Power, Contracts, and Sustainability in Cocoa Supply Chains
June 12, 2025
A new study led by Dr. Sophia Carodenuto in the Department of Geography at the ßÉßɱ¬ÁÏ explores how the formalization of contracts in West Africa’s cocoa supply chains affects smallholder farmers. Focusing on Ghana and Côte d’Ivoire—the world’s two largest cocoa producers—this research offers timely insights into the unintended consequences of sustainability policy, particularly the European Union’s emerging supply chain regulations.
The First Mile: Where Global Supply Chains Begin
The “first mile” refers to the initial point at which smallholder farmers sell their cocoa, typically to cooperatives, licensed buyers, or local traders. These relationships, while hyper-local, are central to global commodity governance. Cocoa from Ghana and Côte d’Ivoire is essential to the global chocolate market, yet the farmers who produce it often face systemic poverty, limited land ownership, and little bargaining power.
Through 107 in-person interviews with farmers, corporations, and first-stage buyers, Dr. Carodenuto and her team investigated how formal and informal contracts at this first mile shape farmers’ ability to make decisions and negotiate terms. The research was supported by a 2020 SSHRC Insight Development Grant and completed in 2025.
Formal vs. Informal Contracts:
Formal contracts, particularly those tied to sustainability certifications, are often viewed as tools for improving transparency and enforcing environmental standards. These contracts provide structured terms, such as pre-agreed prices, training, and traceability mechanisms, all key requirements under the EU’s new Deforestation-free Regulation (EUDR).
However, the study found that these contracts often restrict farmers’ ability to choose their buyers, reduce flexibility in market participation, and limit opportunities for farmers to shape the terms of trade. In practice, they can reinforce top-down relationships that marginalize producer voices. Farmers most at risk of exclusion are those located at the forest frontier, where deforestation risk is highest and formal market infrastructure is weakest.
Conversely, informal contracts (typically unwritten, oral agreements between farmers and buyers) are often characterized by flexibility and negotiation. While these arrangements lack enforceable protections, and thus may seem risky to some, they can provide farmers with more room to manoeuvre, especially in choosing who to sell to and when.
This finding challenges conventional thinking in development policy, which often views informality as a problem to be corrected. In this case, informality may be a mechanism through which smallholders retain a degree of agency in an otherwise rigid supply chain.
Toward More Equitable Supply Chain Governance
The EU’s EUDR and other mandatory due diligence frameworks aim to improve sustainability by requiring companies to prove that products like cocoa are not linked to deforestation. While such regulations may drive greater transparency, they also risk deepening inequalities if they rely on formalization mechanisms that exclude or disempower smallholders.
This research contributes to critical debates in political ecology and supply chain governance by showing how contracts operate not only as economic instruments, but also as tools of power. Dr. Carodenuto calls for a more nuanced understanding of formality and informality in global trade systems, one that centres the voices and agency of smallholder producers in the pursuit of environmental and social sustainability.