Fair Chocolate for the World
The chocolate industry has reached a defining moment for its future business development. At this moment, the industry has the opportunity to chart a new socially conscious path for business that will redefine the relationship of large chocolate processors and manufacturers with the small cocoa producers and the consumers of chocolate. This new path will change the public perception in both developed and developing nations about how business should be conducted by multi-national corporations. Once again, the chocolate industry can become the socially conscious leaders of the for-profit industry. In the process, the image of chocolate will be transformed by eliminating negative connotations associated with chocolate evoked by images of child and slave labour on the cocoa plantations and the abject poverty that threatens the lives of cocoa farmers and their families. By forging a new business partnership with the producers of cocoa in developing countries, the chocolate industry will be at the forefront of a growing trend for ethically and environmentally sound development.
The path for ethically and environmentally sound development is not new to the chocolate industry. From the founding of the modern chocolate industry, loyalty and fairness have been the cornerstone philosophies of business development. During the Great Depression, Milton Hershey, the founder of the Hershey Corporation saw as his duty a grander vision of industrial development. He supported his workers and his town beyond his fiduciary obligations to his company and fulfilled his social and moral responsibilities for human centered development through investments in schools, churches and parks. He subsidised the electricity, water and phone service for all the residents of the town he built to house his workers. Still, to this day, the Hershey Trust endows the Milton Hershey School for socially and financially underprivileged children. Cadbury was founded on the principle of "thoughtful kindness." During a time of widespread exploitation of both child and adult labourers in Victorian England, Cadbury pursued social reform, took care of the people who worked for them, paid fair wages, and always made sure that people were treated fairly and as equals. Committees were established to give the workers a voice in management. Cadbury became the example of a just workplace where the worker's health and welfare was just as important as turning a profit.
The corporate philosophies of the main chocolate producers and processors reflect some of the history and tradition of the chocolate industry. M&M/Mars Corporation has been working to implement a Sustainable Tree Crop Program to assure the long-term sustainability of the cocoa industry in West and Central Africa. Hershey has committed to the Global Sullivan Principles which obligates the company to work with communities in which they do business to improve the quality of life and their educational, cultural, economic and social well-being.
Now is the time to reaffirm the industry's commitment to its history and philosophy by reforming the cocoa supply chain and, as a result, promoting the demand for chocolate. Chocolate evokes memories of holidays with the family and curling up with a hot cocoa on a cold, rainy day. However, the commercial image of chocolate is becoming mixed with feelings of guilt and outrage against labour exploitation and starving children working for next to nothing so that cheaper chocolate will be available in stores. By changing the nature of cocoa purchasing, the chocolate industry can firmly establish chocolate as a popular feel-good product. People who purchase chocolate will know that they are no longer simply fulfilling their desire for chocolate, but they will be contributing to the dreams of millions of adult and child labourers who have been mired in absolute poverty. People will be proud to purchase chocolate, and people will be proud to be working in the chocolate industry.
The chocolate industry is well positioned to become the trail-blazer in multinational corporate development. Already, the industry has taken an important step forward by committing to eliminating child and slave labour on cocoa plantations while supporting the future of plantation workers through education. Now, it is time to effectively achieve this by instituting a sustainable long-term solution to eliminate child labour and slave labour by implementing an industry-wide Fair Trade in Cocoa Program. The public perception of fair trade programs is extremely favorable. A survey by US News and World Report found that 89.3% of Americans would be willing to pay more for a product for peace of mind. Nine out of ten people are concerned with the labour conditions in the developing world. In both Europe and North America, the market for fair trade products is growing rapidly. In the UK, fair trade product sales increased by 50% in 2001. In Europe, fair trade product value is now over E250 million in annual revenue. Rapid growth has occurred in the industry despite the limited supply, distribution, and marketing capabilities of fair trade organisations. If it chooses to follow a fair trade path, the chocolate industry will also be able to open new avenues for marketing through non-traditional sources like NGO networks. Presently, the French government has agreed to implement a policy in conjunction with several large NGOs to dramatically increase the market share of fair trade products in France. A small possible increase in the final price of the chocolate product, if even noticed by consumers, will usually be accepted as a reasonable cost of fair business practices.
The chocolate industry cannot afford to let this opportunity slip by. The public is becoming more and more aware of the dismal conditions under which cocoa producers suffer. Grassroots organisations and international NGOs are increasing pressure on industry and governments to reform their trade practices. Christian Aid, Oxfam and many other organisation have begun a Trade Justice Movement to protest injustices in international trade. The first report on child and slave labour in the chocolate industry has been released, but it will not be the last reported instance of an issue that plagues the image of the industry. More issues could soon surface regarding the unfair practices of the chocolate industry that will guide the public perception of cocoa and chocolate. Thousands of children are working on cocoa plantations in the Ivory Coast at the cost of their own future. They can work 12 hour days and earn less than $150 per year. In Ghana, farmers are forced to sell their cocoa beans to the government who weigh the sacks outside the presence of the growers and then take their own time to pay. Since 90% of cocoa production occurs on small farms that struggle to survive from the sale of their product, farmers are forced to sell their cocoa for a fraction of the market value.
These farmers have little knowledge of the market value of their product and little or no direct access to the market. Crops are usually sold once a year at harvest time when the cash reserves of farmers from the previous year's harvest is exhausted and money is badly needed. Trade in cocoa is run by middlemen who raise the transaction cost of cocoa and thereby artificially inflate the commodity price of cocoa purchased by the industry while simultaneously depressing the price of cocoa paid to farmers. The typical farmer receives less than one penny for every candy bar sold for $0.60. Throughout West Africa, child labour is endemic to family farms. Parents are paid below a living wage for their produce and thus must cut input costs in their production.
Children are forced to work in the fields beside their parents in the hopes that an extra hand in the field will increase the family revenue. These children are denied an education and remain caught in a cycle of poverty that will lead to their children in turn becoming child labourers on the plantations. Only by solving these underlying problems that lead to child and slave labour on the cocoa plantations will the chocolate industry be able to turn a public relations nightmare into a public relations gem.
The solution is clear. In order to fulfill the obligations of the Chocolate Manufacturers Association Protocol, the chocolate industry must implement a Fair Trade in Cocoa policy across the entire industry. Fair trade is trade that will promote sustainable development by improving market access for disadvantaged producers. It seeks to overcome poverty and provide a decent livelihood for producers through a partnership with all those involved in the trading process: producers, workers, traders and consumers. It guarantees that the price paid to the producer clearly reflects the price paid by the ultimate consumer. Also, the produce should come from groups who operate for the benefit of their members and the community. Fair trade incorporates within it all the core labour standards of the ILO as well as standards for environmentally sustainable development. The industry has already committed to the implementation of these standards through their corporate policies, agreements, and statements. The time has come to see the process through to completion and beyond mere rhetoric.
A Fair Trade in Cocoa Program should:
- Set an international floor price of cocoa at the standard fair trade price. This set price will align the price paid to producers with the price paid by consumers at the other end.
- Implement the ILO Core Labour Standards. Producers must be guaranteed the freedom of association and the right to organise and collectively bargain (ILO C87 and C98). Producers must not use forced labour (ILO C29; ILO C105) or child labour (ILO C138; ILO C182). Producers must not practice discrimination in employment and remuneration. (ILO C111; ILO C100) No company will purchase from producers who violate any of these core labour standards.
- Establish environmentally sustainable production techniques for producers.
- Establish a monitoring system to assure compliance with Fair Trade standards.
The most effective way of implementing a Fair Trade in Cocoa Program is through the establishment of cocoa cooperatives. Rather than purchasing cocoa through a series of middlemen, the producers can form themselves into cooperatives that will grow, harvest, weigh and market the cocoa. These cooperatives can be trained and educated for active participation in the global cocoa trade. The cooperatives will facilitate easier inspection and enforcement of fair trade standards by allowing easy verification of the origin of the cocoa and the conditions under which it was grown.
The economic benefits of cocoa fair trade standards will be felt by both the chocolate manufacturers and the cocoa producers. First, by setting a floor price for cocoa, the international price of cocoa will be stabilised. With a stable price, producers and manufacturers will be better able to plan for the long term. Families will be able to afford to send their children to school and eliminate the problem of child labour. Producers will have increased access to credit markets to reinvest into their crop production. They will have the incentive to increase efficiency in the production of cocoa. Manufacturers will be assured of a reliable supply chain and will also be able to better implement long-term corporate financial planning.
Now is the time for all the stakeholders to come together to eliminate child labour and economic injustice in the chocolate industry. By implementing a Fair Trade Program that encompasses the entire industry, we can strike at the root causes of the exploitation that now taints chocolate. This is the opportunity for us to revive the commitments to thoughtfulness, fairness and justice that were once the foundations of the chocolate industry.
