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News :: Miscellaneous |
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The Nature of What's to Come? The Economics of Exploiting Cocoa Workers |
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by Patrick Landewe
(No verified email address) |
16 Aug 2002
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Decatur's Archer-Daniels-Midland, best known in recent years for its felonious busniess practices, should be even better known for profiting from slavery by its dominance in the trade in cocoa. Often produced on plantations whose labor force consists of enslaved youths, this is especially so in the case of ADM's large stake in trade with the Ivory Coast cocoa plantations. |
While mixing up a batch of my favorite chocolate chip cookies, I glanced at the package of chocolate chips and was appalled by the name on the label. The bittersweet chocolate chips were a product of ADM Cocoa of Milwaukee, a subsidiary of Archer Daniels Midland in Decatur, IL and the largest exporter of cocoa from the Ivory Coast (Cote d'Ivoire), a country in sub-Saharan western Africa where child slavery persists on cocoa plantations. ADM's slogan, "The Nature of What's to Come", begs the question: what is to come in the brave new world of multinational agribusiness operating in free trade markets leveraged by international lenders in developing countries?
Cote d'Ivoire is the world's leading cocoa producer, supplying 43% of the world's cocoa. An investigation in 1998 by the International Labor Organization, a United Nations agency, uncovered child slavery in the cocoa fields of the Ivory Coast. Two years later, a report by the U.S. State Department concluded that in recent years approximately 15,000 children aged 9 to 12 have been sold into forced labor on cotton, coffee and cocoa plantations in the northern region of the country.
According to a 1998 UNICEF report, traffickers brought children to work in the Ivory Coast's agricultural sector from poorer neighboring countries such as Mali, Burkina Faso, Benin, and Togo. Under a trade law that prohibits US imports of products created with forced child labor, the International Labor Rights Fund (ILRF) in June called for a ban on Ivorian cocoa imports. International observers report that the child laborers work long days in cocoa fields, often receive harsh beatings, and suffer from malnourishment. Cocoa workers who are actually paid receive starvation wages.
Since cocoa farmers rely on incomes from cocoa harvests to pay their workers, the amount workers get paid directly depends on the price of the cocoa. Recently, the world market price of cocoa fell so low that farmers received prices for their harvests less than production costs. On the New York Coffee, Sugar and Cocoa Exchange, cocoa prices dropped from a high of US$1800 per ton in 1997 to where it currently hovers around US$800, or 40 cents a pound. Cocoa growers are caught in a pinch, unable to pay workers and/or resorting to inexpensive child labor.
Last year's media expose of child slavery on Cote d'Ivoire's cocoa plantations has renewed campaigns for fair trade and increased scrutiny of working conditions in cocoa production. Initially, many major chocolate makers insisted that they bear no responsibility for working conditions, since they don't own the cocoa farms. Nevertheless, embarrassed by the press coverage and encouraged by political pressure, representatives of the global cocoa and chocolate industry signed the Harkin-Engel Protocol in November 2001, setting a four-year timetable to comply with the Inter-national Labor Organization Convention 182 and eliminate "the worst forms of child labor." Their pledge initiated a broad survey of the extent of child labor in cocoa production and will establish a monitoring system.
Although chocolate companies are taking steps to address the child slavery crisis, serious questions remain about policies of the International Monetary Fund (IMF) and World Bank that contribute to cocoa price volatility and perpetuate the severe conditions for cocoa laborers. IMF and World Bank policies in Cote d'Ivoire during the 1990s, including liberalization of pricing systems and emphasis on export production, left the agricultural sector increasingly vulnerable to price instabilities on the international market. While favorable to investors and exporters, the move toward free trade in the Ivory Coast has meant unfair prices for farmers and slavery for laborers since they are not protected during times of low prices.
Typically, cocoa markets cycle through alternating periods of boom and bust. This long-term cycle is often punctuated by short-term price fluctuations due to adverse weather and crop diseases. Speculation at the commodity exchanges further intensifies the price fluctuations. Minor price fluctuations or rumors of shortages or surpluses get blown out of proportion, generating cocoa price spikes. The trade in cocoa futures exceeds the actual cocoa trade fourteen-fold. As a result, trading organizations and the chocolate industry receive about 70% of the profit from chocolate, whereas the cocoa farmers (who usually have no alternative source of income) receive barely 5%, according to the European Fair Trade Association. Although growers and consumers alike benefit from stable cocoa prices, the commodity exchanges thrive on price fluctuations.
During the 1990s, stabilization systems and market interventions for buffering cocoa price fluctuations were removed, and farmers were hit hard by the changes. The 2000-2001 world-commodity survey by the United Nations Conference on Trade and Development (UNCTAD) attributes detrimental changes in commodity prices to globalization and liberalization. "This can be seen at the international level with the end of economic clauses in international commodity agreements," stated UNCTAD. In 1994, the latest International Cocoa Agreement addressed cocoa surpluses merely by calling upon consumer countries such as U.S. and European Union members to consume more. The weakened agreement, whose original purpose was price stabilization, abandoned its price stabilization system and intervention mechanisms. Similarly, in 1999, Cote d'Ivoire dismantled its own price stabilization system to satisfy IMF and World Bank conditions. The Ivory Coast's cocoa sector has been in crisis ever since.
From 1989 to 1993, the Ivorian government received six World Bank Structural Adjustment Loans. In 1994, Cote d'Ivoire entered into an Enhanced Structural Adjustment Facility (ESAF) program with the IMF, whose main objective was to generate a budget surplus in order to finance debt with foreign lenders. To reach the budget surplus target, the IMF required labor market deregulation, dismantling of price stabilization systems, trade liberalization, privatization and currency devaluation.
The "adjustment programs" sponsored by the IMF and World Bank encouraged Cote d'Ivoire to raise export productivity as a way to finance external debt. Cocoa revenues now account for 40% of the Ivory Coast's total export earnings. The "export-oriented" approach to financing foreign debt is misguided, as a report from Friends of the Earth International revealed. While Ivory Coast's exports increased from $3 billion to $5 billion between 1980 to 1995, its Gross Domestic Product remained stagnant at $ 10 billion during the same period. Meanwhile, its external debt skyrocketed from $7 billion to $19 billion. Generally, the heavy external borrowing was used to pay for infrastructure, especially roads for exporting timber, cocoa and coffee. In a vicious cycle, additional debt financed increased exports in order to finance even greater debt. Meanwhile, intensified export production has contributed to surpluses and the weakening of international cocoa prices. During price slumps, external debt and interest on debt cannot be paid, not to mention the threat to the livelihood of farmers and workers. There are 600,000 cocoa farms in Ivory Coast which together account for one-third of the nation's entire economy. Such dependence on a single commodity can prove disastrous when prices fall.
IMF and World Bank insistence on free trade has been detrimental to producer-countries such as the Ivory Coast and beneficial to multinational agribusiness corporations, who profit from agricultural trade liberalization and low cocoa prices. Ten major exporters, led by U.S. companies Cargill and ADM control the cocoa sector in the Cote d'Ivoire. Recent consolidation in the cocoa industry has turned ADM into the world's largest cocoa processor. The larger corporations have the capacity to maintain sizeable stocks of cocoa that keep the price levels depressed and are therefore an instrument of power for the corporations. For instance, last year, when the Ivorian government tried to generate much-needed revenue by increasing cocoa export tariffs, the large exporters simply refused to export anymore cocoa until the new tariffs were lowered, dictating a tax situation favorable to themselves.
Recent attempts by the Ivorian government to build in safety checks against the fall in world cocoa prices drew criticism from the IMF, the World Bank and multinational cocoa exporters. Since the previous state-controlled stabilization system had been dismantled according to IMF agreements, a new producer-led cocoa marketing body was established in July 2001--the Coffee and Cocoa Bourse (BCC)--with the responsibility of ensuring farmers receive fair prices for their beans. The BCC was charged with developing the new marketing mechanism for the cocoa sector, but its efforts were undermined when board members representing exporters walked out in protest over proposed export quotas. ADM and Swiss-exporter Barry Callebaut voiced strong opposition at the mere mention of quotas. The World Bank warned against imposing quotas as they could be seen as a departure from the government's free market pledges. Nevertheless, the BCC set export quotas to reduce the dominance of large exporters and limit supply in order to ensure price stability. According to BCC officials, the proposed system is designed to ensure a fair price for farmers and prevent big exporters from gaining a monopoly, complying with a request by the IMF that no exporter should reach a monopoly position in the cocoa sector. There are signs the new quotas are already being ignored by the larger exporters.
The recent actions by the Ivorian government and BCC, stymied by the interference of IMF, World Bank, and corporate exporters, may not be enough to guarantee a remunerative price to farmers and fair treatment of workers. Farmers are already concerned that the price set by the BCC is too low.
In light of the economic inequities and social injustices wrought by free trade, attention has turned toward alternative trading models such as fair trade. Under the fair trade system, companies must contract directly with farmers, bypassing the brokerage chain altogether. Fair trade ensures farmers receive a fair price (based on the actual cost of production) of $1750 per ton ($0.875 per pound), protecting them against financial insecurity. Fair trade also makes affordable financing available to farmers.
At the moment, the only way chocolate consumers can be certain the product they buy is free from exploited labor is by purchasing products that carry a fair trade label, an independent third party certification. Certified fair trade chocolate may be the socially responsible choice, but it's not readily available to Americans. No U.S.-based chocolate company has signed onto the Fair Trade system. Fair Trade products must be imported from companies in Canada and Europe. The U.S., the largest chocolate consuming country, spends $13 billion per year on chocolate, and big U.S. candy companies, including Hershey's, Mars, & Cadbury, are reaping huge profits-at the expense of child slaves and exploited workers. The goal of fair trade is to reform cocoa trading in order to increase the farmers' and workers' share of the profits.
M&M declared 'purple' as the victor in its new colored M&M debate but failed to reveal how many people voted 'Fair Trade Certified' to encourage them to use fair trade cocoa.
In St. Louis, fair trade chocolate and other fair trade certified products are available from: o Plowsharing Crafts in the U. City Loop
o Utopia/Black Bear Bakery at Soulard Farmers Market on Saturday 7 am to 430 pm
o Black Bear Bakery, 2903 S. Jefferson, Tues to Thurs 6 am - 12 noon, Fri 6 am - 6 pm
o online: http://www.utopiafairtrade.com/
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