Wednesday, April 16, 2014

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Cocoa in West Africa

A book by Orla Ryan asks why workers in the cocoa industry remain poor when chocolate consumption is so high
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Cocoa is integral to the economies of Ghana and the Ivory Coast, with sales accounting for some 10% of government revenue in each country.

In Ghana the importance of cocoa is matched by mining, with oil also set to diversify foreign exchange earnings – an issue already addressed by Think Africa Press. Yet it is widely appreciated that cocoa has had a leading role in the country’s growth over the past decade, culminating in a World Bank's prediction of a blistering Africa-leading growth rate of 13.4% this year. In the Ivory Coast– the world’s leading producer - funds from the commodity pay the wages of the military and civil service, with Alassane Outtara battering Laurent Gbagbo’s funds with a cocoa export ‘ban’.

But although their produce is readily gobbled up by consumers in its processed chocolate form, the 2 million cocoa bean farmers in West Africa who contribute 70% of the crop for a multi-billion dollar industry remain poor.

Financial Times journalist Orla Ryan’s book, “Chocolate Nations: Living and Dying for Cocoa in West Africa, explores this disturbing yet familiar discrepancy. In doing so, she addresses each country’s unique situation while casting a critical eye on the impact of Fairtrade chocolate.

In Ghana, Fairtrade is led by the cooperative Kuapa Kokoo, whose 40,000 farmers own a 45% stake in the Divine chocolate company. It was the aspiration of Divine managing director Sophi Tranchell - present alongside Ryan at her book’s launch - “to change the way the chocolate industry works forever.

However, Ryan believes Fairtrade will fail to bring the financial dividends deserved by West Africa’s impoverished farmers. She describes it as a niche initiative, with Kuapa’s forecasted 20,000 tonnes of Fairtrade cocoa sales this year being a mere fraction of Ghana’s annual 650,000 tonne output.

Of more significance to Ghana, Ryan argues, has been the government’s decision to increase prices under the influence of a growing lobby of cocoa farmers. Her analysis of the history and politics of Ghana and the Ivory Coast also highlights the importance of context and complexity: “The situation on the ground is far more complicated than implied by the Fairtrade narrative.”

As Think Africa Press expert Prof Chris Cramer argues, Fairtrade is important in raising the level of debate, but “confusion reigns around the brand with no “caveat-free line” on its claims. However, Fairtrade sales continue to rise dramatically, and although Ryan’s take on its impact has been dismissed, Fairtrade's claimed role in giving producers a “better deal” warrants attention.

At the heart of the initiative is its guarantee to offer producers a price immune from the fluctuations of the market. Yet from one perspective it is argued that due to its guaranteed floor price Fairtrade encourages excess production, a glut on the market and a drop-off in prices. From another, Fairtrade fails to address structural problems behind Southern producers not receiving the fruits of their labour. And while it does not engage landless wage labourers working for corporations, Fairtrade’s support for small farming is much-needed in the face of big business’ domination.

The current market price for cocoa in Ghana of $2,000 - set by a state marketing board absent in Ivory Coast after its acquiescence to a deeper liberalisation - far exceeds the Fairtrade minimum of $1,600. Prices are now forecast to challenge the 1979 peak, with cocoa tagged “one of the most explosively poised commodities” for 2011.

When Cadbury’s switched to the Fairtrade mark in 2009, Tranchell claimed that:“by converting some of its business to Fairtrade, Cadbury's has joined Divine in saying to the industry that the current way of working is neither sustainable nor fair.” Cocoa prices hitting a 24-year high in 2009 - driven by demand in new markets such as China and the Ukraine - indicated savings for the company and offer an alternative perspective: the acid test for the motivations behind such corporate affiliation will be when the market price is below the Fairtrade price.

Ryan seeks to draw focus on the multiple and different factors affecting Ghana and Ivory Coast.

“A handful of large chocolate companies dominate the world trade,” she says.

“Producers are heavily taxed.  Their holdings are small and yields are low.”

Increasing productivity, boosting investment and promoting diversification will all have marked benefits for West Africa’s cocoa farmers. But as Prof Cramer says: “There is a risk that fair trade diverts attention from prioritising what really reduces poverty, which is dramatic structural change.”

Kwame Nkrumah believed extricating a country from the “trade trap” of dependence on a primary export later processed overseas – as with the beans that make Divine chocolate – is critical for long-term economic development.

Nkrumah’s construction of a Jute factory in Kumasi was intended to simultaneously cut the need for the importation of sacks for cocoa while providing jobs for thousands. West African Mills was established to give Ghana its own processing capability. Both were part of a plan to use cocoa and chocolate to fund industrialisation.

Fairtrade does not substitute a judiciously led economic development strategy retaining a role for the state in place of a one-cap-fits-all approach.  But as the plight of the majority of underpaid workers in the cocoa industry demonstrates, deeper problems which inhibit profits made in Africa while maximising returns for overseas corporations remain unresolved.

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Comments

interesting topic, I'll have to add this to my reading list. The price of living needs to be qualified with the risks we take to live, and work. It holds relevance all over the world, not just West Africa