Tuesday, April 5, 2011

Gbagbo and the Chocolate Factory: Power & Cocoa in the Ivory Coast

Over the years, Chocolate eggs have been placed in Easter baskets around the world in Europe, America, and other continents across the globe.  Chocolate has become a central part of some religious and secular practices during the month of April. Year round, it is used to make chocolate coins for Hanukah or Santa Claus (Father Christmas), for courting on Valentine’s Day, and it used daily to make food and beverages. Not much thought is given by the general public in the west on the African origins of most of the Cocoa they consume or the labor used to obtain that luxury. Instead, when people think of Chocolate, they think ‘Swiss’ or ‘America’ when countries like Switzerland, Germany, and America don’t grow cocoa. Ivory Coast happens to be the world’s largest supplier of Cocoa. This means that the money that Gbagbo is clinging to is being funded by local Chocolate Easter Egg hunts and addictions to high-end chocolate lattes. Needless to say, the chocolate industry is very lucrative and holds the Ivory Coast’s purse strings. Similarly, I would like to point out that the Ivory Coast holds the chocolate industry’s purse strings as well. This is evident in how the current political crisis has impacted on the chocolate industry economically. In recent months, we have seen how the political situations in Libya, Egypt and now Ivory Coast has impacted prices of various commodities around the world. Hopefully, these events have given a chance for Africans across the continent to reexamine (and reevaluate) their central roles in the global economy and how their products affect prices world-wide.  The recent political crisis in the Ivory Coast is a clear example of this. The crisis has resulted in the rise of cocoa prices which increased to a 32-year high as a direct result of the political situation. According to Bloomberg report, Cocoa prices in New York had risen as much as 34 percent since the disputed elections where Gbagbo refused to step down. Prices only fell for the first time this year on March 4, 2011 because there were signs that Gbagbo’s reign as CEO of this large 'chocolate factory' was finally coming to an end. This shows the impact that the Cote d Ivoire situation has on the businesses on an international scale.

This raises the question on how we value African produced commodities both in the raw form and manufactured form. Particularly those products that African countries have a monopoly in supplying like chocolate. Since roughly, 50 million people around the world rely on cocoa for their livelihood, this gives Ivory Coast a considerable amount of power. Whilst only a few people will draw the connection between Chocolate producing Ivory Coast and its role in the global economy, and the political crisis, it effects have a real impact on many. Three quarters (67%) of the world’s cacao bean production takes place in West African in countries like Ghana and Ivory Coast. Ivory Coast alone supplies 43% of the world’s cocoa. Many people in the Ivory Coast (or outside of it) may underestimate the impact the country has on global industries and economies, but is is now being made visible. Whenever a large supplier of chocolate like Ivory Coast, cannot provide a regular supply, it will have a ripple effect on buyers all the way up the supply chain. It will also affect all industries connected to chocolates (milk, raisin, nuts, and peanut butter).  If Cadbury (See: Cadbury: An Ethical Company struggles to ensure Integrity of its Supply Chain) or Hershey is not able to get a regular supply of cocoa, it will cost them more to make chocolate and hence the price of chocolate will go up worldwide. Regular consumers will feel this impact at grocery stores and restaurants. Thus large chocolate manufacturing countries have a stake in Gbagbo’s presidency and on undervaluing the importance of Ivorian Cocoa to their products.

When they restructured the world cocoa market in the 1990s, it left Ivory Coast with little real power over the market. The liberalization policies still don't benefit Ivory coast and have led to large companies having power in the industry (See: Global Restructuring and Liberalization: Cote d' Ivoire and the end of the International Cocoa Market).  Realizing the value to African commodities through their effect in the global economy and branding them will be beneficial to Ivory Coast. At this juncture in its economic history, Ivory Coast should be synonymous with chocolate even if it’s not producing a finished product. As a comparative example of the importance of branding raw products, Colombia’s coffee beans are known worldwide as quality beans in their raw form so any product that uses Colombian beans has added value and can fetch a higher price. Ivory Coast is producing more chocolate than any other country, and clearly, their ability to supply chocolate impacts the chocolate industry. Clearly, it should be able to set prices of Cocoa at a fair trading price. Ivory Coast is in a position to negotiate Cocoa prices. The Chocolate companies know the value of their product and of the Cocoa they are getting. The misnomer that large MNCs will simply and easily ‘go somewhere else’ has been used for years but it doesn't make good business sense and is not an easy feat. For businesses, there are large switching costs that they will incur, and getting a new large supplier would change everything from its pricing strategy, production costs, and may cripple that company. MNC’s have been encouraging countries to mass produce cocoa so that they can achieve economies of scale (drive prices for the consumers down due to large supply of cocoa). Even if they were to go somewhere else, will that new country will probably not be able to meet the demand without large investments in infrastructure that many times the MNC is not prepared to pay. It will also mean the end to unreasonably low cost chocolate for customers in the western market.

There are always economic reasons why MNCs enter a certain country initially (and it is clearly not for humanitarian endeavors). There is no cocoa grown in Malawi, Zambia, Tanzania (much less America or Europe) so Ivory Coast has a product that not many countries can supply at that price. Yet, for some reason this adage that African countries are interchangeable and have ‘little’ to offer the world of economic value is persistent and internalized by some African leaders. not knowing the value of their product in global terms affects their bargaining power.  There is little reason that Ivory Coast is not in a position to set price minimums so that chocolate money trickles down and can be used for schools as opposed to being used to employ child labor of children that can not afford to go to school. There is also an added need perhaps, for this country to brand itself as the ‘Cocoa Coast or Chocolate Coast’ internationally to help add value to their raw product as is the case with Colombian beans. This can trickle to other industries and create and/or ‘chocolate development’ or even ‘chocolate tourism’. This 'chocolate tourism' though should be done in a way that is progressive and does not result in continued abuse of chocolate farmers. In the event that an MNC does get supply ‘elsewhere’, then that country can concentrate on getting another buyer and/or diversifying its products to make more food products that can be consumed locally or regionally. If Ivorians are unable to ‘feed themselves’ working as laborers on cocoa farms,  we then need to question the real life benefits of these farms for them. Their labor is on this farm may be wasted and they may benefit more from selling and growing items that will sustain them or that they can actually eat.

The International Cocoa Organization  (ICO) and the World Chocolate Foundation (WCF) appear to be the foundations in charge of setting standards and guidelines for the cocoa industry. Unfortunately, the latter ‘chocolate police’ are primarily made up of MNC’s and the goal for businesses is to provide value for its shareholders.  In the case of the ICCO, Ivory Coast, Togo, Ghana, Cameroon, Gabon and Sierra Leone are all represented but I think it is also important for regional agreements to made so that work on common issues as a united front in the board. Ivory Coast used to have a Cocoa board (CSSPPA) that was dissolved in the 1990's that was powerful but was dissolved to make way for liberalization. Although this board may not have been perfect, it created some standards within the country and protected farmers at some level.  With no real representation, the question of who is really looking after the primary interest of the Ivory Coast needs to be raised?  Just like in Charlie and the Chocolate Factory, we can see how economic wealth and greed has played a key role in the chocolate industry. A few companies and people are getting rich from the labor of the hard working people in an exploitative way. Currently in these plantations, child labor, debt servitude (‘slavery’) and displacement of people still exists because of the chocolate industry (see: Chocolate Work or read: Chocolate Nations: Living and Dying for Cocoa in West Africa (African Arguments)). Cocoa does not fetch an economically sustainable price for the farmers who are the suppliers. Gbagbo and his supporters have benefited from this industry and this is evident in his unwillingness to step down. Gbagbo’s Ivory Coast has also not lead to the type of economic growth that the Ivory Coast has the potential to realize. The challenge will be to see how Mr. Ouattara’s Chocolate Factory will look like and if his presidency will mean change for the Ivorian people that rely on Chocolate for their livelihood. In his attempts to liberalize the Ivorian economy, we hope that he will set an agenda that helps Ivory Coast receive an equitable price for its Cocoa and that children will be eating cocoa instead of picking it.

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