The True Cost of Cocoa – Tony’s Chocolonely Progress Report

True Price and Tony’s Chocolonely have a multi-year collaboration. Tony’s Chocolonely is a Dutch chocolate brand, known for its mission to make the global chocolate chain 100% slave-free. Since 2012, Tony’s Chocolonely has been buying cocoa beans directly from farmer cooperatives in Ivory Coast and Ghana. Furthermore, Tony’s Chocolonely wanted to understand the impacts of their cacao value chain compared to the sector. Therefore in 2013, True Price carried out an analysis for Tony’s Chocolonely in which the social and environmental costs of a conventional chocolate bar and a Tony’s Chocolonely chocolate bar were calculated.

In 2013, Tony’s performed 44% better than the sector cocoa. Now we have published an extensive report that tracks the performance of Tony’s Chocolonely. While the current true cocoa cost for both Tony’s Chocolonely and the sector benchmark show improvement since 2013, there is still work to be done to have lower true costs and more sustainable cocoa.

Tony’s Chocolonely cocoa is more sustainable than the average cocoa

True Price found that the true cost of cocoa for Tony’s Chocolonely farms in 2017 is €4.52 per kilogram. This is 54% lower than the true cost of the (weighted) average cocoa in Côte d’Ivoire and Ghana (true cost of €9.91) and is an 43% improvement compared to the Tony’s Chocolonely farms in 2013 (true cost of €7.93).

By quantifying the social costs in the cocoa value chain, such as underarming and child labor, Tony’s Chocolonely were able to adapt their price setting strategies to ensure that farmers make a living income. Tony’s Chocolonely performs better on the impacts underearning of smallholder farmers (that receive a Tony’s Chocolonely premium), child labor and forced labor (that Tony’s Chocolonely actively seeks to prevent). In addition, Tony’s Chocolonely’s farms have higher yields, which also helps to reduce the true costs per kilogram cocoa.

Tony’s Chocolonely has improved since 2013, but there are still external costs

While the results of this study show that real progress has been made over the years, external costs still remain. True Price’s work with Tony’s Chocolonely provides valuable insights into the opportunities for progress and improvement for the chocolate sector.

For further information check out our Tony’s case page or the full report.

Towards the Impact Economy

Unprecedented change is needed to create a world that enables every one of us, now and in the future, to live a fulfilling life with dignity. Conventions such as the SDGs, the Paris Climate Agreement, and Human Rights give us direction as to what our goals are. To realize these goals, an impact economy is needed: an economy in which work, entrepreneurship, innovation, and technology lead to a better world.

Today, we are thrilled to announce that we have launched the Impact Institute. Our mission is to empower organizations and professionals to realize the impact economy. For this, we firstly develop the ‘language’ of the impact economy: open-source standards for impact measurement and valuation. Secondly, we develop technologies to measure and communicate impact with radically more accuracy and lower cost.

The Impact Institute is a social enterprise and a spin-off of True Price. True Price was founded in 2012 and has since developed various methods and tools to measure and monetize impact. In 2018, True Price decided it will focus fully on creating a platform that enables businesses and consumers to calculate and share the true price of the products they buy and make. The Impact Institute will continue all other activities of True Price related to impact measurement and valuation.

Key objectives of the Impact Institute are that

  • All organizations measure, disclose, and steer on their societal accounts (including an Integrated Profit & Loss) next to their financial accounts
  • The financial valuation of shareholder value should include long-term internalization risks and opportunities
  • Governments provide the required incentives to enable businesses to be transparent about and optimize their societal value creation
  • All businesses disclose and improve the societal effects of their products (e.g. through true pricing).

The Impact Institute both develops open-source methods and offers the tools—software, data, training, and strategy—to implement these objectives. This includes software tools, measurement & reporting, consultancy & research, and training & education.

Our areas of focus are the Integrated Profit & Loss; true pricing; Sustainable Development Goals; tailor-made impact frameworks and specific topics such as human rights, living wages and income, natural capital, circularity, carbon footprint, social impact and cultural impact.

Finally, we will organize an annual Impact Conference, for which we will update you soon.

More information can be found on www.impactinstitute.com. True Price can be found on www.trueprice.org. Do not hesitate to reach out to us with any questions, ideas or suggestions.

Kind regards,

                              

 

Adrian de Groot Ruiz, Director                                                    Michel Scholte, Director

The First Ever True Price of Bread

The True Price of bread

Bread is a basic element of diets across the world. Like many other agricultural products, production of grains leads to extraction of water, soil pollution, and the emission of Co2, all of which involve societal costs.

Together with Bakker van Vessem, True Price has now calculated the first true price of bread. Bakker van Vessem is a well-established bakery brand, running now for 111 years, with a consistent focus on creating unique and healthy baked goods. True Price compared their Harlemmer Meer Brood with a constructed average bread sold in Dutch supermarkets, with imported ingredients and conventional agricultural methods.

As shown in the image below, we found that the Haarlemmer Meer Brood from Bakker van Vessem had a true price of 17 eurocents, compared to 32 eurocents of conventional bread. The difference is explained by two main drivers: transport and chemical fertilizer use. Haarlemmer Meer Brood is produced and transported locally within the region thereby avoiding the higher impact of imported bread from other areas. Further, Bakker van Vessem use less manure fertilizer per hectare to keep the external cost low.

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Bakker van Vessem should be congratulated on their efforts to ensure that their bread reflects the true price of its production. While this is a huge improvement on the sector average, there is still work to be done. There are three key directions for improvement: increasing the use of organic fertilizer, compensation of Co2 emissions through certified remediation efforts such as tree planting, as well as the use of biogas in order to drive down societal energy costs.

The delicious line of bread by Bakker van Vessem is now available in 16 stores, and is the first bread that can be bought for the True Price. Find out if there is a bakery near you (website is in Dutch).

Landscape valuation: Why pricing shared land is necessary

True Price conducted an innovative natural capital valuation analysis on the different land uses in the Maasai steppe, Tanzania. The region is home to pastoralist herders and is famous for its ecosystems that attract tourists worldwide but it is undergoing a drastic change.

There is an increasing trend of agricultural land conversion that is leading to a loss of habitat for iconic animals and loss of grazing areas for pastoralist herders. A natural capital monetary valuation study shows that conversion of steppe into farmland will result in overall natural capital loss. If the agricultural land conversion is not slowed in the coming decades, it will result in a loss of 1.3 billion USD in terms of lost ecosystem benefits to the Tanzanian people. Ecosystem services affected include: milk, meat, tourism, raw materials, wild food and medicinal herbs, drinking water and tree products.

In the short term, agricultural land conversion increases food production and productivity. However, True Price’s research shows that in the long term this practice leads to a decline in agricultural productivity since the common form of agriculture in the region is not sustainable and land is degraded and abandoned.

The following figure demonstrates the internal natural capital value of the Maasai Steppe, representing the discounted value of present and future benefits of alternative scenarios in USD.

internal natural capital value

Figure 1: Value of natural capital in the Maasai steppe in 3 scenarios of land conversion from glassland to farmland.

Economic benefits can be protected by slowing down the pace of land conversion from grasslands to farmland. Our livestock study with UNEP TEEB identifies options to facilitate a transtion towards more sustainable agricultural practices. A suggested mechanism to encourage this is to financially incentivise pastoralists to protect their land, to be paid for by other ecosystem beneficiaries, in the case of the steppe this is tourism operations. This economic mechanism would facilitate the internatlization of positive externalities, and gives hope to the future shared natural capital value of the Maasai steppe.

Find the full report for UNEP TEEB on their TEEBAgriFood page, created by True Price, Trucost and Wageningen University

 

True Price Banana report

In a recent assessment, True Price calculated the true price of bananas and exposed the external costs in their production.

As the most traded fruit on the planet and with a low price tag for consumers, we seem to be well and truly seduced.

What we do not see is the True Price; a price that includes environmental costs like damage from agrochemical farming or rainforest depletion and the social costs of low wages and poverty.

2017-06-02 16_56_41-Externe_kosten_van_bananenproductie.pdf

As seen here, True Price finds that Fair Trade banana production has lower environmental and social costs then the conventional. By supporting Fair Trade as a more sustainable model, we can contribute to reaching the planet’s 2030 SDG.
Have a look at the report published via Fair Trade Max Havelaar. (In Dutch)