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Towards ethical chocolate: multicriterial identifiers, pricing structures, and the role of the specialty cacao industry in sustainable development

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  • Jeana Cadby

    (The University of Tokyo)

  • Tetsuya Araki

    (The University of Tokyo)

Abstract

The specialty cacao industry is unique in that it is thought to offer higher price premiums and claims to provide cacao farmers with considerably more sustainable resources than traditional cacao systems, prioritizing farmer welfare and environmental resource conservation. However, with poor coherency of industry definition, quality quantifiers, and standardization, specialty cacao buyers can set prices and quality requirements without clear definitions that are easily externalized. Poorly defined standards put farmers at a disadvantage, allowing buyers to wield more bargaining power over producers, often assessing beans with independent or internal quality requirements. This research identified current industry definitions, and prices paid to farmers were collected and compared to world market prices, fair trade prices, and commodity producer prices. Five primary pathways were found to define characteristics for specialty cacao: (1) quality, (2) genetics, (3) origin, (4) certification, and (5) direct trade. This research shows for the first time, variability in farm gate prices for specialty cacao, as well as an average price 95.13% higher than commodity cacao, demonstrating the critical role that specialty cacao can play in developing a more sustainable chocolate industry. Ultimately, cacao farmers are agricultural entrepreneurs managing complex businesses that require reasonable access to independent, unbiased, and objective farmer-driven information on price transparency, market averages, and quality grading systems. This research reveals the need for systems-level definitions to quantify quality parameters to help farmers gain access to higher prices offered by buyers and provide incentives for economic opportunities and support for environmental conservation within specialty cacao markets.

Suggested Citation

  • Jeana Cadby & Tetsuya Araki, 2021. "Towards ethical chocolate: multicriterial identifiers, pricing structures, and the role of the specialty cacao industry in sustainable development," SN Business & Economics, Springer, vol. 1(3), pages 1-36, March.
    • Handle: RePEc:spr:snbeco:v:1:y:2021:i:3:d:10.1007_s43546-021-00051-y
    DOI: 10.1007/s43546-021-00051-y
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    References listed on IDEAS

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    1. Squicciarini, Mara P. & Swinnen, Johan (ed.), 2016. "The Economics of Chocolate," OUP Catalogue, Oxford University Press, number 9780198726449.
    2. Zambrano, Joshua David, 2010. "The Zambrano Report," MPRA Paper 26247, University Library of Munich, Germany.
    3. Valerie Nelson & David Phillips, 2018. "Sector, Landscape or Rural Transformations? Exploring the Limits and Potential of Agricultural Sustainability Initiatives through a Cocoa Case Study," Business Strategy and the Environment, Wiley Blackwell, vol. 27(2), pages 252-262, February.
    4. Masaya Ota & Yusuke Sakata & Takao Iijima, 2019. "Fair trade information eliminates the positive brand effect: product choice behavior in Japan," Asian Journal of Sustainability and Social Responsibility, Springer, vol. 4(1), pages 1-14, December.
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    2. Ballesteros, Josefina F. & Schouteten, Joachim J. & Otilla, Angelyn & Ramirez, Ramona Isabel & Gellynck, Xavier & Casaul, Julieta & De Steur, Hans, 2023. "Does award and origin labeling influence consumers’ willingness-to-pay beyond sensory cues? An experimental auction on improved Philippine tablea (cocoa liquor)," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
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