Summary
While proportionally the use of child labour has not increased in line with the expansion of cocoa production, data suggests some 1.56 million children continue to be employed in the Ghanaian and Ivorian cocoa sectors. NGOs campaigning on child labour issues have condemned 20 years of failure and criticised the focus on public relations rather than substantive solutions. The persistent nature of the challenge faced has been recognised, as has the central issue of net farm gate prices. While the LID payment initiative has been welcomed, a major four-fold increase in farm gate prices is held to be necessary to ‘move the dial’ on the use of child labour in cocoa farming in West Africa. Currently the benefits of the LID payment are dwarfed by losses arising from cocoa market price volatility. Getting to grips with the net farm gate price issues, in ways which ‘move the dial’ on the use of child labour, can be seen as the critical issue to be addressed in the coming months in drawing up EU ‘due diligence’ regulations related to the cocoa sector.
The National Opinion Research Centre of the University of Chicago has published its long-awaited report (commissioned by the Word Cocoa Foundation) entitled ‘Assessment of Effectiveness of Cocoa Industry Interventions in Reducing Child Labour in Cocoa Growing Areas of Ivory Coast and Ghana’ (1). The report’s publication was delayed following objections from the governments of Ghana and Cote d’Ivoire over shortcomings in the methodology used to assess the trends in the use of child labour in the cocoa sector. The report had initially suggested the use of child labour had increased ‘overall from 30% to 41% over the past 10 years, placing more than 2 million children in danger’. Such a trend would have run in direct contradiction to the pledges of large chocolate companies made since 2010 to ‘reduce the worst forms of child exploitation in their West African supply chains by 70% by 2020’ (2). This pledge was in response to the target set in the 2001 Harkin-Engel protocol, an international agreement which sought to reduce child labour by 70% in Ghana and Cote d’Ivoire, in a context where these two countries supply around 60% of all global cocoa production. Despite recent progress this target remains unmet.
A panel of experts was convened to review the findings of the report, with a more nuanced conclusion being reached ‘the 60% increase in cocoa production over the past decade had not seen a corresponding rise in child labour rates.’ The study noted how ‘child labor monitoring and remediation systems supported by companies have the potential to reduce child labor by 50% among identified child labourers.’ According to reports on the confectionaryproduction.com website the assessment formed part of NORCs’ wider report entitled ‘Assessing Progress in Reducing Child Labor in Cocoa Growing Areas of Côte d’Ivoire and Ghana’, with this wider report having found ‘the reported figures for child labour had in fact decreased’.
Data for 2018/19 on agricultural households suggests ‘a total of 1.56 million children were engaged in child labour (an estimated 790,000 in Ivory Coast and 770,000 in Ghana), which had reduced from a reported wider industry figure of 2 million several years previously’ (1).
Overall, some ‘45% of children living in agricultural households in cocoa growing areas aged 5-17 were found to have engaged in child labor in cocoa production in aggregate across Côte d’Ivoire (38%) and Ghana (55%)’, with some 43% being engaged in activities considered hazardous for children (1). The report suggested that ‘between 2013-2019, the prevalence rate of child labour in cocoa production among cocoa growing households remained reportedly at a stable average of around 41%, and 58% in Ghana’ (1).
Meanwhile campaigning NGOs claim the findings of the report have been overtaken by the impact of the Covid-19 pandemic on labour mobility in cocoa producing areas of West Africa and global cocoa demand falls and associated price pressures (see box). This it is asserted has seen a worsening of the situation in regard to the use of child labour. The NGO Mighty Earth claims the pandemic has increased the use of child labour by up to between 15% to 20% (1). The analysis is thus already seen as outdated by these campaigning NGOs. Against this background it was maintained ‘the cocoa industry is more interested in public relations than real solutions for kids, farmers, or forests’ (2).
Similarly, the US campaigning group Green America has condemned a ’20-year failure’ of the cocoa industry in regard to the elimination of child labour. This has seen five US NGOs calling for ‘retailers and confectionery companies to push for the enactment of mandatory human rights due diligence laws worldwide’, further increases in direct payments to farmers and an extension of child labour monitoring and remediation efforts to all cocoa farms.
While the International Cocoa Initiative see’s ‘new human rights due diligence laws’ which require ‘companies to assess and address negative human rights impacts in their supply chains’ as a ‘game-changer’, it is held that these due diligence requirements need to be based on ‘evidence, past experience and emerging lessons on how to drive impact’. It is argued a holistic approach is now required which addresses the ‘various push factors such as limited access to education and poverty in relation to pull factors such as an increase in the global price of cocoa and increasing cocoa yields …and how those factors relate to production stratum, educational opportunities, and hazardous child labour’ (2).
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Recent Cocoa Demand and Price Trend Since the Onset of the Covid-19 Pandemic In terms of the impact of the Covid-19 pandemic on the cocoa sector ,this needs to be seen in a context where ‘chocolate is an impulse buy, a factor which has made it particularly vulnerable to the downturn in likes of flying and rail travel’ (3). It was against this background that on the 15th October 2020 ‘the European Cocoa Association estimated the European grind for the quarter at 345,730 tonnes, down 4.7% year on year’, with cocoa grind in Asia being down an estimated 10.1% year on year and the North American grind down 5.7% year on year, the overall global cocoa grind is seen as being down around 5.7% year on year. Agrimoney.com reported in mid-October that ‘Cocoa futures have over the past two sessions set their lowest in more than two months in both London and New York’ (3). This is indicative of the volatility of cocoa prices since February 2020, with falls of 22.8% from February to July(from $2.72/kg to $2.10/kg), a recovery from July to September to levels 10% below February 202 levels (from $2.10/kg to $2.46/kg), followed by a collapse to a daily price of $2.19/kg on 30th October 2020, as lockdowns began to be rolled out once again across Europe. By the 30th October 2020, the cocoa price was 19.5% below the average price for February 2020 (4). This is giving rise to a situation where established cocoa grinders claim they are ‘really struggling at the moment’ in the face of the impact of the Covid-19 pandemic on demand and rising bean costs linked to the introduction of the living income differential payment. This is seen as being compounded by the expansion of cocoa bean processing capacity in major cocoa production countries (3). |
In contrast to the views of campaigning NGOs concerned with child labour issues, Rick Scobey, president of the World Cocoa Foundation, maintains while ‘genuine progress has been made in addressing the issue of child labour’, although there remains far too many children doing work on cocoa farms despite the joint work being undertaken by governments, cocoa and chocolate companies, cocoa-growing communities, and development partners. He described it as a ‘persistent challenge’ (1).
He maintained the NORC analysis confirmed the targets for the reduction of child labour had been set without ‘fully understanding the complexity and scale of a challenge’, faced in rural areas where poverty is endemic. Equally the targets had not been able to factor in the large-scale expansion in cocoa production since 2001 (+60%) (1).
Against this background it was reported the use of child labour had stabilised in traditional cocoa growing areas while ‘increasing in medium and low production area.’ This it was held ‘underscores the importance of investing in child labour intervention within medium and low production areas’ (2).
In response to the report Scobey committed the leading companies to increasing the coverage of monitoring and remediation systems along their supply chains in Ghana and Cote d’Ivoire to 100% by 2025 from only 20% in 2019 (1). It was held such industry monitoring and intervention packages had the potential to ‘reduce child labour by 50% among identified child labourers’ (2).
An expansion of support for primary education in rural areas was forming an integral part of the package of interventions required to reduce the use of child labour in the cocoa sector. Scobey stressed how eliminating child labour in cocoa supply chains would require ‘more ambitious partnerships and collaboration’ (1).
Significantly, Scobey also highlighted how ‘companies have supported the new Living Income Differential pricing policy of Côte d’Ivoire and Ghana’. This ‘living income differential premium of $400 dollars per tonne’ is to be ‘paid directly to farmers to enable them to make a viable living’. This is projected to provide ‘an estimated $1.2 billion in additional revenues for cocoa farmers on top of official market prices in 2020/21’ (1).
Providing direct financial benefits to farmers is now increasingly seen as ‘critical to solving child labour issues’ (1), since this will ease the financial constraints faced in moving away from the use of child labour. This living income differential premium of $400/tonne is now seen as ‘holding out the prospect of accelerated progress.’
However, it has been questioned whether on its own the $400/tonne living income differential will be sufficient. Fernando Morales-de la Cruz, the founder of Cacao For Change has forcefully argued ‘the only way to end misery, child labour and slavery in the supply chain of the chocolate industry is to multiply the FGP (farm gate price) paid to cocoa farmers by four, which can be done easily by increasing the price of a candy bar by 10 cents per bar’. The put this call in a context where ‘chocolate is a $100bn annual global industry’, but with most cocoa farmers still live on less than $1 per day’ (2). The scale of change required is therefore far more than cocoa sector companies have somewhat reluctantly signed up to (see epamonitoring.net article ‘Pressure Mounting on Cocoa Sector Multinationals to Pay Living Wage as part of Sustainability Accreditation’, 4 November 2019).
| Comment and Analysis While the report was compiled largely in response to US initiatives to end the use of child labour in the cocoa sector, its finding will inform discussions in the EU on mandatory ‘due diligence’ requirements to improve the sustainability of production in the cocoa sector and end the use of child labour.Indeed, the findings of the report and growing pressure on retailers and confectionary companies to support the enactment of mandatory human rights ‘due diligence’ laws globally, is only likely to strengthen calls for such action in Europe. What the NORC report demonstrates is: · The uncertainty in regard to the baseline data against which to judge what · The scale and complexity of the challenges faced. · The need for a comprehensive approach which gets to grips with the wider issues · The urgent need for substantive progress. · The centrality of retained farm gate incomes to the economic prospects for ending There can be little doubt the need to dramatically expand the retained farm gate incomes of cocoa farmers is the central issue to be addressed. The living income differential, while welcome, cannot replace higher and more stable cocoa bean prices. By July 2020, the fall in monthly average cocoa prices compared to the prices paid during the 40-month high in cocoa prices in February 2020, was the equivalent of $620/tonne. Such price volatility, which is not exceptional in the cocoa market, can easily wipe out the benefits of the living income differential payment if these price declines are fully reflected in farm gate prices. The underlying tension around the scale of the financial response required to incentivise an end to child labour in cocoa supply chains needs to be borne in mind in the formulation of any ‘due diligence’ regulations in Europe and elsewhere. It appears clear that if ‘due diligence’ requirements are to ‘move the dial’ on the use of child labour and the promotion of more sustainable farming practices in the West African cocoa sector, the issue of substantially improving the net farm gate price received by cocoa farmers, need to be addressed. This was an issue recently raised by the President of Ghana in a recent exchange of letters with European Commission President, Ursula von der Leyen. However, this needs to be seen in a context where the scale of the Covid-19 induced recession means there has never been a worst time to be advocating for proposals for a 10-cent increase in the price of candy bar. Just how EU ‘due diligence’ regulation will deal with this farm gate price issue in ways which deliver better financial returns to cocoa farmers at a level which ‘moves the dial’ on the use of child labour, will be the critical issues to be addressed in the coming months. |
Sources
(1) confectioneryproduction.com, ‘NORC study on child labour in Ghana and Ivory Coast cocoa production finds more collaborative work required’, 19 October 2020
https://www.confectioneryproduction.com/news/31811/norc-study-on-child-labour-in-ghana-and-ivory-coast-cocoa-production-finds-more-collaborative-work-required/
(2) confectionerynews.com, ‘NORC final report released finds over 1m cases of child labour in West Africa’s cocoa sector’, 21 October 2020
https://www.confectionerynews.com/Article/2020/10/19/NORC-final-report-released-finds-over-1m-cases-of-child-labour-in-West-Africa-s-cocoa-sector
(3) Agrimoney.com, ‘Cocoa demand ‘not as bad as it looks’ from declining grind data’, 20 October 2020
https://marketing.agrimoney.com/cocoa-demand-not-as-bad-as-it-looks-from-declining-grind-data/
(4) Cocoa beans Monthly Price – US Dollars per Kilogram October 2019 to September 2020 (+ daily price for 30th October 2020)
https://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=12
(5) International Cocoa Initiative, ‘ICI Technical Summary of NORC Report “Assessing Progress in Reducing Child labour in Cocoa production in Cocoa Growing Aras of Cote d’Ivoire and Ghana, 2018/9 Survey Round’, 19 October 2020
https://cocoainitiative.org/knowledge-centre-post/ici-technical-summary-of-norc-report/