February 10 2016, NOAA, https:\/\/www.climate.gov\/news-features\/climate-and\/climate-chocolate<\/a><\/p>\n

[6]<\/a> Michon Scott, \u201cClimate & Chocolate\u201d, February 10 2016, NOAA, https:\/\/www.climate.gov\/news-features\/climate-and\/climate-chocolate<\/a><\/p>\n

[7]<\/a> Jacob Bunge, \u201cCargill\u2019s Food Empire Adapts to a Changing Word\u201d, October 16 2016, The Wall Street Journal, https:\/\/www.wsj.com\/articles\/cargills-food-empire-adapts-to-a-changing-world-1476670081<\/a><\/p>\n

[8]<\/a> P.\u00a0L\u00e4derach, A.\u00a0Martinez-Valle, G.\u00a0Schroth, N.\u00a0Castro, \u201cPredicting the future climatic suitability for cocoa farming of the world\u2019s leading producer countries, Ghana and C\u00f4te d\u2019Ivoire\u201d, Climactic Change, August 2013,\u00a0Volume 119,\u00a0Issue\u00a03\u20134<\/a>,\u00a0pp 841\u2013854, https:\/\/link.springer.com\/article\/10.1007%2Fs10584-013-0774-8<\/a><\/p>\n

[9]<\/a> Nicholas Bariyo\u00a0and Julie Wernau, \u201cGhana Faces Huge Shortfall in Cocoa Crop\u201d, June 19 2015, The Wall Street Journal, https:\/\/www.wsj.com\/articles\/ghana-faces-massive-shortfall-in-cocoa-crop-1434719593<\/a><\/p>\n

[10]<\/a> -\u201cCargill Sustainability Report\u201d, Cargill.com, October 3 2017, https:\/\/www.cargill.com\/2017\/cargill-sets-clear-course-for-cocoa-sustainability<\/a><\/p>\n

[11]<\/a> -\u201cCargill Sustainability Report\u201d, Cargill.com, October 3 2017, https:\/\/www.cargill.com\/2017\/cargill-sets-clear-course-for-cocoa-sustainability<\/a><\/p>\n

[12]<\/a> -\u201cCargill Sustainability Report\u201d, Cargill.com, October 3 2017, https:\/\/www.cargill.com\/2017\/cargill-sets-clear-course-for-cocoa-sustainability<\/a><\/p>\n

[13]<\/a> Susie Lonie, Meritxell Martinez, Rita Oulai, Christopher Tullis, \u201cOpportunities for Digital Financial Services in the Cocoa Value Chain C\u00d4TE D\u2019IVOIRE\u201d, International Finance Corporation, 2016, Page 20 https:\/\/www.ifc.org\/wps\/wcm\/connect\/2d3ae2fc-ae9a-45e1-bb9a-f039927a2f89\/IFC+Cote+d%27Ivoire+Digitizing+Cocoa+Value+Chain+report+ENGLISH.pdf?MOD=AJPERES<\/a><\/p>\n

[14]<\/a> -\u201cCargill Sustainability Report\u201d, Cargill.com, October 3 2017, https:\/\/www.cargill.com\/2017\/cargill-sets-clear-course-for-cocoa-sustainability<\/a><\/p>\n

[15]<\/a>P.\u00a0L\u00e4derach, A.\u00a0Martinez-Valle, G.\u00a0Schroth, N.\u00a0Castro, \u201cPredicting the future climatic suitability for cocoa farming of the world\u2019s leading producer countries, Ghana and C\u00f4te d\u2019Ivoire\u201d, Climactic Change, August 2013,\u00a0Volume 119,\u00a0Issue\u00a03\u20134<\/a>,\u00a0pp 841\u2013854, https:\/\/link.springer.com\/article\/10.1007%2Fs10584-013-0774-8<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Cocoa production is highly concentrated in two countries and is exposed to the risks of climate change, particularly in reducing the available arable land for production. Cargill one of the largest producers of cocoa is focused on improving sustainability of the product through a comprehensive approach.<\/p>\n","protected":false},"author":10199,"featured_media":0,"comment_status":"open","ping_status":"closed","template":"","categories":[1243,1757,1320,1795,835],"class_list":["post-25965","hck-submission","type-hck-submission","status-publish","hentry","category-agribusiness","category-cargill","category-chocolate","category-cocoa","category-farming","hck-taxonomy-organization-cargill-inc","hck-taxonomy-industry-agriculture-and-agribusiness","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nA World without Chocolate? 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