Evaluating the True Cost of Cocoa Production & the Viability of Mondelēz International’s Farm of the Future Model
Abstract
This report examines and seeks to identify how the total costs of cocoa production,
inclusive of environmental externalities, can be valued in dollars through impact
quantification and monetization. It explores how Mondelēz’ proprietary Farm of the
Future (FotF) model could mitigate impacts and recommends continued investment in
the project given its potential to create significant true cost savings.
Global cocoa demand is changing and bolstered by significant increases in emerging
markets – is projected to outpace global supply by as much as 1 million tons as early
as 2020. This is a critical challenge for chocolate producers, including Mondelēz
International (Mondelēz), one of world’s largest snack companies. The cocoa supply
chain is complex the existing fragmentation of the production landscape, declining
soil fertility, diseases, pests as well as the generally poor socio-economic welfare
of the millions of smallholder cocoa farmers all present difficulties and concerns.
While Mondelēz has invested heavily in the mitigation of these challenges, the organization
recognizes the future challenges that will impact their organization and the industry
as a whole, if something does not change.
This Masters project endeavors to provide a deeper understanding of the scope of these
impacts and value creation generated by their mitigation. This study utilizes an
adapted system of true cost assessment, incorporating concepts from systems thinking,
life cycle assessment (LCA) and whole life costing (WLC) to monetize these impacts.
The first chapter examines the global cocoa production landscape, highlighting impacts
associated with the current system.
The second chapter delves into the developed monetization methodology and defines
the concepts.
The third chapter presents a cocoa case study that employs the above methodology
as well as traditional cost assessment measures to highlight the costliest impacts.
The fourth chapter examines the proprietary Farm of the Future model, developed
by Mondelēz, forecasting its efficacy in mitigating existing environmental and social
issues as well as creating economic gains.
The fifth chapter applies the conclusions of the case study and demonstrates the
decreased societal cost burden that the FotF model facilitates.
The final chapter provides a brief conclusion of the primary learnings.
Type
Master's projectSubject
sustainable cocoasustainable agriculture
cocoa production
environmental costs
agriculture impact
corporate social responsibility
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https://hdl.handle.net/10161/11902Citation
Neale, Brittany (2016). Evaluating the True Cost of Cocoa Production & the Viability of Mondelēz International’s
Farm of the Future Model. Master's project, Duke University. Retrieved from https://hdl.handle.net/10161/11902.Collections
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