:00:00. > :00:00.last? And now The Bottom Line with Evan
:00:00. > :00:15.Davis. Today we are talking about
:00:16. > :00:19.chocolate. Partly because it is a delicious subject, but also because
:00:20. > :00:25.if we can understand the business from cocoa bean to consumer
:00:26. > :00:30.product, we can understand the ways of the world, commodities, trade
:00:31. > :00:33.between north and south, speculators manufacturing and marketing. It is
:00:34. > :00:41.all there in that tasty slab. Each week, his nurse leaders gather for
:00:42. > :00:43.the BBC Radio 4 programme, The Bottom Line, and you can see it as
:00:44. > :01:02.well as he it. -- hear. I have three gas from different
:01:03. > :01:05.pieces of the industry. Guests. -- let's learn what their companies
:01:06. > :01:11.bring to the party and how they add value to the cocoa beans. The
:01:12. > :01:16.majority of the world cocoa supply is grown in West Africa. My first
:01:17. > :01:23.guest, Kojo Amoo-Gottfried, travels from Ghana to be with us today.
:01:24. > :01:28.Welcome. You are the manager for Kargil in Ghana, one of the world
:01:29. > :01:34.was the biggest companies. Tell us what they do. It is one of the
:01:35. > :01:45.largest privately held companies in the world, involved in in the food
:01:46. > :01:51.and energy sector. It is a big agricultural company, isn't it? It
:01:52. > :02:00.trades, buyers and producers. With sauce from foreigners, we trade and
:02:01. > :02:03.process. -- farmers. Watt sitting next to you is someone who would
:02:04. > :02:13.represent one of your customers, Jonathan Horrell, the director of
:02:14. > :02:16.global sustainability. Another large company that no one has heard of but
:02:17. > :02:22.people had heard of it, but you changed your name from Craft,
:02:23. > :02:38.swallowing Cadbury and people have heard those. We have existed since
:02:39. > :02:44.the end of 2012. It has left us with a different heritage, notably with
:02:45. > :02:55.products like Cadbury and Toblerone. Not to mention Powell coffee brands
:02:56. > :02:58.and biscuit rants. -- our. So you by the processed cocoa butter and other
:02:59. > :03:04.bits and make products that go onto shelves, like chocolate to drink,
:03:05. > :03:10.eat and snacks. That is exactly right. We use the separate
:03:11. > :03:16.ingredients produced by companies such as Kojo Amoo-Gottfried works
:03:17. > :03:23.for. So you are also a bit of a competitor. We wouldn't go into the
:03:24. > :03:28.level of buying from farms within the countries. Where we buy the
:03:29. > :03:35.cocoa beans we would buy from exporters such as Cargill. The
:03:36. > :03:40.question is whether we buy it as a bean or a processed product. Finally
:03:41. > :03:51.we have Sophi Trancell, who works for Divine chocolate. What was the
:03:52. > :03:56.story behind Divine? The cooperative in Ghana voted in an annual general
:03:57. > :04:01.meeting to set up a chocolate company in the UK to gain the value
:04:02. > :04:06.of the cocoa they grow. We were established in 1998 and apart from
:04:07. > :04:11.chocolate, what makes Divine special is that cocoa farmers own 45% of the
:04:12. > :04:15.company, with seats on the board and influence over how the company is
:04:16. > :04:26.run. They also received 45% of the profit. Two of you sell chocolate in
:04:27. > :04:30.some form. To understand what your companies do, we need the benefit of
:04:31. > :04:36.the props that we have. We have vials with stages. We have the cocoa
:04:37. > :04:47.beans in here, about 1-2 centimetres long. They are long. Tell me about
:04:48. > :04:58.these Kojo. This is what happens after the cocoa has been fomented
:04:59. > :05:05.and dried. This is the bean. -- fermented. This is what is bad and
:05:06. > :05:10.goes to processing. But before you get to that stage the farmers have
:05:11. > :05:13.done a lot of work. They have prevented it for seven -10 days in
:05:14. > :05:26.their farms and then dried it in their farm for-7 days. -- 5-7/ we
:05:27. > :05:30.have these other things here, a chocolate powder that looks like
:05:31. > :05:36.stuff that you may print out of. It is rather dusty and I will sneeze if
:05:37. > :05:44.I throw that in. Then we have cocoa liquor which isn't a liquid. It
:05:45. > :05:48.would be liquid if it was at a different temperature. It is solid
:05:49. > :05:54.at room temperature. It is beginning to sound -- smell a bit chocolatey.
:05:55. > :05:58.It begins with the being sent to the factory, then it is roasted at a
:05:59. > :06:04.high temperature and at that roasting, you get a liquid becoming
:06:05. > :06:09.the cocoa liquor, and then you can send that for chocolate or you can
:06:10. > :06:14.take it another step where you apply hydraulic presses to the liquor and
:06:15. > :06:19.you get butter and powder coming out. So the liquor comes out of the
:06:20. > :06:23.bean and then you get powder, which we have here, and the cocoa butter
:06:24. > :06:29.which is white, looking like candle wax. It doesn't smell very nice.
:06:30. > :06:37.That is what you put in the chocolate. We have one final
:06:38. > :06:46.product, it is none of yours. It has a mix of butter, powder, liquor,
:06:47. > :06:53.sugar, milk. You take the combined product and mix it with milk and
:06:54. > :06:59.sugar, creating the basic chocolate recipe. What is interesting about
:07:00. > :07:04.this press is that the butter that you create in the powder you create
:07:05. > :07:10.for our screens and biscuits and drinks, and the markets can be
:07:11. > :07:14.totally different. What is interesting is that Europe and the
:07:15. > :07:20.US have 70% of the demand of chocolate. When it comes to powder,
:07:21. > :07:23.it is worldwide. In emerging countries, they are grabbing onto
:07:24. > :07:31.the powder is before they get to chocolate. As wealth... As you get
:07:32. > :07:36.into the chocolate taste, you work towards chocolate. Let's talk about
:07:37. > :07:41.the relationship between growers and the rest of the industry because,
:07:42. > :07:47.obviously, as I understand it, shout me down, but, in an ordinary bar of
:07:48. > :07:55.chocolate like this one, the retail price maybe 5% would actually go to
:07:56. > :08:02.the grower or farmer. Is that right's is that a lot, or a little?
:08:03. > :08:08.Should we be shocked? Was that a reasonable return the grower? The
:08:09. > :08:13.question of returns, proposed as the proportion of the end price might be
:08:14. > :08:22.less significant than whether the grower is actually thriving as part
:08:23. > :08:26.of a thriving community. In cocoa, increasingly, that has not been the
:08:27. > :08:29.case. Whether or not farmers have been able to invest in their farms
:08:30. > :08:34.and whether or not they have the right skills or access to higher
:08:35. > :08:40.yield varieties, or whether the community is a good place to live,
:08:41. > :08:43.all of these factors come together. The experience in cocoa has been
:08:44. > :08:49.that the formula has been wrong, out of kilter. A lot of people are
:08:50. > :08:56.concerned about the future of cocoa supply because of the pressure on
:08:57. > :09:02.farmers. Companies that are operating like Cargill are doing
:09:03. > :09:07.very well. And farmers over the last 20 years have been doing badly. So
:09:08. > :09:11.badly that lots are dropping out of cocoa farming, hence why there has
:09:12. > :09:18.been a deficit in the crop for four out of five years. Big companies
:09:19. > :09:23.recognise the problem in terms of securing cocoa and they begin
:09:24. > :09:28.investing in making it more productive. But are they focusing in
:09:29. > :09:34.making it more productive or ensuring farmers are paid enough to
:09:35. > :09:43.carry on doing it's that was a very interesting critique. Come on then
:09:44. > :09:50.Kojo. Low if you look at Cargill, we have been doing this for a long
:09:51. > :09:57.time. If a farmer feels, the chain feels. We can point fingers, but it
:09:58. > :10:05.is critical for the farmer. If white American men were growing cocoa
:10:06. > :10:08.beans, the price of cocoa beans... I offer this as a hypothesis, the
:10:09. > :10:12.price of cocoa beans would be higher and they would get more than 5%.
:10:13. > :10:15.There is something about the structure of the industry, with
:10:16. > :10:22.power in the middle and the company is in the middle, and small guys at
:10:23. > :10:26.one end, meaning the little guys have little market power and the big
:10:27. > :10:35.people have a lot of market power. Why has it ended up in that way? In
:10:36. > :10:42.a place like Ghana and the Ivory Coast, where the government has
:10:43. > :10:49.stepped in and the government sells a head and takes care of the farmer.
:10:50. > :10:55.But as we know, Ghana is a large income earner from cocoa. It is
:10:56. > :11:02.critical the farmer -- that the farmer is taken care of. People have
:11:03. > :11:08.few choices. We need to look at it from that context. They will switch
:11:09. > :11:13.to other crops, for instance in the Ivory Coast where people switch to
:11:14. > :11:20.rubber when prices aren't great. We understand that will happen.
:11:21. > :11:24.Something that is important in the difference between the European
:11:25. > :11:27.farmer in the west African farmer is the scale of the operation. The
:11:28. > :11:37.average cocoa farm is one heck care and very few farmers in that area
:11:38. > :11:44.have that scale. -- hecatre. --hectare. All those things need to
:11:45. > :11:50.change and develop to enable it to thrive. We talk a lot about
:11:51. > :11:56.productivity in the cocoa sector and concerns of the future cocoa supply,
:11:57. > :12:00.but if you view it as a productivity problem you miss half of the issue
:12:01. > :12:06.because it is a community issue. Does the community does the
:12:07. > :12:11.generation coming want to have a cocoa farm? They might want to go to
:12:12. > :12:17.the city. A lot is happening altogether. Sophie, you gave us the
:12:18. > :12:22.original idea that got us into this but what do you feel about the
:12:23. > :12:25.responses you have heard? Part of it would come back to the fact that the
:12:26. > :12:31.palmers R4 because they have tiny farms. It is interesting because
:12:32. > :12:38.Cadbury has been involved in cocoa for a long time. Perhaps 100 years.
:12:39. > :12:48.It is not a big scale crop. It is dominated by small holders. The
:12:49. > :12:55.exploiting and primary processing is concentrated, and it is incredible
:12:56. > :13:10.how concentrated. Tell us how the price fluctuates? What has Obama get
:13:11. > :13:25.free tone of beans? In Ghana he gets about $70 per bag at the moment. Bag
:13:26. > :13:33.is not a time? 64 kilograms. That is the government price. A dollar per
:13:34. > :13:42.kilo. What is your capacity? 2 million tonnes? We are below
:13:43. > :13:59.700,000. We are not in the 50% market. We make no. -- no. We are a
:14:00. > :14:04.very large company and we have some of the world 's biggest chocolate
:14:05. > :14:08.brands. In fairness, if he did not have people who are successfully
:14:09. > :14:14.marketing chocolate, perhaps more successfully than you are, they have
:14:15. > :14:18.been at it longer and have been successful because they sell very
:14:19. > :14:22.large amounts of it. If they weren't doing that, the farmers would not be
:14:23. > :14:28.better off. Ultimately the income of the farmers depends on people like
:14:29. > :14:36.me buying the product and eating it. You want the big companies. We
:14:37. > :14:46.buying cocoa and so it is processed by Kargil. These are hugely
:14:47. > :14:52.profitable companies while farmers have not done well at all over the
:14:53. > :14:56.past 20 years. What I'm saying is that if you want farmers to carry on
:14:57. > :15:06.farming July to give them a voice and give them better pay. These to
:15:07. > :15:12.recognise that. We depend on thriving cocoa communities to give
:15:13. > :15:18.us a sustainable supply and what you need is effective investment,
:15:19. > :15:24.training, activation. A decent return to encourage people to do
:15:25. > :15:27.that. You need transparency over what those returns are. There is a
:15:28. > :15:31.question about the price but does the farmer know what the world
:15:32. > :15:38.market price is? The chain is Ray Long, what share of it are they
:15:39. > :15:45.getting? -- very long. What proportion of chocolate as can be --
:15:46. > :15:51.is consumed as chocolate as a chocolate bar or what proportion is
:15:52. > :15:56.as a snack bar? Most of our chocolate is chocolate. We make
:15:57. > :15:59.chocolate bar type things but across most of Europe most of our chocolate
:16:00. > :16:12.business is making chocolate tablets or buyers. -- buyers. People get
:16:13. > :16:17.very attached. Dark chocolate has become more popular here in the UK.
:16:18. > :16:20.You see a strong attachment to the chocolate you had as a kid. That is
:16:21. > :16:26.something which you see that people hold on to that. With love chocolate
:16:27. > :16:33.because it melts at body temperature which is a nice experience. We eat
:16:34. > :16:35.twice as much chocolate as the Americans and we all know what
:16:36. > :16:42.American chocolate is like. What is it like? It is temperature
:16:43. > :16:48.resistance so it makes it more difficult to eat it because you end
:16:49. > :16:51.up with a mouthful of it. European chocolate is better than chocolate
:16:52. > :16:56.iPad in the US but I did not know that it melted at different
:16:57. > :16:59.averages. America has huge climate differences if you move chocolate
:17:00. > :17:07.around you to be challenged if you have products that melt a lot. That
:17:08. > :17:10.is fascinating. We have a lot of challenges moving chocolate around
:17:11. > :17:16.America because these difficult to move it around. You have to keep it
:17:17. > :17:20.in, not refrigerated, but controlled temperature. We do not want it to
:17:21. > :17:26.freeze but we do not want it to get hot. If it has been too hot to cold
:17:27. > :17:32.that comes with a white on it whether that has come out of the
:17:33. > :17:36.product. That is fascinating. What you observe is that the core
:17:37. > :17:42.chocolate consuming nations are North European. Belgium,
:17:43. > :17:52.Switzerland, Germany, the UK, and some of France. How much chocolate
:17:53. > :18:01.is consumed in Ghana? They do but it all has to do with a luxury. About
:18:02. > :18:09.1% chocolate consumption on the continent is the norm. It is a very
:18:10. > :18:17.hard bar of chocolate. It is the heat resistant part of it. Access to
:18:18. > :18:20.refrigeration is low. If you are selling it on the road or not
:18:21. > :18:29.refrigerated it is difficult to carry some of these brands. Emerging
:18:30. > :18:37.markets, Brazil, China and India must become convergent with the
:18:38. > :18:43.Europeans and the US? Yes. We have a rise in sales of 20 to 30%. They are
:18:44. > :18:49.a powerful force. Customers are asking us to be in these markets. We
:18:50. > :18:52.are building a factory in Brazil and Indonesia and we're getting closer
:18:53. > :18:59.to the customers because they are getting these markets. It is all
:19:00. > :19:03.about scale. At some point you in to the risk of consumers not being able
:19:04. > :19:10.to pay for it if it is too niche. You are anticipating a growing
:19:11. > :19:15.demand. We have seen it. 3.5 million tonnes ten years ago and now we are
:19:16. > :19:20.talking about 4 million and more than that. It is not grow in many
:19:21. > :19:24.places, it need specific climate, good moisture and temperature all
:19:25. > :19:31.year. It grows well in the rainforest and it grows 10 degrees
:19:32. > :19:35.above or below the equator. It flourishes in the rainforest and
:19:36. > :19:40.there is less rainforest. We have a lot of demand in the Asia-Pacific
:19:41. > :19:44.region. We want more grown in Indonesia because of liquor sauce
:19:45. > :19:49.more of it there than it will be easier. They can grow almost
:19:50. > :19:57.anything in Indonesia. Demand is growing, supply will need to grow,
:19:58. > :20:02.but about what climate? Is climate something that you all thinking
:20:03. > :20:09.about? A lot of studies say that by 2050 half of the cocoa belt will be
:20:10. > :20:14.too dry. You should be having nightmares about that. There is a
:20:15. > :20:22.lot of research going on concerned about this. I am personally from a
:20:23. > :20:27.cocoa farming family. My parents went to school based on cocoa income
:20:28. > :20:35.and they see the yield dropping since my father stopped looking
:20:36. > :20:40.after the farm. Even on my own farm, we are looking out for the seed
:20:41. > :20:47.varieties. In Ghana the Cocoa Board will tell you that they have
:20:48. > :20:55.migrated 6% of the seedlings -- 60% of the seedlings to more productive
:20:56. > :20:58.ones. What we forget is that technology is important. We took
:20:59. > :21:01.about the seed varieties where the industries investing in technology
:21:02. > :21:09.to make sure that we can stand the heat. Resilience is key. Two nobody
:21:10. > :21:19.knows what will happen to whether in West Africa. You cannot predict
:21:20. > :21:24.accurately what will happen but you can help farmers to become more
:21:25. > :21:29.resilient. Increasing the number of shade trees, those things help in
:21:30. > :21:34.managing a less reliable climate. It worries me that you are doing
:21:35. > :21:40.intensive farming where you are using more inputs and it delivers an
:21:41. > :21:43.increasing yield but it is worrying whether it will do it in the
:21:44. > :21:48.long-running? It is not in our interests that doesn't but it is a
:21:49. > :21:52.worry if it does not. The farmers will be devastated and so that sends
:21:53. > :21:56.of those intensive farming work in the long-running? The trees used to
:21:57. > :22:02.be productive of 30 years but the new hybrids are 20 years which means
:22:03. > :22:06.that as a farmer if you invest in planting these new plants and grow
:22:07. > :22:11.them, you have an income coming in for 20 years when you use to have
:22:12. > :22:17.one for 30 years. You will have to replant when you are quite old.
:22:18. > :22:19.Those things are quite challenging. There are new techniques so that
:22:20. > :22:26.trees can come into production more quickly. Now it might produce pods
:22:27. > :22:34.in a year or two. There is then a balance between productivity and
:22:35. > :22:44.long-term yield. You need to be able to produce... Land is light running
:22:45. > :22:50.out -- running out. Coming back from seeing sugar in Malawi, they were
:22:51. > :22:53.getting the yield up but you are concerned about what will be like in
:22:54. > :22:58.ten years time when you have been irrigating for so long. What will
:22:59. > :23:08.the soil like? We do not have that problem in cocoa. But to make
:23:09. > :23:13.chocolate win need sugar. When you look at Indonesia and West Africa,
:23:14. > :23:17.there is a big difference in yield. On the same land you can do more and
:23:18. > :23:24.so that is why it is critical that we scale up. Price will not do it
:23:25. > :23:28.all. To any of you feel that at some point humans will fall out of love
:23:29. > :23:34.with this product? We have liked it for millennia, it goes back quite a
:23:35. > :23:38.long way but it is kind of good for you but it is not good for you in a
:23:39. > :23:44.quantity that we eat its? It is not a health product. It is a joy
:23:45. > :23:48.product and people will not fall out of love with it. People will
:23:49. > :23:53.continue but they might be to cherish the moment more because of
:23:54. > :23:58.the good of their health they might need to eat smaller amounts of it.
:23:59. > :24:01.Whenever we talk about food of this programme, it makes me hungry so
:24:02. > :24:17.this is a good point on which to draw to a close. Thank you to all of
:24:18. > :24:29.my guests. Thank you all for listening and I will be back with
:24:30. > :24:32.more guests next week. Downloads are available on our website and you can
:24:33. > :24:39.always listen to it on BBC Radio 4. We like to get your e-mail Sue drop
:24:40. > :24:42.us a line -- so drop us a line.