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Johannes-Gutenberg Universität Mainz Geographisches Institut Lecture: Globalization and Culture Lecturer: Prof. Dr. Christina Beal Kennedy

Buying a Chocolate Bar: The Cocoa Commodity Chain and its Actors in respect to economic, social and environmental impacts

Deadline: 06/28/2011

Florian Zoll HolsteinstraĂ&#x;e 1 55118 Mainz

Master Humangeographie: Globalisierung, Medien und Kultur 2nd Semestre Matriculation number: 2675852


1

Table of Content

1.

Introduction ....................................................................................................................... 2

2.

The Global Commodity Chain ......................................................................................... 3

3.

Issues and Impacts of Consumption of Chocolate products ......................................... 6

4.

5.

6.

3.1.

Consumer of Chocolate products ............................................................................. 6

3.2.

Retailer of Chocolate Products ................................................................................. 8

Issues and Impacts of the Cocoa Industry ...................................................................... 8 4.1.

Manufactures of Chocolate Products ...................................................................... 9

4.2.

Traders and Grinders of Cocoa ............................................................................... 9

Issues and Impacts of Cocoa Producing ....................................................................... 10 5.1.

The Case of Cocoa Farmers .................................................................................... 10

5.2.

Civil War .................................................................................................................. 14

5.3.

Migrants ................................................................................................................... 14

5.4.

Situation of children and youth .............................................................................. 15

5.5.

Uprooting of Forests and Soil Fertility .................................................................. 16

Conclusion ....................................................................................................................... 17

Sources..................................................................................................................................... 18


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1. Introduction The production of commodities is part of the cost-based globalization: large multinational corporations (and also small or medium sized companies) have outsourced their place of production in foreign countries. For example corporations as Wal-Mart (USA), Metro (Germany), Carrefour (France) or IKEA (Sweden) do have large factories alongside the south-eastern coast of China (COE, KELLY, YEUNG 2007: 88) which produce their products and sell them mainly in markets of industrial countries. So it may be possible, that a German do have a cupboard made in Russia, a mobile phone made in China or a car made in several countries of the world. It is clear, that it is at least hard for consumers to keep the overview over the places of production. Moreover it is even harder to have knowledge about the working conditions of the people who produced for example the cupboard. Do they earn “fair” wages? Do they have a right to enter a labor union? Do they earn enough for livelihood? And so on. This paper will be about people living physically far away from each other and have probably never seen in life nor never will, can be directly connected to each other through a well-thought-out system of networks. On a local decision there shall be shown global impacts, which is being reflected in turn in the locally. I agree with COOK ET AL. (2006:656-657) that it is more important in analysis to follow the entire value chain, and less on individual aspects of value chains. I can also agree with him that this may seem potentially enlightening for consumers in developed countries and a reflection of their own consumer behavior. It is important that the daily purchasing decisions is associated with the production conditions of the product, because every food has "chain hidden story from the food, which our food might tell us if it could talk," one (COOK ET AL. 2006: 656). As an example in this paper shall be used cocoa from Cote d’Ivoire. Cocoa is a commodity that can only be produced in tropical countries and is consumed mainly in developed countries. But from the seed to their final product - usually chocolate - it is seen not only physically a very long way. The cocoa supply chain consists of a multitude of different actors who follow all different tasks and have different power. The actors are individuals such as consumers in a German supermarket, a Swiss chocolate manufacturer, large multinational cocoa grinder based in the USA, an intermediary in the capital of Cote d‟Ivoire Abidjan and a cocoa farmer in the southern main growing area on the coast of Cote d‟Ivoire. These points already show the complexity of the cocoa commodity chain. The aim of this work is to show the whole cocoa commodity chain and its actors and the problems and issues they are facing as well as join the research of link


3 together again – at least a bit – consumers and producers. The paper will show the economic, social and environmental impacts of a relatively simple everyday purchase of a chocolate bar. But for all that the focus is a little more on the producer side, because they are compared to other actors, the most vulnerable. COOK

ET AL.

(2006:660) says on this, that, to excite the

attention and empathy for the vulnerable it is necessary to describe the abuses faced by those affected. This paper is organized as following: first - in Chapter 2 - the importance of global commodity chains is explained in detail. Then begins, like the cocoa value chain, with Chapter 3, the analysis of the global cocoa supply chain with the consumer side, after which follows the description of the cocoa industry (Chapter 4) and the producer side (Chapter 5). 2. The Global Commodity Chain GEREFFI introduced the concept of Global Commodity Chain during the mid-1990s. He developed it to give researcher a tool for analyzing the impact in industrial commodity chains. Later on it got developed further to analyze power relations embedded in global commodity chain which determines the character of a chain (FAO 2005:3). BLOWFIELD (2003) was also using the model to describe economic, social and environmental impacts. This paper will use GEREFFIS (1999) definition which than will be extend: “A commodity chain refers to the whole range of activities involved in the design, production, and marketing of a product” (GEREFFI 1999:1). According to GEREFFI (1999:1) there are two distinct types of international economic networks: producer-driven and buyer-driven global commodity chains. A producer-driven global commodity chain is characterized by large often transnational manufacturers, which play the central role in coordinating production networks with capital and technology-intensive production methods such as automobile, aircraft or heavy machinery industries. GEREFFI (1999:1) defines a buyer-driven global commodity chain as following: “Buyer-driven commodity chains refer to those industries in which large retailers, marketers, and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in the third world. This pattern of trade-led industrialization has become common in labor-intensive, consumer goods industries such as garments, footwear, toys, housewares, consumer electronics, and a variety of handicrafts. Production is generally carried out by tiered networks of third world contractors that make finished goods for foreign buyers. The specifications are supplied by the large retailers or marketers that order the goods.”


4 BLOWFIELD (2003:17) categorizes cocoa as a buyer-driven global commodity chain; although he points out that the cocoa chain challenge some aspects of the buyer-driven commodity chain model: -

Cocoa and coffee industries have a large and increasing number of small producers while production is declining instead of an assumed narrowing of supply base.

-

International traders and Grinders actually do have the most power instead of market brokers.

-

Certain elements of the chain have more power than others.

-

Product provenance is low. The geography of a commodity chain can range from being in one place to be dispersed

across several localities. Each commodity chain has its own geographical and social distribution (TCC 2009:15). Nowadays most of the commodity chains range between several places (COE, KELLY, YEUNG 2007: 97). COE, KELLY, YEUNG (2007: 88) argue that (foreign) labors fortune is “intricately connected to consumers” wherever they are. A commodity can connect very different people together, because it traces a chain of connections across the global economy. Capitalism can also be thought as a commodity exchange system. At the same time commodities are central to the capitalist system. A commodity can be purchased on the market. But on these markets for consumer it is not obvious how the commodity has been produced. COE, KELLY

AND

YEUNG (2007:89) are stating that “consumers in the capitalist

system are largely ignorant of the geographical origins and histories of the commodities that they consume”. An example could be a car, which is produced in various production sites all over the world. The consumer is usually overstrained or not in the position to be able to oversee the production conditions (REHBEIN

AND

SCHWENGEL 2008: 109). Even drinking a

coffee has inherent a complex web of connections across the globe. The global supply chain leads to consumers who are disconnected to the producers and therefore disconnects also the responsibility (COE, KELLY AND YEUNG 2007:90). In the case of cocoa there is a locally and internationally acting supply chain. Cacao is like coffee and tea a tropical commodity which only can be profitably grown in tropical regions, but are predominantly consumed in countries of the north (TALBOT 2002: 701). Local is the cocoa production, the harvesting, the transport from farmers to local grinders and to ports. The international part is the transport of different cocoa products usually by ships, grinding activities, production of chocolate products, marketing and sale on commodity markets


5 (CAPELLE 2008:7). These is illustrated in Illustration 1, where the global cocoa streams can be seen. Illustration 1: Production and net exports of cocoa beans in 2005/06

Source: ICCO (2007). So commodities should be considered as a “representative of the whole system of connections between different groups of people that have enabled the consumer to make a purchase.” (COE, KELLY AND YEUNG (2007:90). WISKERKE (2009:2-3) indicates three processes in the system of food provision and consumption that developed in the past few decades: a) Disconnecting: A loosing link between producers and suppliers and between consumers and customers, while the relation between consumers and producers is often anonymous. b) Disembedding: The local or regional character has largely disappeared and with it the quality and nature of many products. Furthermore this leads to a lack of identity which is replaced by an image around goods to keep up loyalty and give the feeling of a special experience to consumers. c) Disentwining: Upscaling and specialization in the supply chains have disconnected producer and consumer and created separate spheres of activity. While the use of goods is linked to place and time, the supply of goods “takes place through separate and specialized supply and provision chains”.


6 These three processes are driven by the principle of cost-effective production and the economies of scale. But WISKERKE (2009:3) concludes that as well as goods and services are increasing exchangeable also are places interchangeable. Mainstream food provision has changed from a producer driven to a buyer driven supply chain in the last decades. In cocoa sector it is assumed that this happened due to the liberalization processes enforced by the International Monetary Fund in the 1980s. 3. Issues and Impacts of Consumption of Chocolate products 3.1. Consumer of Chocolate products Cocoa is nowadays deeply integrated in European consumer buying habits. But cocoa and its products was originated in Mesoamerica and it needed a long process until it was fixed in European food habits. NORTON (2004:14) even states, that “liking chocolate required learning to like chocolate”. Before Europeans arrived in Americas Aztec and Mayas used to have chocolate for beverages, added with different tropical flowers as for example vanilla or chili peppers (LEE AND BALICK 2001:120). It was even used as tribute and currency by the Aztecs, which shows cacaos precious status in this region (BASTIDE 2007:3). Another example is that just high status persons had access to chocolate in Aztec society. Chocolate was an important beverage to symbolize denoted status in society and was embedded “in a range of social, diplomatic, and religious rituals” (NORTON 2004:14) as betrothal, wedding, and visiting dignitaries. Also Spanish conquerors fast discovered that chocolate conferred high social rank (NORTON 2004:14-15). Under Spanish colonialism chocolate survived Spanish conquest and got intensified cultivated since the 16th century. Consumption changed in that way, that broad group of natives had access to it. But the meaning remained the same: the reflection of power and prestige. At this time still most of Spanish colonizers found chocolate disgusting. Spaniards learned to like it by their Indian wives or mistresses “who were responsible for the domestic sphere, including cooking” how NORTON (2004:15) states. Chocolate first occurred in Spain during the late 16th century. It was represented as an exotic novelty in form of a beverage made by Indians. In 1727 in Madrid there was a vital and noteworthy chocolate industry and started to spread out in Europe mainly at royal household as a symbol for noble life. But while Europeans developed a taste for Mesoamerican chocolate they also absorbed cultural material: as they learned to make the chocolate they also learned the social meanings to it by Mesoamericans (HANISCH 1991:5). Cacao was a luxury good and in Spain cocoa kernels were even proposed to be currency. This shows the alteration from a native exchange good to a commodity in Europe. (CAMPOS 2009:3). With


7 industrialization at the end of 19th century and the invention of the chocolate bar, chocolate got accessible to broad social classes (HANISCH 1991:5). Today chocolate changed most of these meanings: sometimes it is even seen as a children‟s drink. And it is not longer seen as an aristocratic convenience good (NORTON 2004:16-17). But in recent years there has been a trend that chocolate with high cocoa intent seems to be an affordable luxury to consumers (ICCO 2010:3), which could be linked to chocolate as a symbol of high status. One collective imagination today of chocolate is the connection between chocolate and romantic love and also its “mythical status as an aphrodisiac” (NORTON 2004:16-17). NORTON assumes that the Spaniards connected these with the Aztec and Maya use of chocolate in weddings processions. Furthermore we still consume chocolate with tropical flowers as the Mesoamericans did it, too. “In our own casual consumption of chocolate today, we unconsciously invoke ancient rituals of consumption that predate the European conquest of America and signal the peculiar transformations and continuities alike of commodities in the Atlantic World” (NORTON 2004:17). Maybe cocoa is also linked like tropical fruits to Europeans‟ imperial “adventures” like COOK ET AL. (2006:659) has shown with Papayas. But as it has been described above cocoa could called a fetishised commodity in Western consumer imaginations. According to DAND (2011:191-201) the main factors influencing the demand for chocolate are income, climatic conditions and the eating habit. There is a tendency in countries with high GDP to higher chocolate consumption. Also the main consumer countries throughout the year or at least in part tend to have a moderate climate, where chocolate can be handled better. Exceptionally three countries (Mexico, Colombia, and Brazil) all main consuming countries, where people consume at least two kilograms of chocolate per person per year, are in Europe and Northern America. But also the consumption patterns of chocolate did not remained unchanged in recent years. While HANISCH (1991:84) was labeling chocolates with low cocoa content as high quality in the beginning of the 1990s, now a high cocoa content is considered as noble. This trend was especially due to new insights regarding positive effects of cocoa on health (COOPER, DONOVAN, WATERHOUSE et.al. 2008: 2, 6-8). Accordingly, the cocoa consumption has grown faster than the demand for chocolate in recent years (ICCO 2010:26). It becomes apparent, that consumers in Europe and United States increasingly demand chocolate with high cocoa intent or with less sugar. Furthermore it can be seen a trend towards chocolate of specific countries of origin. A second development in terms of consumer behavior is consumers concern about cocoa farmers‟ welfare (TCC 2009:16). But according to DAND (2011:203-204) the global proportion of organic produced cocoa is less than 0.5% in 2010. And SCHRAGE AND EWING (2005:110) even assume due to their research, that cocoa


8 industry “responded much more to the threat of government intervention than it did to market pressure” in respect to better working conditions or fair wages of cocoa farmers. This should be known in respect to sustainable improvements of living conditions for farmers due to consume of so called organic or fair traded cocoa. VUYLSTEKE ET AL. (2004 cited in WISKERKE 2009:373) concludes that “the majority of consumers have a low understanding of the conditions and methods of food production, partially due to the growing gap between producers and consumers.” And BLOWFIELD (2003:18) even argues that the “industries where ethical sourcing is most advanced are those where the supply chain appears to be relatively straightforward and where there is already some motivation for knowing the producti origin” to conclude than that in respect to cocoa these considerations are “almost entirely absent for cocoa, where country but not grower location is a factor in determining prices”. According to FOLD (2001: 408) there will be a further diversification of consumption patterns regarding chocolate, which leads to a constant pressure on the whole cocoa chain of innovation in terms of new products and services. 3.2. Retailer of Chocolate Products The retail sector is the main distribution channel of chocolate products (TCC 2009:4). Retailers are today the main outlet for processed and fresh food products. Chocolate manufactures predominantly sell their products via retailers (WISKERKE 2009:4). It is difficult to assess the influence or power of the retail sector but “these companies played an important role in product design, supplier selection and value chain coordination even though they did not engage directly manufacturing production themselves” (UNIDO 2005:7). Retailers can decide whether a chocolate bar is being sold or not and put pressure on manufactures to sell cheaper chocolate products. Furthermore they are the link between chocolate manufactures and consumers which means that they manage the consumers demand in respect to chocolate purchasing by manufactures. 4. Issues and Impacts of the Cocoa Industry The main purchasers are the chocolate processing and confectionary industry. Just a few cocoa (1-2%) is used by the cosmetic industry (BASTIDE 2007:3). In general there are a large number of companies involved in the cocoa chain. But there is a growing dominance of multinational companies along the cocoa chain in trading, processing and manufacturing activities. And these companies dominate the market (TCC 2009: 4).


9 4.1. Manufactures of Chocolate Products The chocolate confectionary sector is dominated by just a few actors. Kraft (14.9% of global sales volume of chocolate products), Mars (14.5%), Nestlé (7.9%), Hershey‟s (4.6%) and Ferrero (4.5%) dominate the confectionary market (TCC 2010:5). Since 2008 premium brand chocolate manufacturers have problems to gain their growth targets while manufactures focused on lower price ranges were much more successful. The highly competitive market lead to a reducing of the cocoa intent to keep down costs of raw cocoa material or reduced the size of chocolate products (ICCO 2010:5). Since consumers increasing concern about social, economical and environmental issues in the cocoa chain, producing and trading actors are under constant risk (TCC 2009b:3): “Chocolate brands capture most of the value created in the cocoa supply chain. Any action that threatens that supply chain imposes the greatest burden on the brands, not the relatively anonymous suppliers” (SCHRAGE

AND

EWING

2005:109). Until media attention at the end of the 1990s in respect to questionable working conditions of cocoa producers no one of the companies was drawing attention to that. First industry was arguing that the cocoa chain is too complex to guarantee acceptable working practices on farms. In response many manufactures started to certify their chocolate on certified standards regarding working conditions in cooperation with other cocoa chain actors (SCHRAGE AND EWING 2005:104). Chocolate-making often requires several types of cacao. But usually they are not all grow in sufficient quantity in a country and therefore must be imported from different producer countries. BLOWFIELD (2003:18) argues that the purchase from several countries was one of the reasons that the chocolate industry was not able to “have the means to trace product provenance to farms or even regions” and therefore did not sufficiently controlled for child labor. 4.2. Traders and Grinders of Cocoa Producing cocoa liquor, butter and powder is called grinding (TCC 2009:4). International grinders are as well traders. They usually export cocoa and/or sell the grinded liquor, butter and powder to chocolate manufactures which use it to produce their chocolate products. Grinders are seen as the most powerful actors in the value chain because of their high concentration and a potential monopolistic or oligopolistic market power (TCC 2010:5). The semi-finished cocoa exporting market is being dominated by three big multinational corporations: Cargill (14.5% of global cocoa sales in grinding and trading), Archer Daniels Midland (ADM) (13.9%), Barry Callebaut (12.2%), Petra Foods (7%), and Blomer (5.3%) in


10 trade and grinding activities. According to TCC they globally account for more than the half of these activities (TCC 2009: 4). Traders/Grinders sell directly to the processing factories or through international commodity markets. They are often larger than the major chocolate manufacturers which means that even they could not be able to influence the behavior of traders and grinders. (BLOWFIELD 2003:18). Cocoa grinders are close both to the farmers and the chocolate manufacturers. But grinders are most likely the actor which are not visible to end consumers even though they have a “pivotal role in addressing the social, environmental and economic problems at farm level” (TCC 2010: 14). The government of Cote d‟Ivoire did huge efforts to establish a higher grinding capacity and therefore to compete with foreign grind companies and to establish its own grinding industry (LOSCH 2002:16). The price volatility is also a risk for grinders. But due to their huge company size and their financial means grinders use falling prices to build up cocoa reserves to regulate the market in their own interest. Producing countries do not have the possibilities to do that and remain subject on the cocoa market (BASTIDE 2007:3). There are several small actors between the cocoa farmers and the exporters which act as supplying intermediaries for exporters which are usually the foreign grinding companies. Traders visit the farms to purchase cacao. The traders pay the farmers cash and often without giving information about international market prices. The traders transport the cocoa to the nearest larger city. From there they get transported to the Ports of Abidjan or San Pedro where they get sold to exporters. There can be up to six distributors until the cocoa beans arrive at a port (CAPELLE 2008: 8). But nowadays there can be seen a change that large exporters invest in purchasing systems which are much closer to the producers. This leads to a decrease and so to unemployment of these intermediary actors, which are local patented exporters (BASTIDE 2007:12). 5. Issues and Impacts of Cocoa Producing 5.1. The Case of Cocoa Farmers Cote d‟Ivoire is a coastal country with savannah in the north and forests in the south. In the north smallholder farmers produce cereal, cotton and livestock while in the south smallholders produce export crops like cocoa. Rural poverty is even higher in the north but because of the volatility of world prices for cocoa and coffee the poverty in the south is steadily increasing. Already in the second half of 1980 there could be registered an increase of poverty which continued to the early 1990s (IFAD 2009:2). Cote d‟Ivoire ranks on the low human developed countries on place 149 of 169. 43.2% of population can afford less than 2$


11 a day, which is the line for absolute poverty (UNDP 2010:145). Cote d‟Ivoire has one of the highest HIV/AIDS rates in West Africa (IFAD 2009:2). Cote d‟Ivoire is the world's largest cocoa beans producer as well as a major producer of green coffee. These top rankings, especially the absolute position in the cocoa sector could be achieved because of the enormous growth of the agricultural sector starting in the 1970s. At that time the country still had sufficient forest areas, which could be transformed into fertile farming areas and enough workers, who were attracted by relatively high producer prices from neighboring countries. In addition, the government created fiscal incentives for new planting of cocoa trees (VARANGIS AND SCHREIBER 2001: 36). Thus, the cocoa and coffe plantation area has increased five-fold in less than 50 years (WORLD BANK 2010: 5). Cote d‟Ivoire exports cocoa value of 3.606 million US$ in comparison to global number two of cocoa producers Ghana with 1.508,7 million US$ (UN COMTRADE 2009: 072). Cacao products are still the main export commodities before petroleum products in 2009. It accounts for a third of countries export earnings. (UN COMTRADE 2009: Chapter Cote d‟Ivoire). Cocoa production in West Africa started in the early 20th century in Ghana. In the next years it also was established in French and British colonies to the North and East of Guinea Bay (HOWES 1946: 152). In 1920s West Africa took over the leading producer of cocoa worldwide. High world market prices between the late 1970s and early 1980s lead to a large expansion of cacao areas followed by a decline of prices in the 1990s because of a better resistance to pests and diseases of the crops and therefore a higher global stock (FOLD 2001: 410-411). In 2008 West Africa was the largest supplier of cocoa. 70 per cent of global cultivation can be found in this region whereby the Ivory Coast is with 40 per cent of global cultivation the two largest cocoa producer (CAPELLE 2008: 4). Cote d‟Ivoire is the country with the greatest amount of land (2.4 million hectares) in global cocoa production (FRANZEN AND MULDER

2007:3838). Cocoa is by far the most important economic sector (CAPELLE

2008: 8). Cote d‟Ivoire welfare depends heavily on exports of commodities such as cocoa and coffee (ADENIKINJU, SÖDERLING, SOLUDO 2002:645). Most of the country‟s poor people are small-scale farmers (IFAD 2009:2). The cocoa production in Cote d‟Ivoire is mostly based on smallholders. On 800,000 cocoa farms were working more than 7 million people (SCHRAGE AND EWING 2005:100). Farmers own between 1.75 and 5 hectares (CAPELLE 2008: 6). Cocoa production is very labor-intensive and is mainly done on family run farms. The average farm has five workers, from which are at least 4 family members (SCHRAGE AND EWING 2005:101). This is in contrast to other West-African crops as tea, tobacco, and fruit which are produced on large commercial plantations with more employees (NKAMLEU AND KIELLAND 2005: 321).


12 Growing cacao stands for long hours in strong sun while performing physically demanding work. Workers often use “primitive tools, travel great distances, and are exposed to pesticides and chemical fertilizers, poisonous and disease-carrying insects and reptiles” (SCHRAGE AND EWING 2005:103). Farmer harvest 300 to 400 kilograms of cocoa beans per hectare per year which is 30 to 50 percent lower than potentially could be harvested (like for instance in Indonesia). Some of the reasons are old cocoa trees, lack of technical possibilities, financial reserves or access to credit (CAPELLE 2008: 6). 46% of cocoa trees were more than 20 years old, with 19% over 30 years old. Cocoa yield starts to decline between 20 and 30 years old (ICCO 2010:15). Other problems cocoa farmers are facing are small insects which attack the fruit and branches and a aggressive fungus. For both chemical pest controls are available but expensive and need technical knowledge which often lacks (BASTIDE 2007: 1213). Other problems are pests like witches‟ broom or the cocoa pod borer which can destroy whole plantations (TCC 2009:16). Especially in eastern Cote d‟Ivoire is the disease swollen shot which can just be controlled by uprooting and burning infested trees (BASTIDE 2007: 1213). Ivorian cocoa farmers have a relatively low output compared to cocoa farmers for example in south-east Asia as already said above. Alongside the mentioned diseases, one reason is also the low usage of fungicides and fertilizers due to the lack of financial means. So even on the cocoa price hike in 2007 and 2008 farmers could not participate on that because of low crop yields (ICCO 2010:15). This has the effect, that farmers are earning a relatively low income in comparison to other West African cocoa farmers (CAPELLE 2008: 13). In economic theory farmers try to increase production levels and enlarge the scale of operation to reduce the costs of production per unit (WISKERKE 2009:4) but Ivorian farmers usually face a lack of capital access to widen their production as well as a lack of useable land for new plantation area due to uprooting. Cocoa farmers‟ production is mainly purchased by dealers. Later on it is getting exported by exporters (TCC 2009:4). Cocoa smallholders have little bargaining power or influence on prices because weak market linkages (TCC 2010:3). Farmers are often disadvantaged regarding access to market information as compared to other actors (ICCO 2010:4). Cocoa farmers do need “information and prospects over three time horizons; that of the current price for negotiating his sales, intra-seasonal price prospects for planning the management of his current crop, and long-term prospects for making new investments in cocoa production” (ICCO 2010:4). After liberalization process of cocoa market and the end of governmental guaranteed prices in Ivory Coast, enforced by the International Monetary Fund (IMF) after a financial crisis in the 1980s, multinational companies became much more powerful. They began to dictate


13 conditions, leaving producer no choice than to accept the offered prices. In the end of this process the production price was halved and farmers had problems to access credit (BASTIDE 2007:11-12). Before liberalization there has been a relatively high guaranteed minimum price for the crops. The difference between market price and guaranteed price was paid by governmental subsidies. In turn prices for food were kept relatively low by the government (FAUST 2006:215). This led to a relatively welfare of Ivorian cocoa farmers. Due to the liberalization process farm gate prices are determined by international prices (ICCO 2010:2) which are made thousands of kilometers away on future markets in London (Great Britain) and New York (USA). Now “cocoa is characterized by a very instable world market price during the year, varying between weeks and month without any seasonality” (TON, HAGELAAR AND LAVEN 2008:4). This makes it for cocoa farmers extremely difficult to plan their production, on which they are heavily dependent in respect to their livelihood (TON, HAGELAAR AND LAVEN 2008:23) Farmers income is determined by various factors which determine the price of cacao: The most important is the daily international cocoa market price which is negotiated on future markets. The market information, as for example a bad harvest but also speculative activities, weather-related or political events have their influence on the price (BASTIDE 2007:3). But also government restrictions as for example taxes determine the price. An increase of cocoa price doesn‟t necessarily facilitate a higher income of the farmers. This is due the many steps in the supply chain where every step earns money from cocoa. In 2007 the price was only a third of 1980 in real terms (CTA 2009:4) which affected in recent years especially small-scale farmers in the southern part who were affected by increasing poverty and food insecurity (IFAD 2009:2). Wide fluctuations of cocoa price made cocoa plantation not sufficiently attractive to farmers and to maintain their farms (CTA 2009:9). Furthermore BLOWFIELD (2003:3) shows that if farmers lack financial means to plant more lucrative crop they will exploit their labor or engage in poor environmental management as foster deforestation. This in turn can damage the reputation of companies in the supply chain. But price levels are not dependent to the output of an individual country but to global stock levels (TON, HAGELAAR AND LAVEN 2008:3), which means for Ivorian cocoa farmers, that they are also in competition to other cocoa farmers worldwide. Cote d‟Ivoire has the 9th worse gender equality in the world. Disparities are especially in education, a maternal mortality ratio (915 deaths per 100,000 live births) very high above the global average, and there is only one woman for every eight men in parliament at average (UNDP 2010:93). Cocoa in Cote d‟Ivoire is a man‟s crop. 98% of household heads were male (NKAMLEU AND KIELLAND 2005:322). Women are dependent on men for access to land


14 because they do have not or limited decision-making power. But access to land is crucial for women because to generate income they largely produce crops (IFAD 2009:2). 5.2. Civil War The civil war in Cote d‟Ivoire since 2002 caused by the political crisis has not influenced the West African dominance in cocoa production. It has even led to an increase of production in other West African countries (BASTIDE 2007: 2). TON, HAGELAAR AND LAVEN (2008:4) report that incomes generated due cocoa export were used from government and rebels for buying arms and to finance the ongoing conflict. Rebels and government tried to take advance from cocoa farmers so they were less affected than other Ivorian social groups or Migrants. 5.3. Migrants Migrant‟s labor in Cote d‟Ivoire mostly come from Burkina Faso and Mali, which each one is of the poorest countries in the world (SCHRAGE

AND

EWING 2005:103). 70% of foreign

population in Cote d‟Ivoire is from Burkina Faso (KOUAMÉ 2009:128). FAUST (2006) has shown the living conditions of migrants in a research analysis about the two neighboring towns Azoumanakro and Soubre 3 in the south of Cote d‟Ivoire which are founded in the 1970s. The general object to establish these settlements by the government was to expand and increase cocoa production in this region. (BABO 2010:105). About 80% of the population in these towns are non-native and half of these come from abroad, especially Burkina Faso where they got recruited. The development of this area could not have been possible without migrants. FAUST assumes, those migrants where integrated economically but not “necessarily socially” (FAUST 2006:215). Migrants from Burkina Faso (Burkinabé) depend on the Ivorian land owners until today. They almost did not change their social status as workers to for example independent farmers. They can buy just small areas of land by property laws and earn lower labor wages as Ivorian labor by tendency. In fact it is nearly impossible and in some regions even prohibited to buy land for Burkinabé. Especially migrant women are socially disadvantaged mainly due to their lack of language competencies. Furthermore besides economic interaction there is little social interaction between Ivorian and Burkinabé which can lead to social conflicts how could have been seen during the civil war (FAUST 2006:216-218). BABO (2010:6) has explained this with policies “associated with the ethnonationalist concept of Ivoirité”, which has led to several coup attempts. This ideology executed by harassment, humiliation and violence like razing homes and destroying goods mainly against West African immigrants as the Burkinabé are. In Ivory Coast there is a clear “differentiation between the positioning of individuals on the basis of ethnicity and land


15 ownership” (FAUST 2006:217). But it has to be noted, that in contrast to their social situation for most immigrants their economic situation has improved in comparison to their origin countries (FAUST 2006:216-217 AND BABO 2010:6). 5.4. Situation of children and youth1 According to the International Labor Organization (ILO) Sub-Saharan Africa has the highest relative rate of child labor2 (5 to 14 years). 2008 the rate was estimated on 28.4 % compared to 14.8% in Asia and the Pacific which is globally seen number two. The worldwide average is 14.5%. Between 2004 and 2008 there has been even an increase of child labor from 49.3 million to 58.2 million in Sub-Saharan Africa (ILO 2010:4-5). Most of the working children are working in area of agriculture (60%), services (25.6%) and Industry (7.0%) (ILO 2010:13). First time child labor on cocoa farms got public when an Ivorian newspaper reported about widespread child labor on Ivorian cocoa farms (SCHRAGE

AND

EWING 2005:100). As the

cocoa production in Cote d‟Ivoire is mainly small-holder based and run by families most of working children on cocoa farms belong to the household (IITA 2002:16). 46.3% of household individuals represent children (NKAMLEU

AND

KIELLAND 2006:322). The survey

from NKAMLEU AND KIELLAND (2006:327) has shown, that 53.7% of household children do at least one task on the cocoa farm: 15-17 years (78%), 10-14 years (63%), 6-9 years (33%), which all are much higher than the African average of 28.4%. Under Ivorian law children are permitted to work over the age of 14 when the work is not dangerous and parents allow it (SCHRAGE AND EWING 2005:102). In their survey the IITA estimates 625,000 children under 18 which are working on cocoa farms. (IITA 2002:16). BLOWFIELD (2003:18) points out that the correct number of child labor was unclear as initial reports estimated 90% of cocoa farms used child labor and later reports less than 2%. However, in their study NKAMLEU

AND

KIELLAND (2006:327-328) assessed weeding, pod collection, and crop transport as the heaviest and agrochemical (fertilizers and pesticides) application as the most harmful tasks. They identified high rates of child participation in the first three. The rate of 6-9 year old children who are pod collecting is 28%. 10-14 even 54.3%. Weeding is usually done by young boys: 29.6% of the 10-14 year olds. It is done by a machete which is defined by the ILO as hazardous task because it is risky and very physically demanding. Transport of the

1

NKAMLEU AND KIELLAND (2006:320) point out that some African rural societies “do not consider child labor as a delinquent activitiy” and that it can be necessary to survive for a whole family. On the other hand they argue, that childhood is “probably the best time for knowledge acquisition from formal education, which is seen as a way out of poverty. 2 ILO: all persons from 5 to 17 years.


16 crops is mostly done by 10-14 (39.4%) and 15-17 (60.4%). Agrochemical application is mainly done by children between 15 and 17 (50%). It can be very harmful for development. At all it can be said, that the labor of children (and women) is concentrated on the most-labor intensive tasks. When boys reach the age of 15-17 they are getting involved in a wide range of the cocoa farming process while girls remain constant on the heaviest tasks. Girls and/or woman are mainly demanded for work during harvesting. 33.5% children attend school and are not working in cocoa farming while 28.7% combine school and work and 20% just work on cocoa farms (NKAMLEU AND KIELLAND 2006:328). Education is a way seen out of poverty, because it is strongly connected to other issues which could help fighting against poverty (SEN 1992:111-112). Education provides for example necessary knowledge in literacy which for example could be used for signing financial contracts or to inform about market prices or about the adverse reaction of pesticides. 38% of Ivorian children are enrolled in schools at average (UNDP 2010:31). There is compulsory primary education but especially in rural areas not enforced. It ends at the age of 13. (SCHRAGE AND EWING 2005:102). At all it can be said that that “children from the poorest families, children living in communities with low average cocoa productivity, (…) and children living in the poorest communities are more likely to work on cocoa farms and not attend school (work only)” (NKAMLEU AND KIELLAND 2006:332). Most vulnerable children are salaried child workers (about 5,120) and children without kinship to farmers (SCHRAGE AND EWING 2005:106). Another problem was that especially the youth was (forced) recruited for the armed conflicts since 2002. They were both victims and perpetrators. The recruitment could be fostered by the poor socio-economic conditions. Concludes that “the continued difficulties in the region, coupled with development indices, which are amongst the lowest in the world, make the environment ripe for youth manipulation and marginalization” (UNIDO 2007:16) 5.5. Uprooting of Forests and Soil Fertility The immense growth of cocoa production was just possible due to the uprooting of huge forest areas not by improvement of the yield per hectare. Between 1961 and 2004 the forest area shrank from 4,000,000 to 250,000 hectare, mainly used for cocoa farming. The uprooting in combination with cultivation has led to a decline in soil fertility, which has led to lower cocoa yield and will constrain future plantation (BASTIDE 2007:14). There is now just a “little remaining forest for the expansion of cocoa production, as the original forest remains only in patchy fragments” (FRANZEN and MULDER 2007:3838). Furthermore the former guaranteed prices until the end of the 1980s have impacts until today: cocoa (and coffee) is grown in monocultures and affect loss of biodiversity and the danger of pests (FAUST 2006:215).


17 Because of the depletion of Ivorian forests also the wood processing industry is in a deep crisis since middle of the 1990s, which has lead to relevant amount of dismissals (ADENIKINJU, SÖDERLING, SOLUDO 2002:650). 6. Conclusion To follow COOKS

ET AL.

(2006) suggestion of analyzing the whole global commodity chain

offers insights into a stream of different impacts in space. Even though consumers and producers of cocoa are living physically far away, they are closely linked to each other: Whether a consumer in Germany is buying a chocolate bar while the civil war in Cote d‟Ivoire is financed by the consumer, or how grinders are using their capital stock to buy reserves for decreasing the global cocoa price which makes it hard to survive: this paper should have shown a wide range of impacts caused by a “simple” purchase of a chocolate bar. Furthermore it has to be stated, that especially children, women and migrants are socially and economically disadvantaged and the most vulnerable in cocoa commodity chain. It is necessary to reconnect cocoa consumers as well as other actors to cocoa producers to escape the relative anonymity to people who live under worst conditions for a chocolate bar. This could be one possibility to regain responsibility of all actors to each other and to a respectful global cooperation. Fair traded and/or organic cocoa can be just the first step. As well as the romantic idea and the enjoyment of chocolate, consumer should consider children labor, war, deforestation, discrimination of women and migrants as well as poverty of wide parts of Ivorian society while they are waiting to pay their chocolate in the domestic supermarket.


18

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19 FOLD, N. (2001): Restructuring the European chocolate industry and its impacts on cocoa production in West Africa. In: Journal of Economic Geography 1 (2001):405-420. FAUST, H. (2006): COMPARATIVE CULTURAL GEOGRAPHY: EMPIRICAL EVIDENCE ON PROCESSES OF INTEGRATION IN RURAL BOLIVIA, IVORY COAST AND INDONESIA. In: Erdkunde. Band 60. Heft 3:209-220. FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS (FAO) (2005): Commodity Chain Analysis: Constructing the Commodity Chain Functional Analysis and Flow Charts. URL: http://www.fao.org/docs/up/easypol/330/cca_043EN.pdf. FRANZEN, M. AND MULDER, M. B., (2007): Ecological, economic and social perspectives on cocoa production worldwide. In: Biodivers Conserv (2007) 16:3835-3849. GEREFFI, G. (1999): A Commodity Chains Framework for Analyzing Global Industries. URL: http://eco.ieu.edu.tr/wp-content/Gereffi_CommodityChains99.pdf. HANISCH, R. (1991): Die politische Ökonomie des Kakaoweltmarktes. S. 1-175, in: HANISCH, R., JAKOBEIT, C. (Hrsg.) (1991): Der Kakaoweltmarkt. Weltmarktintegrierte Entwicklung und nationale Steuerungspolitik der Produzentenländer. Band I: Weltmarkt, Malaysia, Brasilien. Hamburg: Schriften des Deutschen Übersee-Instituts Hamburg. HOWES, F. N. (1946): The Early Introduction of Cocoa to West Africa. In: African Affair (1946) 45 (180):152-153. INTERNATIONAL COCOA ORGANIZATION (2010): THE WORLD COCOA ECONOMY: PAST AND PRESENT. “EX-142-6 World Cocoa Economy _Trend_ ENGLISH ONLY- edited”. Discussion paper. INTERNATIONAL COCOA ORGANIZATION (ICCO) (2007): Cocoamap. URL: http://www.icco.org/statistics/cocoamap.pdf. INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD) (2009): Enabling poor rural people to overcome poverty in the Republic of Cote d‟Ivoire. URL: http://www.fao.org/fileadmin/user_upload/rome2007/docs/IFAD%20Rural%20Poverty%20R eport%202011.pdf. INTERNATIONAL INSTITUTE OF TROPICAL AGRICULTURE (IITA) (2002): Child Labor in the Cocoa Sector of West Africa: A synthesis of findings in Cameroon, Cote d‟Ivoire, Ghana, and Nigeria. URL: www.globalexchange.org/.../cocoa/IITACocoaResearch.pdf.


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21 TROPICAL COMMODITY COALITION (TCC) (2010): TCC Cocoa Barometer. http://www.teacoffeecocoa.org/tcc/content/download/309/2079/file/Cocoa%20Barometer%20 2009.pdf. UL HAQUE, I. (2004): Commodities under Neoliberalism: The Case of Cocoa. G-24 Discussion Paper Series. Research Papers for the Intergovernmental Group of Twenty-Four on International Monetary Affairs. United Nations Conference on Trade and Development. UNITED NATIONS DEVELOPMENT PROGRAMM (UNDP) (2010): Human Development Report 2010. URL: http://hdr.undp.org/en/reports/global/hdr2010/chapters/en/. UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION (2007): Best Practices, Policy Environment, Tools and Methodologies for Youth Employment in West Africa. VARANGIS, P. AND G. SCHREIBER (2001): Cocoa Market Reforms in West Africa. Pp. 35-82, In: AKIYAMA Takamasa, BAFFES John u.a. (2001): Commodity Market Reforms: Lessons of Two Decades. Washington D.C: The World Bank. WISKERKE, J.S.C. (2009): On Places Lost and Places Regained: Reflections on the Alternative Food Geography and Sustainable Regional Development. In: International Planning Studies. Vol. 14, No. 4, November 2009:369-387 WORLD BANK (2010): C么te d'Ivoire Country Environmental Analysis (CEA). Executive Summary. Washington D.C.: The World Bank. YILMAZ, K. (2006): How Much Should Primary Commodity Exports be Taxed? Nash and Stackelberg Equilibria in the Global Cocoa Market. In: J. Int. Trade & Economic Development. Vol. 15, No. 1, March 2006:1-26.

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