Tuesday, February 25, 2014

Cocoa Capitalism

Cocoa is crucial to the Ivory Coast's economy and is mainly grown around the deep green and undulating lands in the south, centre and west of the country. These areas help the country produce around 40% of the world's entire cocoa supply, and the crop is responsible for 15% of the Ivory Coast's GDP, 20% of its tax revenue, and 35% of its exports. Ivorian cocoa typically ends up at ports like Amsterdam - the biggest cocoa harbour in the world.

The idea that millions of young children are being trafficked, enslaved, and forced to work 16-hour days in dire conditions makes for dramatic and emotive story, and one that campaigners can easily rally around. The concept of inequitable state pricing, misguided economic policies and distorted value chains makes for a much less rousing tale. However, while the former is thankfully a myth, it is the latter that is all too real. There is no shortage of problems within the Ivory Coast's cocoa industry. But despite the headlines, child slavery doesn't seem to be one of them.

Child labour has been a staple of Western campaigners in recent years. In late 2012, for example, this website published an article citing estimates that some 1.8 million child labourers are working in Ghana and the Ivory Coast as well as a US Department of State guesstimate that over 100,000 children are working under "the worst forms of child labour" on Ivorian farms. Meanwhile the Dutch journalist-turned-activist-turned-ethical-chocolatier Teun van de Keuken has claimed there are 460,000 people "working in conditions that have been declared illegal" in West Africa. Figures citing hundreds of thousands of child slaves make for sensations headlines, but they don't chime with the reality.

A 2013 background paper on forced labour and trafficking in Africa, the International Labour Organisation explained that "there are many clear examples where the assumption of forced labour has proved wrong. This is especially the case with cocoa production." The paper cites a range of studies that have disproven the idea of large numbers of child slaves and of widespread exploitation in West African cocoa fields, concluding that "an absence of good quality, accurate, empirical data has allowed for the perpetuation of sensationalist and often misplaced claims."

The Ivory Coast's cocoa industry is wrought with problems, most of which can be traced back to its hasty, ill-considered and poorly executed liberalisation in the late 1990s. Before then, the industry had been regulated by the Caisse de stabilisation et de soutien des prix des productions agricoles, more commonly known as Caistab.

Caistab was a state agency that offered farmers a guaranteed market at set prices. The organisation facilitated the buying and selling of the crop and removed many of the risks and uncertainties associated with cocoa farming. However, Caistab also worked to siphon illicit extra funds into the pockets of the ruling party and its leader Félix Houphouët-Boigny. It was partly this corruption that led the World Bank and International Monetary Fund to call for its abolition. Ivory Coast eventually acceded to its wishes.

Liberalising the industry, however, proved to be a hugely problematic. The cocoa industry disintegrated into a large number of cooperatives and private operators; government oversight and management of the sector lost its coherence as it fractured into various smaller bodies; and a few large multinational buyers were able to use their financial leverage to muscle in on the hitherto protected market and gain a stranglehold on exports.  Prices plummeted to the point that growing and selling cocoa sometimes cost them money.

With cocoa prices differing between neighbouring producers, particularly Ivory Coast and Ghana, many exporters try to get higher profits by smuggling crops across the border. The amount smuggled can be as high as hundreds of thousands of tonnes each year, leading to significant losses in tax revenues for the Ivorian or Ghanaian governments.

Furthermore, the new system hardly rooted out opportunities for corruption. In fact, one could argue that it deepened and intensified it, with vast amounts of embezzled cocoa revenues being used to fund the country's civil war in the mid-2000s. Farmers claim they are still extorted, over-taxed and short-changed by the current system. "With Caistab we had to support a director, his family, his home, his car, his mistress and so on," says one farmer from Sikensi. "With the new system in place, we've got to support four of five of these."

From a report by Bram Posthumus, an independent press and radio journalist with more than 20 years of experience living and working in West and Southern Africa.

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