Responsible sourcing programmes of chocolate companies have failed the stress test

Farmer poverty cannot be addressed through corporate commitments or investor dialogue with chocolate companies, argues Emma Farrell.

In early 2023, while working as an Active Ownership Specialist at Credit Suisse Asset Management, I wrote an article about the environmental risks embedded in the cocoa supply chain. It was intended for publication as part of our engagement research series, but it never made it out. The merger with UBS that year disrupted the publication pipeline, and I resigned around the same time to spend a year doing the groundwork for a charity, combining governance and impact work with time abroad. The article had been sitting in my cloud storage since then, untouched.

When I found it again recently, I read through it and felt a familiar pang.

The risks I had described had materialised two years later. In April 2024, New York cocoa futures surpassed $12,000 (CHF9,341) per metric tonne. The previous long-run average had hovered around $2,500 per tonne for decades. By any measure, this was a historic dislocation. The International Cocoa Organisation (ICCO) reported a global production deficit of approximately 478,000 metric tonnes for the 2023–24 season, the largest shortfall in over 60 years, with end-of-season stocks falling to their lowest levels in nearly half a century.

The root causes were the ones I had flagged as risks in 2023. Ghana and the Ivory Coast, which together account for roughly 60% of global cocoa supply, both experienced severe production collapses in the same season. Ghana’s Cocoa Board reported that 81% of the 2024 crop had been affected by cacao swollen shoot virus (CSSV), a disease whose spread is linked to climate-driven stress in cocoa trees. The Ivory Coast recorded its lowest production in eight years, Ghana its lowest in two decades. These were not random coincidences. They were the compounding effect of climate vulnerability in a geographically concentrated supply chain.

Farmers hit, and consumers too

The 2024 cocoa crisis cost billions. For consumers, it meant not just higher prices but quietly reformulated products: fillers, flavour enhancers, and reduced cocoa content in chocolate bars that looked identical on the shelf. As Swissinfo reported in September 2025, record cocoa prices accelerated the adoption of cheaper replacement options designed to deliver the same chocolate taste for less. It devastated smallholder communities even against a backdrop of record prices they never actually received. Even in a hypothetical system where farmers benefit from an upswing in prices, their share of the final retail price of chocolate has been estimated at between 3% and 6%. Record market prices, in this architecture, are largely irrelevant to farmer welfare.

Price volatility also hits farmers on the way down. Through 2025, cocoa prices reversed sharply, falling from their 2024 highs to below $6,000 per tonne by year end – a collapse of more than 50%. For farmers inside procurement models where a living income reference price is embedded directly into the purchase contract rather than linked to market conditions, the floor held. For the majority dependent on government-set farmgate prices, the gains of the previous two years began to erode. In the Ivory Coast, farmgate prices dropped 57%. In Ghana, they fell by 21%. The lesson of the 2024 spike – that farmers do not benefit proportionally from high prices – was now mirrored in reverse: they absorb the losses when prices fall.

Why voluntary frameworks don’t reach the source

The cocoa sector had built, over many years, a substantial architecture of sustainability governance. The Cocoa and Forests Initiative (CFI), signed in 2017 by the governments of the Ivory Coast and Ghana alongside leading chocolate manufacturers including Nestlé, Barry Callebaut, Lindt & Sprüngli, and Mondelēz, was followed by detailed action plans in 2019.

The Feed the Future Partnership for Climate-Smart Cocoa launched in 2016 with nine private-sector companies, devising programmes for drought-resistant tree varieties and shade-grown farming. Investor-engagement programmes, including the active ownership work I contributed to at Credit Suisse, operated systematically across major portfolio companies. And yet, by the time the 2024 crisis arrived, the deforestation commitments had not been honoured, traceability remained incomplete, and farmer income had not improved structurally.

From the vantage point of having worked inside active ownership programmes targeting these supply chains, I think the structural reason for the failure is this: the governance infrastructure that was built around cocoa sustainability was designed to manage disclosure and commitment at the corporate level. It was not designed to change the underlying economic architecture of the supply chain that produces the problems.

The structural problem – farmer poverty – cannot be addressed through corporate commitment letters or investor dialogue with chocolate companies. The Cocoa Barometer 2025, published by the VOICE Network, found that smallholder farmers across West Africa continued to earn far below a living income despite the price environment. The report’s conclusion is direct: farmer poverty is the root cause of virtually every major challenge in the sector. Governance frameworks that do not address the economic position of the farmer have not addressed the problem.

Lessons for Switzerland

The choice about whether to change the governance logic is not a moral one in the abstract. It is a cost-benefit calculation about who absorbs the costs of the current model, and for how long. Switzerland built its global reputation on chocolate. It is not a bad place to also build a model for doing it right.

The urgency of that choice became visible again on April 16, 2026, when Barry Callebaut – the world’s largest chocolate processor, headquartered in Zurich – reported its shares falling more than 15% in a single day. The company cut its profit forecast, citing the speed of the cocoa price collapse, industry overcapacity, and supply disruption. Its recurring earnings before interest and taxes fell by 4.2% and volumes declined by 6.9%. An analyst covering the company noted that people believe there is a structural element to the decline, and not a purely cyclical downturn.

The 2024 crisis exposed structural fragility at farm level. The 2025 price collapse is now exposing structural fragility at the processor level. The system is being tested at both ends simultaneously, and the current governance architecture is holding at neither.

Edited by Anand Chandrasekhar/vm/gw