It is well-known that farmers get only a small fraction of the full value extracted from a coffee and cocoa bean.
This is the breakdown of the value capture from the cocoa bean supply chain.
The farmer gets just 6.6% of the total value of a chocolate sold. Ivory Coast and Ghana produce two-thirds of the global cocoa beans, but makes just $6 bn in revenues, from a global chocolate industry of $100bn.
This is the cocoa supply chain.
The farmer gets a mere 1 pence from a £2.50 cup of coffee! In contrast the coffee maker's profits are twenty-five fold higher!
Update 1 (03.06.2021)
Chocolate terms of trade fact of the day,
Of the $130bn global chocolate industry, less than $2bn goes to Ghana. Many farmers live in penury. Some employ children or extend their farms by cutting down forest to make ends meet. Farmers get at most 7 per cent of the chocolate value chain. Those who make, sell and market chocolate grab more than 80 per cent.
1 comment:
Looking it another way, from the perspective of the coffee maker, the fixed costs (staff and rents) is more than 6 times the profits or the variable costs. We could also say that the variable costs are negligible and the margins are wafer thin. That seems to be a very highly leveraged and risky industry similar to aviation.
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