Author: Michael

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Speculation and Cocoa Prices – again

Almost six months ago, I wrote about the potential impact of investment funds flowing into the commodity markets. Commodity markets used to be the realm of those who knew what they were doing. Traders became experts in one particular commodity and used that expertise to make a profit. But then the mortgage crisis happened and a lot of money is desperate for profit. Like a junkie searching the streets for another hit, hedge funds and all the other players who brought us the “subprime” mortgage meltdown are flocking to the futures markets. And cocoa is one of the next targets.

My suspicions in January are now being confirmed by executives of chocolate makers. A report in the Wall Street Journal cites several sources who blame the high cocoa prices on speculators who have driven up the market. Stephanie Garner, a trader in London explains: “In my lifetime, it’s an entirely new phenomenon. It’s to a large extent a fallout of the credit crunch.” And the International Cocoa Organization (ICCO) has reported that the gap between this season’s harvest and cocoa demand is a mere 50,000 tons, an amount that is easily covered by existing stocks. In other words, there’s no reason for the high prices. Continue reading “Speculation and Cocoa Prices – again”

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Child Labor in West Africa: Roads not taken – Part 2

The emergence of the child labor issue in West African cocoa economies coincided with the historical low of cocoa prices at the end of the 1990s. While there are other factors that contribute to child labor, poverty is a significant part of the problem. Yes, there are cultural predispositions, but they are not sufficient in explaining the entire phenomenon, especially in light of alternatives for children, i.e., schooling. So dealing with child labor means addressing poverty. There is no way around that. Continue reading “Child Labor in West Africa: Roads not taken – Part 2”

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Child Labor in West Africa: Roads not taken – Part 1

This is the first of two posts that address what could have been done regarding child labor in West Africa. The first covers the efforts of the International Labor Organization’s International Program on the Elimination of Child Labour. 

In 1999, the ILO convention on the Elimination of the Worst Forms of Child Labour helped focus attention on those aspects of child labor that were most abhorrent. Shortly thereafter the first reports about child labor in the West African cocoa sector emerged. No wonder then, that IPEC has something to say about the problem. Its director, Frans Roselaers, even witnessed the Harkin-Engel Protocol with his signature. 

In 2002, IPEC began its Programme to Combat Hazardous and Exploitative Child Labour in Cocoa/Commercial Agriculture in West Africa (WACAP) with $5 million in funding from the U.S. Department of Labor and $1 million from the International Confectionary Association. By its end in 2005, WACAP had created working pilot programs in Cameroon, Nigeria, Côte d’Ivoire, Ghana and Guinea. Let’s look at the Ghanian program, one of the more successful ones. Continue reading “Child Labor in West Africa: Roads not taken – Part 1”

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The Harkin-Engel Protocol – Part 3

In yesterday’s post, I outlined how the industry has adopted a definition of certification that flies in the face of the common sense meaning of the term. Certification, as I understand it, involves developing a standard and then measuring the production processes against that standard. If processes do not meet that standard, the product cannot be certified.

In the case of cocoa this would mean developing an appropriate level of child participation in cocoa farming. Cocoa can be certified to meet that standard if it is verified that children’s involvement did not rise above the levels specified. To achieve that certification, industry would use its resources to help bring child labor down to acceptable levels. Continue reading “The Harkin-Engel Protocol – Part 3”

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The Harkin-Engel Protocol – Part 2

Yesterday, I reported that the situation regarding child labor in West Africa does not seem to have improved much since 2001 if we look at the initial surveys conducted in Ghana and the Côte d’Ivoire. Today, I’d like to focus on what the industry has done so far to address these issues and live up to the obligations it accepted in 2001.

The industry has established the International Cocoa Initiative, a foundation with the mission to “to oversee and sustain efforts to eliminate the worst forms of child labour and forced labour in the growing and processing of cocoa beans and their derivative products.” How has it fared? In its 2006 annual report, the most recent available on its web site, the foundation reports that, through its programs, 3,844 children “have been withdrawn from or spared the worst forms of child labor.” The report is somewhat vague as to what the program entails, but reports that it involves a community based approach to bring about sustainable change and abolish “improper” employment practices. Interestingly, the plans “are reliant on the programs of governments and existing donors” indicating that not a whole lot of new money is being expended to implement new programs. Continue reading “The Harkin-Engel Protocol – Part 2”