Damning cocoa report: Decade-long efforts to improve cocoa sector falling way short, claims NGO

20 Apr 2018

20 Apr 2018 --- A damning report into the cocoa sector claims that widely touted efforts in the industry to improve the lives of farmers, communities and the environment made over the last decade are having little impact. Despite many of the big players in the cocoa and chocolate supply chain working on sustainability issues like trying to eradicate child labor and stopping environmental damage like deforestation, the efforts of companies and governments have very little influence, according to the Cocoa Barometer 2018.

This report is written by a group of 15 organizations including Solidaridad, an international civil society organization that facilitates the development of socially responsible, ecologically sound and profitable supply chains.

And it paints a very dark picture. Although it acknowledges the efforts being made by key players in the industry, it says they are nowhere near close to solving the problems.

Smallholder farmers in West Africa account for the bulk of world output, but cocoa is also grown in Latin America and Asia. In recent years the spotlight has been on the cocoa supply chain and chocolate industry as a whole which has faced repeated accusations of deforestation and child labor.

According to the report, child labor remains at very high levels in the cocoa sector, with an estimated 2.1 million children working in cocoa fields in the Ivory Coast and Ghana alone.

Child labor is due to a combination of causes, including structural poverty, increased cocoa production, and a lack of schools and other infrastructure.

“Not a single company or government is anywhere near reaching the sector-wide objective of the elimination of child labor and not even near their commitments of a 70 percent reduction of child labor by 2020,” it says.

The current situation is even starker, says the report, because cocoa prices have been spiraling for some time amid a period of oversupply. Since September 2016, the price of cocoa per ton has fallen from an average of US$3,000 to US$2,000 and local forests in the Ivory Coast and Ghana have been transformed into cocoa plantations to increase production.

However, there has been a recent spike in prices due to European demand; farmers continue to struggle, West African communities still face serious poverty and child labor and deforestation remain major concerns.

“The 2018 Cocoa Barometer Report” describes efforts over the last ten years as modest in scope and even states that the solutions put forward to deal with some of the major sustainability issues “do not even come close to addressing the scale of the problem.”

“The scale of the solutions brought to the cocoa sector by the industry, governments and civil society organizations is nowhere near the size of the problem,” says Isaac Gyamfi, Director of Solidaridad in West Africa.

“Cocoa and chocolate companies save billions purchasing cocoa while spending millions on sustainability programs. Governments of both producing and consuming countries do not have policies in place to correct this market failure.”

Heske Verburg, Director of Solidaridad in Europe, calls for market correction, insisting the supply chain and government departments and organizations must do more.

“A living income for farmers is the most important indicator for a sustainable cocoa sector,” she says. “Governments should change market conditions. Cocoa and chocolate companies need to find ways to redistribute value along the production chain. Together they can guarantee a living income for farmers.”

FoodIngredientsFirst reached out to key players in the industry for their reaction to the report. We are expecting a comment from the World Cocoa Foundation, while Olam Cocoa referred us to its Cocoa Sustainability report which details its goals of achieving 100 percent traceable and sustainable cocoa volumes from its direct origination supply chain by 2020.

Cargill sent FoodIngredientsFirst this statement as a direct response following the inquiry: “The economic and social vitality of cocoa farmers and their communities is at the heart of Cargill’s Cocoa Promise. Poverty is a cause of many other issues and addressing that is key. That’s why Cargill is committed to helping farmers earn a fair income. For example, we endorse certification programs so farmers can earn a premium on their products. About 45 percent of our supply is third-party certified and we are working to increase that number. Through our work with farmers, we have also implemented a training and education program, the Cargill Coop Academy, to develop business leaders at cooperatives. We’ve enrolled 320 leaders from 80 cooperatives in Côte d’Ivoire, and 580 leaders from 165 farmer groups in Cameroon.”

A Cargill study on farmer income has shown that cocoa is about 60 percent of income and so it’s critical to also look at diversification strategies for the remaining 40 percent. The Cargill Cocoa Promise focuses on diversification. A study on farmer income provided us a better understanding of other incomes sources (other crops, own business or trading, livestock or livestock products), this all-important input is necessary to develop income diversification strategies.

“We believe increasing productivity and yields are important to meeting growing global demand for cocoa, benefiting cocoa farming communities, and lessening our impact on the environment. We have now mapped over 60,000 farms in Côte d’Ivoire, 6,000 in Indonesia, and 3,000 in Cameroon, providing valuable information on yields and farming methods. We use this insight to inform farm development plans and improve productivity.”

“Also, alongside CocoaAction and external partners, including ICI, we have implemented a Child Labour Monitoring and Remediation System, to help us identify if and where children are working on farms, and if labor cases are found, then to deploy appropriate responses to not only stop existing child labor but to remediate cases. In 2016 and 2017, Cargill implemented the system amongst more than 20,000 cocoa farmer household members in West Africa, 55 percent men and 45 percent women.”

“Our work continues and while we recognize there is much progress to be made, we are confident we are heading in the right direction towards a thriving cocoa sector,” reads the statement.

In an interview to be featured in the April/May issue of The World of Food Ingredients, Simon Brayn Smith, Head of Sustainability at Olam Cocoa says: "We work towards the directly sourced volumes in our cocoa supply chain being 100 percent traceable and sustainable by 2020. Our innovative technologies, such as the Olam Farmer Information System (OFIS), are playing a key role in this process by collecting detailed data points throughout the supply chain, often from some of the most remote corners of the word, and then providing direct access to this information and resulting insights to our customers and partners. By 'geotagging' each bag of cocoa we originate we can trace it from farm to factory, providing assurance to end users on product provenance. This technology also supports our supplier network of millions of smallholder farmers by helping them make data-driven decisions for their specific farms in order to improve both yields and livelihoods. Alongside this, our six Cocoa Innovation Centers around the world support customers to fulfill consumer demand for healthier, responsibly sourced products by creating cocoa ingredients that contribute to as clean a label as possible."

Barry Callebaut has not yet responded to the request for comment.

Guilty pleasure
On top of severe poverty experienced by cocoa farming communities, the Cocoa Barometer 2018 lists a whole host of other problems:

- An average cocoa farmer in Côte d’Ivoire earns only a third of what he or she should earn a living income.

- More than ninety percent of West Africa’s original forests are gone.

- Child labor remains at very high levels in the cocoa sector, with an estimated 2.1 million children working in cocoa fields in the Ivory Coast and Ghana alone. Child labor is due to a combination of causes, including structural poverty, increased cocoa production, and a lack of schools and other infrastructure. Not a single company or government is anywhere near reaching their commitments of a 70 percent reduction of child labor by 2020.

- A “broken” market in which farmers have no real influence. While many of the current programs in cocoa focus on technical solutions around improving farming practices, the underlying problems at the root of the issues deal with power and political economy, such as how the market defines price, the lack of bargaining power of farmers, market concentration of multinationals, and a lack of transparency and accountability of both governments and companies.

“As long as poverty, child labor and deforestation are rife in the cocoa sector, chocolate remains a guilty pleasure,” said Antonie Fountain, co-author of the Barometer.

“Current approaches will not solve the problem at scale. Companies and governments need to acknowledge the urgency and make a change. Efforts that cover less than 50 percent cannot be called ‘solutions'.”

What are the recommendations?
Recommendations for action in the report include the following:
- Make net income the key metric for all sustainability projects.
- Commit to a sector-wide goal of achieving a living income.
- Commit to a global moratorium on deforestation; focus on agroforestry and reforestation as environmental solutions.
- Move from voluntary to mandatory requirements, on human rights as well as on transparency and accountability.
- Develop sector-wide approaches at a scale that address causes to child labor.
- Increase urgency and ambition to reflect the scale of the problems, and implement changes that also address issues around power and political economy, not just at technical levels.

The authors of the report include ABVV-FGTB/Horval (Belgium), FNV (Netherlands), Green America (USA), Hivos (Netherlands), Inkota Netzwerk (Germany), International Labor Rights Forum (USA), Mondiaal FNV (Netherlands), Oxfam America (USA), Oxfam Novib (Netherlands), Oxfam Wereldwinkels (Belgium), Public Eye (Switzerland), Solidaridad (Netherlands), Stop The Traffik (Australia/Netherlands), Südwind Institut (Germany), VOICE Network (Global) and Members of the VOICE Network. There was also input from UNICEF National Committee (Netherlands).

Last September, FoodIngredientsFirst ran an in-depth special report into how sustainable cocoa farming detailing the response from several suppliers who spoke about efforts, targets and sustainability programs within cocoa growing regions, including West Africa. You can read more here.

And last month, it was also reported how Barry Callebaut is starting its first-ever “Forever Chocolate” pilot program in one of the world’s key growing regions, Indonesia, where theories of change will be put to the test in a bid to speed up a systemic change in cocoa farming. Following Indonesia pilot, others will take place in Côte d'Ivoire, Ghana, Cameroon and Brazil. Read more here.

By Gaynor Selby