The K Experience

Cocoa Revealed: The Industry

Present - Here and Now

Monday, 24 March 2008

Cocoa Revealed

Easter Sunday is now behind us, and we're probably trying to finish off those chocolate easter eggs that were bought. This year in the USA it's expected that people will spend over $95million on eggs alone. This is dispite the fact that energy costs are steadily increasing, and the price of the eggs have also increased more than expected. However, the Easter tradition in the USA and other Western countries is still going strong, and when the time comes the chocolate producing companies will probably report record breaking profits once again. My question is how much of the money makes its way back to the people who slave over the cocoa farms and their families and communities, slave being the opporative word. In this entry, part II of the Cocoa Revealed series, I would like to delve into the cocoa industry a bit, just to see exactly what is going on, and also to see how Fair Trade is helping...

So what's going on with chocolate? Let's start with a few chocolate facts (provided by eauk.org)just to get us in the mood:

The chocolate industry, according to Global Business Insights is expected to be worth £710m in 2008
On average, each person in Britain eats approx. 9kg of chocolate per year (that’s about 3 bars per week).
People in the UK are the biggest chocoholics in Europe, munching through an average 10 kilos per year – or 25% of all the chocolate eaten across Europe. This means the UK spends the equivalent of 20 new hospitals a year on indulging in chocolate - a total of £4.3 billion.
Belgians came second in the European chocolate league, with an average 8.7 kilos each in 2005, followed by the Germans at 8.1 kilos. According to Datamonitor, who analysed the figures across Europe – Britons lead the chocoholic stakes with the average spending on chocolate in 2006 being £72 a head in Britain, compared with £40 in France, £31 in Germany, £18 in Italy and £12 in Spain. Although the Italians spent more than the Spanish, they ate less, averaging 2.2kg a year, compared with 3.9kg in Spain, 6.8kg in France and 8.1kg in Germany
The Ivory Coast in West Africa a is the world's leading producer of cocoa - supplying 43%.
Thousands of children are being forced to work as slave labour on cocoa farms in West Africa. According to International labour Organisation figures, 12,000 children have been trafficked from countries like Mali and Burkino Faso to the Ivory Coast.

Cocoa Boy It wasn't going too bad until the last one, but the truth about the chocolate industry isn't as sweet as the chocolate itself. The facts above are about the European chocolate industry, so obviously wouldn't offer figures about the chocolate eating habits of those in the cocoa producing countries. However, the reality is, it's nowhere near that of Europe or the United states, or any of the developed nations. This is mainly because chocolate it far beyond the price range that they can afford. It may not seem like it from our comfortable positions in the world (talking from a Western pont of view), but chocolate is more of a luxury than we realise. It is reserved for the privilaged few in those countries that can afford it, and it has been that way throughout the history of processed cocoa, and chocolate production.

Looking at the history of the cocoa process, we'll see that it started in the Mayan Empire between AD 250 and 900. It was such a precious commodity, that it was used as a source of currency, a rabbit costing as much as 10 beans, and a slave costing about 100 beans. Only the truly wealthy could afford the luxury of using cocoa beans in beverages, literally drinking their money. When it made it's way to London, England via the Spanish Conquistadors, there was a 75 pence tax place on it, which ensured that it remained out of the reach of the common people. It wasn't until recently with the mass production of chocolate by big companies such as Mars and Nestle that it entered the wider market. However, this is only in the West. For the cocoa producing countries, it is still very much a source of currency if not currency itself. This is an extract of a 1950's Highlife (Ghanaian popular music):

"If you want to send your children to school, it is cocoa
If you want to build a house, it is cocoa
If you want to marry, it is cocoa
If you want to buy cloth, it is cocoa
If you want to buy a lorry, it is cocoa
Whatever you want to do in this world
It is with cocoa money that you do it."

Even though the song was from the 1950's, it still rings true in todays times. In Ghana, very few people eat chocolate, as it is priced at exactly the same cost or similar to the equivalent in the west. Little or no adjustment is made for the economy whatsoever. This means that a £1 bar or chocolate in England would have cost the same, roughly 17,000 old Ghana Cedis or 1.7 New Cedis now, an extortionately high price, considering that about 10,000 old Ghana Cedis, would pay for a whole hearty meal (fried rice, with a piece of chicken, and probably a drink too).

Slaves Taking a closer look at cocoa production in this day and age, we'll find that the situation has not improved as much as it should since the days of slavery. Cocoa production was right alongside cotton and sugarcane production back then, and it seems like in some parts of the world, it is still going strong. While many of the smaller farms in the other West African countries are not prospering as much as they should, the Ivory Coast, the largest producer of Cocoa is said to be utilizing child labor. While we consider this, let me also introduce the fact that Mars Inc's revenue for 2006 was $21 Billion, whereas Nestle reported a revenue of 98.5 Billion Swiss Francs ($98 Billion) in the same year.

So how much do the cocoa farmers get? Not enough. Fair Trade chocolate traders ensure that the farmers get about $150/MT (per Metric Ton) which raises to $350/MT if it's organic. This is a decent wage but the Fair Trade Market only reaches so far. According to the Green Guide, it is estimated that Fair Trade chocolate represents less than 1% of the world's roughly $60 billion chocolate market. and most of these farms being served by free trade are small family owned farms, which probably don't use slave labour anyway. It is the larger Cocoa farms in the Ivory Coast which do, and it's their products that make their way to the big factories which serve the developed countries with their precious cheap chocolate bars.

The following extract explains the child labour situation in a bit more detail:

"According to the International Labor Organization and the U.S. State Department and others, over 284,000 children work in hazardous tasks on West African cocoa farms such as using a machete or applying pesticides unprotected. 66% of children working on cocoa farms in the Ivory Coast don't attend school. Some farms even use child slave labor! The cause of this is poverty -- the average cocoa farming family earns between $30 and $110 dollars per household member a year."
(Source: Global Exchange.org)

The next extract explains why the high quality cocoa produced by the small family owned cocoa farms never makes it to the big producers:

"These firms’ bread-and-butter is a low-cost, heavily-advertised candy designed to gain high market share. The average cocoa content is in the 20-per-cent range – quality chocolate comes closer to 40 or 50 per cent, or even more.

Low cocoa solids means less money for the farmer. A rough back-of-the-envelope calculation, based on the current cocoa price of about £1,100 a ton, shows that if Asamoah’s cocoa were used in the leading 200-gram milk-chocolate bar in Britain he could expect just 0.5p from the 90p retail price. "

This extract is taken from "The Cocoa Chain" which appeared in the New Internationalist and was written by Richard Swift. The first part of the very interesting article is explains the cocoa industry from the point of view of Asamoah a cocoa farmer from his little farm in Ghana. However the extract is taken from the section where Asamoah is taken to the UK to see the cocoa industry from the Western point of view. During Asamoah's eye opening journey he's taken to see businesses like the Cadbury factory. Ironically enough, he was refused entry to the Mars factory in Slough (where I used to work), as they didn't want him to see how they made their chocolate. I'm sure Asamoah would have been suprised to see the many other Ghanaians that were their working in the factories for probably less than an admirable wage while trying to survive in the western world, but that's another entry for another day.

The aim of this entry is just to shed a little light on that Easter egg you may have just finished eating, or that chocolate bar you will probably be eating sometime soon. Fair trade may be more expensive, but at least in ensures a decent wage for the people that need the money the most.

For more information on Fair Trade check out, Fair Trade.net, the Stop Slavery Chocolate website, USA Today, and make sure you check out Richard Swift's "The Cocoa Chain" for an extensive look at the life of Asamoah as a cocoa farmer, and an indepth look at the cocoa industry. You can also check out Part I of this story, Cocoa Revealed: The Pod, for pictures of the inside of a cocoa pod, and description of the chocolate making process.

Images for main picture taken from Ghana Embassy.or.jp, keswick.org, Baristanet.typepad.com, New International Australia.
Other sources, Food Navigator USA.com, TUAME.com.