Global demand
for cocoa beans is surging because consumers in China and India - the
two most populous countries on the planet - have taken a liking to
chocolate, reports the World Bank. West Africa is where two-thirds of
cocoa beans are produced. Respectively, Ghana and
the Ivory Coast
account
for roughly 19 and 45 percent of this production.
"That
provides both countries significant market strength against powerful
buyers," says Casper Burgering, senior economist at ABN
AMRO.
Yet
when the two nations recently demanded higher compensation for their
prized crop from global buyers, the chocolate industry called their
bluff and on July 16, Ghana and the Ivory Coast gave in to pressure
from the global chocolate industry and lifted a month-long ban on
cocoa sales that was meant to push international buyers to accept a
new minimum pricing agreement.
Cocoa
farmers in Ghana and the Ivory Coast will get $400 premium per every
tonne of cocoa beans they sell during the 2020-21 harvest season. The
move may slightly boost earnings for West African cocoa farmers. But
it is so far from the $2,600-a-tonne minimum price for which Ghana
and the Ivory Coast were pushing for. The negotiations are largely
considered a defeat in both these nations. setbacks
like the recent fixed-pricing defeat are becoming all too common as
forces outside Africa set the rules - and profit. Economists are also
concerned that guaranteed compensation will entice other competing
countries - such as Indonesia
and Nigeria-
to produce more cocoa, thereby increasing global supply and
triggering a fall in cocoa bean prices.
This
is especially painful in the Ivory Coast because the country has
destroyed massive portions of its forests trying to satisfy the
global demand for chocolate. In 1960, the West African nation had
roughly 12 million hectares of forests. Today, nearly three-quarters
of that forest is gone. In
the 1960s, Ivory Coast encouraged locals and migrants to take up
cocoa farming. Since then, annual production in the West African
nation has quadrupled from half a million tonnes of cocoa to over two
million tonnes in 2018. IMF data shows cocoa exports account for
nearly 15 percent of the Ivory Coast's gross domestic product. 30
percent of Ivory Coast's cocoa production is conducted illegally -
and spread across at least 220 protected forests and national parks.
Ivory Coast is running out of farmland, it has to fight to increase
farmers' earnings so they are not tempted to illegally grow cocoa in
protected forests.
Compounding
the pain, many cocoa farmers in the Ivory Coast still don't make a
living wage, even though their country is the world's top producer
and exporter of cocoa beans that are the main ingredient in the
$100bn global chocolate industry. Currently, North America and
Western Europe are the principal markets for the consumption of all
chocolate products. And because cocoa prices are set in
auctions at exchanges in the West - and not in West Africa - the cost
of Ivory Coast farm labour is not a determining factor in what is
ultimately paid for chocolate. This means that though many people in
the cocoa supply chain may earn more because of increased demand,
many farmers must continue struggling to make ends meet. Only an
estimated 12 percent of the Ivory Coast's small farmers of cocoa make
what Fairtrade International considers a living wage, or $2.50 a day.
More
than a million of these small-scale growers live in poverty.
"We
really have no say on the price against these international buyers of
cocoa," Lezou told Al Jazeera. "They decide the price."
The
lion's share of money earned from cocoa is claimed by big-name
international manufacturers and retailers. Producers receive only a
mere six percent of the final product's value. Desperate to cash in
on the guaranteed price - and without farmland to expand cocoa
production - Ivory Coast growers could start tilling even more of
their crops in protected forests just as their government is ramping
up its efforts to stamp this practice out.
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