the global chocolate market
DESCRIPTION
Performance and Legitimacy in Social Enterprises HEC Management School, University of Liege 3-4 March 2011 ‘Performance in agricultural social enterprises: confronting the productivity gap, breaking the poverty cycle and securing food sustainability’ Dr Amanda Berlan. - PowerPoint PPT PresentationTRANSCRIPT
Performance and Legitimacy in Social EnterprisesHEC Management School, University of Liege
3-4 March 2011
‘Performance in agricultural social enterprises: confronting the productivity gap, breaking the poverty cycle and securing food sustainability’
Dr Amanda Berlan
The global chocolate market• Cocoa represents a multi-billion £ industry
US chocolate market = approx $18 billion annuallyUK chocolate market = approx £4 billion annually
• Consumption is rising and major growth in key markets e.g. India and China
• The global chocolate market is presently characterised by:
a concern for ethical practices in production more demand for quality cocoa (single origin and
‘terroir’)
GLOBAL TRENDS Consumption is rising BUT production is falling so global cocoa
market is characterised by undersupply (an estimated 1M/MT annually by 2014)
This is driving prices up (and chocolate bar sizes down)
SOCIO-ECONOMIC ISSUES Average age of farmers high; young people not interested in
cocoa farming In many countries incomes from cocoa are low
FUTURE IMPLICATIONS Impact on long-term food sustainability of abandonment of food
production
Cocoa in crisis?
The Dominican Republic
The DR: formerly had a very bad reputation for poor quality cocoa is the second largest exporter of Fairtrade cocoa has the second largest cocoa-producer cooperative globally has the largest area of cocoa-growing land certified by Rainforest Alliance is the largest exporter of organic cocoa
Cocoa in the DR
DR cocoa producer profile • Most farmers produce organic cocoa, which can fetch very high premiums
• Current cocoa producer population = 36,000 farmers
• Typical profile is: male, average age 58, and has a small plot of land (≤ 10 acres) where cocoa is grown alongside other crops
• Literacy levels are low among cocoa farmers and workers
Many farmers are abandoning production and selling their land to larger landholders. In 1980, 84% of farms were ≤5 ha. By 1998, 68% of farms ≤5 ha.
Incomes are low, producers reported having debts and bonuses spent before they are even earned
Producer housing is of poor quality
Young people are not interested in becoming cocoa farmers, and this puts the long-term future of cocoa production at risk
Farm productivity is low and has the potential to be doubled or trebled in some areas, therefore farmers earn only a small amount even when the cocoa price and/or organic premiums are high
Challenges in DR cocoa production
9,500 producers are in the cooperative CONACADO and their numbers are growing
Impact of social entrepreneurship on: Quality - switch from Sanchez to Hispaniola Productivity (hopefully) because easier to provide
agricultural extension services Producer morale and affiliation, leading to less abandonment of farming and therefore better long-term
food sustainability The national cocoa market
Social entrepreneurship and cocoa in the DR
Sales of cocoa in MT (Oct 2008-Sept 2009)
CONA
CADO
ROIG
AGR
O-CA
CAO,
CXA
RIZ
EK C
ACAO
, C. P
OR A
.
COOP
ROAG
RO, I
NC.
YACA
O, S
. A.
CORT
ES H
NOS.
& C
O., C
XA
BIOF
CACA
O
JOSE
PAI
EWON
SKY
EHIJO
S, C
XA
MUN
NE &
CO.
, CXA
GARC
IA &
MEJ
IA, S
. A.
CAFI
ESA
OKO
CARI
BE, S
. A.
CHOC
OLAT
E AN
TILL
ANO,
S. A
.M
ARAB
EL F
ARM
SPA
NCA
IDEP
ACHU
MAR
IAS,
S. A
.
COOP
. AGR
OP. R
ED G
UACO
NEJO
MSR
. INV
ESTI
MEN
TCA
CAO
RICO
-
2,000.00
4,000.00
6,000.00
8,000.00
10,000.00
12,000.00
14,000.00
16,000.00
18,000.00 17,893.33
12,808.95
12,591.39
3,58
2.82
2,97
3.25
2,82
8.50
2,29
3.20
2,07
9.00
2,00
2.90
1,83
6.45
1,159.28
287.35
176.10
136.96
26.60
25.20
24.99
24.57
19.95
1.60
“generalised perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions” (Suchman, 1995)
“the congruence, in multiple stakeholder judgements, of an organization’s perceived actions with their expectations of its performance” (Nicholls, 2010)
The growing membership of CONACADO reflects the sense of legitimacy it has acquired among farmers
Farmer discourses reflect pragmatic (“it’s good for us”), cognitive (“can’t live without CONACADO”) and moral legitimacy (“CONACADO is a good organisation”).
Legitimacy of CONACADO
No legitimacy
Farmers abandon production
No cocoa = no chocolate AND
No cocoa = threat to food sustainability
Importance of legitimacy
Adopted multiple certifications which has opened up new markets (organic, Öko garantie BCS, Demeter, Bio-Suisse, USDA organic, ‘Hand in Hand Organic Rapunzel Fairtrade’, Fairtrade, Rainforest Alliance, ISO, Kosher, ISO 9001, KOSHER and JAS)
Has grown by focusing on quality and set a new standard across the DR
CONACADO by far the largest exporter, vastly outperforming competitors and making more efficient use of resources
Performance of CONACADO
Concluding remarks • The abandonment of cocoa has implications for long-term food security and is symptomatic of broader problems in farming and food sustainability worldwide • In order for cocoa, chocolate and food production to have a sustainable future, it is necessary to drastically rethink food production and value chains
• Based on the evidence from the Dominican cocoa sector (and other countries), Social Enterprises have a vital role to play and have become social imperatives in the modern world.