The role of trade in keeping the world fed

The Australian Bureau of Statistics recently released data that proved that COVID-19 hasn’t destroyed our global trade, even though it has definitely complicated things due to geopolitical developments. Supply chain dependencies and priorities within countries changed and restrictions were placed on the export of critical items as countries began to navigate the spread of COVID-19.

In 2020, food and beverage exports have increased 5.8 per cent, led by seven per cent year-on-year increase in food product manufacturing. The results are in – demand for safe, high-quality, Australian-produced food still remains strong in these uncertain times. This is great for our food manufacturers and growers, the essential businesses keeping the supermarket shelves stocked.

Trading in the current environment
A strong international trade system is crucial to maintaining global food security. The fact is that trade stabilises food prices and supply volumes and thereby helps improve social stability, particularly in countries with higher levels of poverty, or where there are more variable agriculture production conditions. During the 2007-08 food price crisis, restrictions by countries on exports of certain commodities led to increases in world food prices and intensified the impact on food insecurity and poverty. So far, during the current COVID-19 pandemic, such crises have been averted and the trade flows have continued.

According to an ABARES study, Australia is ranked among the most food secure nations globally and as one of the top 10 countries for food affordability and availability. It should also serve as some comfort to Australian consumers that we are not going to run out of our everyday supplies and food that we need. About 11 per cent of the food and beverages Australians consume by value is imported. Many of these are ingredients that Australia is unlikely to produce in any quantity for the foreseeable future. Cocoa, for example, which is used in making chocolates. For Australians to continue to have a Tim Tam with their tea or coffee, the country must continue to trade and import those key ingredients.

As the pandemic continues, some grocery shortages might occur, but this isn’t a sign of a lack of food. For example, in Victoria the shortages are due to temporary disruption to logistics and operations to ensure compliance requirements set out by authorities. Australia produces enough to feed the entire population three times over – Australians do not need to panic.

Global challenges and what we should do?
What can we do to make sure Australians continue to be spoilt for choice and have access to our preferred grocery products? We can learn. The first step is Australia must continue its efforts in strengthening global trading systems and work with international trading partners to achieve resolutions to interruptions to global supply chains. Special arrangements need to be secured for two-way trade under crisis conditions.

When Australians refer to business as usual and the future hopefully waiting for us post COVID-19, the country needs to remain committed to working on securing trade agreements with a focus on getting equivalent access. In any future, a secure, rules-based international trading system backed by reliable supply chains is a must for stability and security of food supply.

Chocolate consumption falls during COVID-19

With COVID-19 restrictions around the world limiting impulse purchasing and decreasing consumer confidence, global chocolate consumption has fallen significantly over recent months, according to a new report by agribusiness banking specialist Rabobank.

In the report — Consumers Lose Taste for Cocoa Under COVID-19 — Rabobank said a significant proportion of chocolate demand is comprised of impulse and gift purchases made at retail shops, vending machines, airports, or while travelling.

“The instant gratification of an in-person purchase has been largely unavailable while consumers have been stuck at home and under government imposed lockdowns and this, combined with the prospect of a recession, has seen consumers more likely to shun indulgent snacks, especially those considered a luxury,” report author, London-based Rabobank commodities analyst Andrew Rawlings said.

In the US, for example, Mr Rawlings said, chocolate sales in supermarkets initially increased in April as consumers stockpiled goods, however sales for May and June showed steep month-on-month declines.

“We’ve also seen this trend play out in other regions and other commodities across the globe, with a short period of stockpiling prior to government lockdowns followed by a return to a new normal in sales,” he said.

Lower cocoa demand
The report says lower global chocolate consumption has led to a drop off in demand for cocoa grindings – the main ingredient in chocolate.

“In some regions — such as Europe — we saw processors increase cocoa grindings in quarter one, as they anticipated the potential for future plant closures during lockdowns. However, outright lower cocoa demand in the fallout of COVID-19 saw grindings in major production regions significantly lower year-on-year in quarter two,” he said.

“For this period, European grindings fell by 8.9 per cent year-on-year — the largest percentage decline in Europe since 2012 — while there were also big year-on-year falls in grindings production in North America (10.5 per cent) and in Asia (six per cent).

The report says the recession resulting from COVID-19 is expected to extend into 2020/21 and cocoa demand is unlikely to resume its growth trend until 2021/22, assuming a complete relaxation of social distancing measures. 

Downward price pressure on cocoa
Rawlings said while cocoa demand had been impacted by COVID-19, the effects of the virus on cocoa supply have been minimal, and will likely continue to be.

“The mid-crop harvest is well underway in West Africa and with no major weather issues, cocoa availability at origin should be extremely good,” he said.

“This imbalance between supply and demand will likely keep pressure on cocoa prices until availability weakens or a weather issue develops ahead of the main crop in October.”

Australia
While specific Australian chocolate consumption was not detailed in the report, Rabobank Australian-based senior analyst Michael Harvey said similar trends are expected to have been evidenced locally.

“With weaker economic conditions, consumers tend to tighten their belts and are less inclined to make discretionary purchases of some luxury food items,” he said.

“Australia’s economic slowdown over recent months is likely to have adversely impacted chocolate sales, however, the country’s relative success in controlling the spread of COVID-19 means sales may have declined less significantly than in some other regions.”

Harvey said with cocoa the principal ingredient in chocolate – along with milk and sugar – the lower demand and strong supply could spell good news for chocolate lovers, likely to keep a lid on retail price rises in the near future.

An outline on how to end cocoa deforestation

Cargill has outlined its plan to eliminate deforestation from its cocoa supply chain. The Protect Our Planet plan provides concrete actions the company is taking to achieve 100 percent cocoa bean traceability and includes a commitment of “no further conversion” of any forest land in Ghana and Ivory Coast for cocoa production. It also expands the company’s forest efforts to five origin countries (Brazil, Indonesia, Cameroon, Ivory Coast and Ghana) as well as the indirect cocoa supply chain, while securing the future livelihoods and resilience of smallholder cocoa farmers.

“We recognize there is considerable urgency to address climate and deforestation challenges. This means engaging in programs to stop deforestation in the countries from which we source cocoa,” said Cargill Cocoa & Chocolate president, Harold Poelma. ”We have made important first steps but there is more to be done and we believe that this action plan is how we will reach our goal.”

In October 2017, Cargill introduced five sustainability goals for a thriving and sustainable cocoa sector, aligned with the UN’s Sustainable Development Goals (SDGs). Protect Our Planet, which will be implemented in five origin countries where Cargill sources cocoa and throughout the company’s indirect supply chain, outlines how the company will achieve those goals and eliminate deforestation from its supply chain by 2030, including:

  • Intending to achieve 100 percent cocoa bean  traceability. The company will map its entire cocoa supply chain, using GPS and polygon farm mapping globally, to identify the exact location of the farms and accurately assess farm size. We will also continue to introduce traceability technology to cooperatives and farmers such as a Coop Management System (CMS) and bar-coding of bags enabling us to trace beans back to individual farms. We have already achieved 100 percent traceability from farm to factory in Ghana using these technologies. We are aiming to achieve the same in Ivory Coast in 2020, where we  mapped over 80,000  of the 120,000 farms in our direct supply chain.
  • Integrating environmental protection projects into its Cocoa Promise program. This includes expanding existing programs related to growing more cocoa on less land, economics and labor issues to include agroforestry, and conservation.
  • Being committed to managing the risk of deforestation not only in the Cargill Cocoa Promise supply chain, but also within indirect cocoa and chocolate ingredient supply chains. This includes raising standards for third-party suppliers to advance their own transparency and build their capacity to address common challenges.
  • Acknowledging that the journey towards sustainable business practices is far greater than the actions or interests of any one company. Last year, Cargill co-signed the Cocoa and Forests Initiative (CFI) alongside thirty-four other chocolate and cocoa companies, the World Cocoa Foundation, and the IDH Sustainable Trade Initiative to achieve a fair and secure cocoa supply chain. Protect Our Planet also includes collaborative arrangements with (sub)national & landscapes initiatives, and support of stronger legal enforcement mechanisms.
  • Being committed to reporting annually to all its stakeholders, including customers, CFI, NGOs and others. By sharing progress and learnings with stakeholders around the globe, participants in the cocoa supply chain and beyond can learn from each other on this journey to end deforestation.

“Concerns around deforestation and its impact demand a joint response from private and public sectors, companies and citizens alike,” said Poelma. “We are committed to playing our part in ending deforestation in the cocoa sector while improving the lives of cocoa farmers and their communities, reinforcing our ability to thrive as a business while leaving a positive impact on the world around us.”

Cocoa Industry announces plan to end deforestation

Twelve of the world’s leading cocoa and chocolate companies, including Hershey and Nestlé, have agreed to an initiative to end deforestation in the global cocoa supply chain.

The agreement, concluded in London during a meeting hosted by Prince Charles, commits the companies to develop and present a joint public-private framework of action at the United Nations Framework Convention on Climate Change in Bonn in November. The initial focus of the initiative will be on top cocoa producers Ivory Coast and Ghana.

The companies included in the initiative are Barry Callebaut; Blommer Chocolate Company; Cargill; CEMOI; ECOM; Ferrero; The Hershey Company; Mars, Incorporated; Mondelēz International; Nestlé; Olam and Touton.

Also present at the meeting were ministers and senior government representatives of Côte d’Ivoire and Ghana, as well as France, Germany, the Netherlands, Norway and the United Kingdom.

“…the most powerful direct reason for action is that deforestation threatens to undermine the very resilience of the cocoa sector itself, and with it the livelihoods of the millions of smallholders who depend on it,” Prince Charles said at the meeting.

“I am heartened that companies are undertaking to work up, in full collaboration with host governments and civil society, a joint framework of action to make good on the commitments announced today…”

John Sauven, Executive Director, Greenpeace UK welcomed the initiative.

“This initiative to stop cocoa production destroying forests must be warmly welcomed. The threats to biodiversity, the climate and local people will not be stopped by environmentalists chasing industry from forest to forest or commodity to commodity. The solution that would protect forests in Indonesia or Côte d’Ivoire would also work in other threatened biomes like Brazil’s savannah forests in the Cerrado,” said Sauven.

“It doesn’t matter whether the forest is being destroyed for cocoa, animal feed or palm oil. What matters is how industry responds. Business leaders must work together to stop their supply chains driving deforestation. This action by the cocoa industry brings us one step closer to that goal.”

Cocoa Life Sustainability Program reports Strong Progress

Mondelēz International has published the first progress report on its Cocoa Life sustainability program, which highlights the wide-ranging impact and efforts to date across its six cocoa-growing origins. 

Since its inception in 2012 to the end of 2015, Cocoa Life reached over 76,700 farmers in over 795 communities, establishing a strong foundation and framework for the program.

Initial results show Cocoa Life farmers' incomes tripled since 2009, which is 49 percent more than control communities measured. Likewise, cocoa yield increased 37 percent more than the control communities.

The report also includes data from a needs assessment of the five regions where Cocoa Life is in place in Côte d’Ivoire and an Indonesia baseline assessment, which identifies key areas that will be targeted and measured for improvement. 

According to Cocoa Life Program Director Cathy Pieters, Cocoa Life integrates the work of stakeholders to achieve common goals in ways that can assist Cocoa Life farming communities around the world.

"This progress report brings together the voices of people in cocoa communities across all our origins and demonstrates how the program is working together with local governments, our suppliers and partners to build lasting change on the ground," Pieters said. 

As the world’s largest chocolate company and buyer of cocoa, Mondelēz International is committed to ensuring a sustainable cocoa supply chain. Today, 21 percent of the company’s cocoa is sustainably sourced and brands such as Côte d'Or and Marabou are now displaying the Cocoa Life logo. Cocoa Life is a long-term $400 million investment to empower 200,000 cocoa farmers and reach over one million community members by 2022. 

Cocoa Life is a part of Mondelēz International's Call For Well-being, a call to action focused on four areas that are critical to the well-being of the world and where the company can make the greatest impact: Sustainability, Well-being, Communities, and Safety.

Cocoa Farmers in Indonesia to receive financial support program

A two and a half year program aimed at improving the livelihood of smallholder cocoa farmers has been introduced through collaboration with Mondelez International’s Cocoa Life operation.

Driving sustainability in Indonesian farming practices, the program that started in October 2015 aims to benefit six thousand farmers and their families in the Kolaka region.

Southeast Asia Cocoa Life manager Andi Sitt Asmayanti says the program is part of the Green Prosperity –Sustainable Cocoa Production Partnership national initiative led by Swisscontact in Indonesia.

“Through Cocoa Life, Mondelez International plans to reach 40,000 farmers in Indonesia and we believe this project will be a major step forward in reaching this commitment, and supporting cocoa farmers and communities to thrive,” Asmayanti said.

According to Asmayanti, the program aims to deliver training in good agricultural practices to improve knowledge and boost productivity while also improving environmental practices to reduce the carbon footprint of cocoa farming.

Cocoa Life urges employees, suppliers and community partners to join together to develop new approaches that will have a positive impact for both communities and stakeholders.

Implemented with Swisscontact, focus on facilitating access to agro-inputs can help farmers sustain their production for longer periods of time due to extra training in financial literacy.

Since July 2014, Mondelez and Cargill worked together to strengthen Indonesia’s position as a leading cocoa producer –strengthening both companies’ commitment to improving the livelihoods of cocoa farmers and investing in their future. 

Australian carob producer secures non-GMO status

The Australian Carob Company, producers of more than 200 tonnes of quality, allergy-free carob pods for distribution throughout Australia and export markets such as USA, China, Hong Kong and the UK, has secured Non-GMO verification from Cert ID.

Based in South Australia, The Australian Carob Company owns and harvests 6000 carob trees using sustainable and organic farming practices. Accredited by Australian Certified Organic (ACO) and USDA Organic Standards, non GM Verification by Cert ID, carried out by its Australian partner company HACCP Australia, will give The Australian Carob Company ‘added value’ with the increasing GM-aware Australian consumer, as well as in new export markets such as the USA.

Cert ID has Non-GMO verified the growing, harvesting, processing and packaging of seven carob products including Roasted Carob Powder, Raw Carob Powder, Raw Carob Kibble Nibbles, Carob Syrup. Back up testing was also undertaken to ensure that GM presence is below 0.1% as set out in the Cert ID Non GM Standard.

Cert ID’s Non-GMO Verification system is designed for food manufacturers and ingredient suppliers who wish to inform consumers of the non-GM status of their product. The scheme is particularly suitable for food producers and manufacturers wishing to target the North American market where awareness of GM issues is increasing. 

Michael Jolley, owner of The Australian Carob Company said: “We are already committed to the highest standards of sustainable and organic farming practices but our increasing export activities means we were being asked about our non GM status too. The Cert ID Non GMO Verification scheme provides a unique selling point because we are now able to demonstrate complete traceability at every step of carob production, which gives us real ‘added value’.