SBP310 Fundamentals of Sustainable Business Practices Assignment: An Analysis of Sustainability Challenges and Strategic Solutions in the Global Cocoa Supply Chain

Instructions

Students need to apply essential knowledge and skills learnt in this course to address the questions.

Students must demonstrate written proficiency by producing a typewritten report in Microsoft Word 2013 or later (*.docx) format. Any key illustrations and diagrams should be shown in the main report with correctly formatted in-text citations.

Please carefully take note that:

• Students should not include the questions in the report.
• Students should demonstrate the ability to:i) Conduct proper research, provide the appropriate referencing of sources (students must provide proper in-text citations and an end-text reference list

ii) Show originality, critical thinking, and creativity. All are essential skills that our students must develop, and marks will also be awarded that demonstrate research effort and proper referencing.

• Fewer marks will be awarded to students who merely extract information from their reference sources without demonstration of critical analysis and creativity.
• Answers that are simply reproduced from the course materials will be given very low marks or no marks.

Question 1

Case: The Cocoa Sector

Cocoa Supply Chain

The global cocoa supply chain is a complex process that transforms freshly harvested cocoa pods into chocolate and other cocoa-based products. This chain involves five steps, from smallholder farmers who produce the majority of cocoa beans, through various processing stages, to global manufacturers and ultimately consumers.

Production 

The production of cocoa beans begins with the harvesting of cocoa pods by hand and their subsequent cutting open to remove the beans from their husks. These fresh beans are then fermented and dried to develop their characteristic chocolate flavour and aroma.

This process is predominantly carried out by millions of smallholder farmers across Africa, Asia, Latin America, and Oceania.

• Geographical Distribution of Production (ICCO Bulletin No. 2, 2025): Africa accounts for the largest share of cocoa bean production at 71%. America contributes 23%, and Asia and Oceania contribute 6%.
• Leading Producer Countries (ICCO Bulletin No. 2, 2025): Côte d’Ivoire leads with 36% of global production. Ghana follows with 10%, and in descending order, Ecuador (9%), Cameroon (7%), Nigeria (7%), and Brazil (4%) are also significant producers.

Trade and Processing

Once fermented and dried, cocoa beans are packed into bags, purchased by distributors or government agencies, and transported to central warehouses. There, the beans are cleaned, shelled, and roasted before being ground into cocoa mass. Part of this mass is further pressed to separate it into cocoa butter and cocoa powder.

Only a small proportion of the cocoa beans is processed in the country of origin, while the majority is shipped to international processing facilities.

• Grinding Locations (ICCO Bulletin No. 2, 2025): Europe accounts for the largest share of cocoa bean grinding at 36%. Africa produces 22% of the world’s cocoa beans. Americas grind 19%, and Asia and Oceania grind 23%.
• Leading Grinding Countries (ICCO Bulletin No. 2, 2025): Côte d’Ivoire leads with 15% of global grinding. Netherlands (12%), Germany (9%), Indonesia (8%), Malaysia (8%), and the United States (6%) are also major grinders. Other notable countries include Ghana (4%), France (3%), Turkey (3%), Canada (2%), Spain (2%), Belgium (2%), and Singapore (2%).

Chocolate Manufacturing and Retail

To produce chocolate, manufacturers blend cocoa mass with cocoa butter, sugar, and, in some cases, milk powder. Additional ingredients, such as nuts or flavourings, may be incorporated to achieve the desired taste and texture. Some manufacturers handle the entire process in-house, roasting and grinding cocoa beans before moulding chocolate or producing other cocoa-based products.

Although West Africa is the world’s largest cocoa-producing region, most of its harvest is exported as raw beans to Europe and Asia. Only a small proportion is processed locally into cocoa butter, powder, or limited quantities of chocolate, leaving the majority of value addition in the hands of confectioners and retailers at the end of the chain[2].

Major chocolate manufacturers in the world include Nestlé S.A. (Switzerland), The Hershey

Company (United States), Mars Incorporated (United States), Mondelez International (United States), Ferrero Group (Italy/Luxembourg), Barry Callebaut (Switzerland), and Lindt & Sprüngli (Switzerland).

After manufacturing, chocolate products are distributed through retailers to reach consumers worldwide.

Key Challenges in the Cocoa Sector 

1. Poverty and Inadequate Living Conditions

• A significant proportion of cocoa farmers, particularly in West Africa, live in poverty, with cocoa production accounting for approximately two-thirds of their income.
• Self-employed cocoa farmers in West Africa generally cultivate small plots of land (typically less than five hectares) with average yields of only about 400 kilograms per hectare.
• Low incomes (often insufficient to provide a living wage) are further undermined by price volatility and limited access to financial services, resulting in poor living and working conditions.

2. Child Labour in Cocoa Production

• Child labour is a widespread issue in West African cocoa farming households, often due to the inability to afford to hire external labour.
• An estimated 1.6 million children work on family cocoa farms in Côte d’Ivoire and Ghana, the world’s two largest cocoa-producing countries, representing roughly 45% of children in agricultural households in these regions.
• Children are often engaged in hazardous tasks, including spraying pesticides, carrying heavy loads, climbing trees to harvest pods, and opening them with sharp tools such as machetes.
• Limited school attendance caused by child labour hampers children’s development and education, perpetuating the cycle of poverty for future generations.

3. Deforestation and Loss of Biodiversity

• Cocoa production is often threatened by ageing plantations, poor farm management, soil degradation, pests, and diseases.
• To boost production and meet growing demand, cocoa producers often clear additional forest land, causing deforestation that drives biodiversity loss and contributes to climate change.
• Overuse or misuse of pesticides and chemical fertilisers contaminates water, degrades soil, and harms ecosystems.

4. Climate Change Threats

• Climate change increasingly threatens cocoa production, with more frequent extreme weather events making some regions less suitable for cultivation.
• Prolonged dry seasons, declining rainfall, extreme temperatures, and the emergence of new pests and diseases can reduce both the yield and quality of cocoa.
• By reducing incomes and increasing market unpredictability, these changes place farmers in a vulnerable position, making adaptation vital to securing their livelihoods and building resilient farming systems.

5. Limited Access to Finance and Poor Infrastructure

• Low financial literacy and limited access to services such as savings, loans, and microcredit constrain farmers’ ability to break out of poverty.
• Without adequate financial resources, farmers are unable to invest in high-quality cocoa plants or essential farm inputs.
• A lack of financial resources also limits access to training, reducing opportunities to improve agricultural practices.
• Poor road infrastructure raises transport costs, deepening farmers’ reliance on intermediary traders and diminishing their revenues.
• Additionally, many cocoa-producing communities have inadequate access to safe drinking water and sanitation.

a) Analyse the sustainability issues of the cocoa sector based on the case information. (70 marks)

b) How can chocolate manufacturers in the cocoa sector integrate sustainability into their operations to address the sustainability issues? Please give at least three (3) examples of proposed sustainable business practices. (30 marks)