Abidjan, Ivory Coast – The last piece of chocolate you ate likely had its roots in West Africa, where two-thirds of cocoa beans are produced.
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“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 industry called their bluff.
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. The two countries settled for a fixed premium price – and now 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 angling that the negotiations are largely considered a defeat in both these nations.
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, reports the World Bank.
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.
“There are times farmers have abandoned cocoa for other crops, but [still they] return,” says Ivory Coast cocoa merchant Baikeh Lezou, 28. “That means they are producing cocoa beans because they have no other choice.”
Demand rises, but payoff is small
For Lezou and others in the Ivory Coast cocoa trade, setbacks like the recent fixed-pricing defeat are becoming all too common as forces outside Africa set the rules – and profit – from chocolate’s sweet success.
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.
Scientists are researching cocoa’s pharmaceutical applications, which could also spur the industry’s growth.
The ICCO expects cocoa processing to grow 3.4 percent this season – and continue to expand in future years.
Currently, North America and Western Europe are the principal markets for the consumption of all chocolate products, according to Euromonitor. 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 work with a lot of farmers and cooperatives and what they earn is nothing compared with what the margins are for big processing firms,” Lezou says, while welcoming customers to his brightly painted shoppe.
Lezou grew up surrounded by cocoa. His family owns a farm that produces the crop, and his mother still works in a cocoa cooperative in the western port city of San Pedro, through which most of Ivory Coast’s cocoa is shipped overseas.
Lezou now runs an artisanal cocoa-processing outfit in the former capital, Abidjan. He notes that farming cocoa is labour-intensive, and the yields are low. He dreams of a day when the farmers who supply his business will be able to earn a living wage.
“We really have no say on the price against these international buyers of cocoa,” Lezou told Al Jazeera. “They [are the ones who] decide the price.”
Deforestation: How did it get so bad?
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.
Cocoa gave the Ivory Coast one of Africa’s strongest economies, but there is a sour side to this sweet story. A satellite analysis sent to Al Jazeera by the Washington-based environmental activist group Mighty Earth shows more than 30 percent of Ivory Coast’s cocoa production is conducted illegally – and spread across at least 220 protected forests and national parks.
Traditionally, if a farmer wanted to earn more, he or she had to produce more, which would mean using more land. However, since the 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.
“Cote d’Ivoire [Ivory Coast] has already announced a plan to regulate supply by addressing rampant illegal cocoa production in its national parks and forest reserves over the next five years,” says Callee Davis, an economist at South Africa-based NKC African Economics.
The government believes it can cut the global supply of cocoa by 300,000 to 500,000 tonnes by evicting illegal farmers from the forests.
This would not be the Ivory Coast’s first evictions of illegal cocoa farmers. In operations that Human Rights Watch says were marred by corruption and violence, the government has – in the past five years – evicted thousands of people from protected forests and also burned their farms.
Although the government has the right to reclaim forests, this needs to be done in a humane manner, respecting the dignity and rights of those affected, Human Rights Watch said in a June report.
The risks of a price floor
In addition to addressing concerns about its forestland, the Ivory Coast must also grapple with the impacts of the $400-premium-per-tonne at which it plans to sell cocoa beans for the 2020-21 season.
“Although a price floor is viewed by many as a positive development for cocoa farmers, it could also have potentially debilitating effects in the long run in the case where an oversupply is induced,” says Davis.
Davis and other economists are 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.
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 practise out.
More than price-conscious
International observers hope the story of the Ivory Coast’s chocolate industry will not grow bitter as the government works to address the combined challenges of its cocoa-bean price floor, protected forests, and impoverished small-scale farmers.
“This process is logistically very challenging and often unsuccessful,” says Jim Wormington, a West Africa researcher with Human Rights Watch. “These are programmes that require technical expertise and financial investment, and it is not clear if and where that is coming from.”
Cocoa merchant Lezou is hopeful about trends that suggest consumers are not just price-conscious, but also impact-conscious. Recent developments indicate that more and more chocolate lovers care about the social impact of the cocoa supply chain. European governments are now pushing for a more sustainable sourcing of cocoa beans. And in July, two United States senators called for a strict crackdown on imports of cocoa products that rely on child labour for production.
Because the cocoa industry is so critically important to West African nations, Lezou sees his role as about more than maximising profit. “It is not just about making money,” says the cocoa merchant. “It is about being part of the development dream. And we are trying to make that dream come true.”