One day, Willy Wonka… put an ad in the Evening Bulletin:
“I, Willy Wonka, have decided to allow five children … to
visit my factory this year. These lucky five will be shown
around personally by me, and they will be allowed to
see all the secrets and the magic of my factory”
Charlie was one of the lucky ones to be shown around.
One day, Willy Wonka… put an ad in the Evening Bulletin:
“I, Willy Wonka, have decided to allow five children … to
visit my factory this year. These lucky five will be shown
around personally by me, and they will be allowed to
see all the secrets and the magic of my factory”
Charlie was one of the lucky ones to be shown around.
But…
One day, Willy Wonka… put an ad in the Evening Bulletin:
“I, Willy Wonka, have decided to allow five children … to
visit my factory this year. These lucky five will be shown
around personally by me, and they will be allowed to
see all the secrets and the magic of my factory”
Charlie was one of the lucky ones to be shown around.
But…
There were some secrets Willy Wonka never
told Charlie
The chocolate industry’s
romantic image
• Charlie and the
chocolate factory
• The brand Freia
Melkesjokolade
chosen as Norway’s
”Superbrand”
• The tradition of Freia
gründer Johan
Throne Holst
• Romantic, naïve image
• Distinctly different from other food
products (e.g. coffee)
• Image based on marketing
• Realities of production little known
Realities:
Realities:
• World market dominated by six multinationals:
Mars/Masterfoods, Nestlé, Hershey, Cadbury,
Ferrero, Kraft Foods
Realities:
• World market dominated by six multinationals:
Mars/Masterfoods, Nestlé, Hershey, Cadbury,
Ferrero, Kraft Foods
• Increasing concentration (Three companies
dominates 70% of Norwegian market)
Realities:
• World market dominated by six multinationals:
Mars/Masterfoods, Nestlé, Hershey, Cadbury,
Ferrero, Kraft Foods
• Increasing concentration (Three companies
dominates 70% of Norwegian market)
• Enourmous profits (Three owners of
Mars/Masterfoods all among the 25 richest
persons in the world)
Questions of business ethics
• Marketing to children
Questions of business ethics
• Marketing to children
• Industry’s role in the obesity epidemic
Questions of business ethics
• Marketing to children
• Industry’s role in the obesity epidemic
• The power of the multinationals (Kraft Foods’
owner Philip Morris/Altria is an economy as big
as Slovakia and Tunisia)
Questions of business ethics
• Marketing to children
• Industry’s role in the obesity epidemic
• The power of the multinationals (Kraft Foods’
owner Philip Morris/Altria is an economy as big
as Slovakia and Tunisia)
• Corporations’ fortunes based on cocoa produced
with child labour
Questions of business ethics
• Marketing to children
• Industry’s role in the obesity epidemic
• The power of the multinationals (Kraft Foods’
owner Philip Morris/Altria is an economy as big
as Slovakia and Tunisia)
• Corporations’ fortunes based on cocoa produced
with child labour
Squeeze on cocoa prices
The tremendous power of the manufacturers
enable them to “squeeze the prices in both
ends of the production- and distributionchain: the impoverished farmers who
produce the commodity at one end, and
consumers all over the world at the other
end.” (French economist Frederic Clairmont)
Squeeze on cocoa prices
“Continuing pressure on prices and
structural changes in cocoa bean
producing countries, such as liberalisation,
have taken their toll on the quality of cocoa
beans and on the geographic spread of
cocoa bean production – only the low cost
producers survived” (Rabobank International)
More than 70% of all cocoa
grown in West Africa
Leading producers:
•
•
•
•
•
•
Côte d’Ivoire 37%
Ghana 19%
Indonesia 14%
Nigeria 6%
Brasil 6%
Cameroon 5%
(UNCTAD, 2003)
Leading producers:
•
•
•
•
•
•
Côte d’Ivoire 37%
Ghana 19%
Indonesia 14%
Nigeria 6%
Brasil 6%
Cameroon 5%
(UNCTAD, 2003)
Cultivated from cocoa plants
Production in small villages
No telephones. No electricity. No running water.
No public transport
Workers
Manually, hard work. Land clearance with machetes.
Workers
Payment: $2 a day
Cocoa farmers
Income averages $ 829 per family (7-8 persons)
Cocoa prices drop over time
Living standards deteriorate
Living standards deteriorate
Côte d’Ivoire:
• Living standards increase until 1985, then drop
Côte d’Ivoire:
• Living standards increase until 1985, then drop
• Life expectancy fall from 45 (1970-75) to 41
(2000-2005
Côte d’Ivoire:
• Living standards increase until 1985, then drop
• Life expectancy fall from 45 (1970-75) to 41
(2000-2005
• GDP per capita annual growth rate -2% (19752002)
Côte d’Ivoire:
• Living standards increase until 1985, then drop
• Life expectancy fall from 45 (1970-75) to 41
(2000-2005)
• GDP per capita annual growth rate -2% (19752002)
• Half the population live on less than $2 a day
(1990s)
(Source: UNDP)
Côte d’Ivoire:
• Living standards increase until 1985, then drop
• Life expectancy fall from 45 (1970-75) to 41
(2000-2005)
• GDP per capita annual growth rate -2% (19752002)
• Half the population live on less than $2 a day
(1990s)
• Civil war in Côte d’Ivoire affects immigrant
farmers (driven off their land)
Farmers send children to work
”The interviews with community leaders
indicated that the greater employment
of family labour was a common
response to the recent drop in cocoa
prices and the crisis in cocoa
incomes” (IITA)
”Because of the weakness in commodity
markets since the late 1980’s, farmers
have been forced to cut costs by reducing
expenditures and increasing the
household labour including children” (IITA)
”Because of the weakness in commodity
markets since the late 1980’s, farmers
have been forced to cut costs by reducing
expenditures and increasing the
household labour including children” (IITA)
625100 children work on cocoa farms
140800 of these are 6 to 9 years old (IITA estimates)
Most working children from farmer’s family
But:
129 400 children employed in hazardous work
Hazardous work
• Application of noxious pesticides
Hazardous work
• Application of noxious pesticides
• Working with machetes
Hazardous work
• Application of noxious pesticides
• Working with machetes
• Transporting excessively heavy loads
5120 children are full time permanent workers
Vulnerable immigrant workers
from Mali, Burkina Faso
Child labourers testimonies of slave-like conditions
• 1485 children could not leave their work without
permission from adults
• 1485 children could not leave their work without
permission from adults
• 88 percent of child labourers had never attended
school
• 1485 children could not leave their work without
permission from adults
• 88 percent of child labourers had never attended
school
• Child labourers earn less than adults, despite
same working hours
Conclusion:
• Chocolate fortunes are built on cocoa
made with child labour
Why this situation?
Why this situation?
The cocoa economy (IITA):
Why this situation?
The cocoa economy (IITA): ”The picture that
emerges is of a sector with stagnant technology,
low yields, and an increasing demand for
unskilled workers trapped in a vicious circle of
poverty.”
Why this situation?
The cocoa economy (IITA): ”The picture that
emerges is of a sector with stagnant technology,
low yields, and an increasing demand for
unskilled workers trapped in a vicious circle of
poverty. Salaried child workers were most clearly
wrapped in a vicious circle.”
Why this situation?
The cocoa economy (IITA): ”The picture that
emerges is of a sector with stagnant technology,
low yields, and an increasing demand for
unskilled workers trapped in a vicious circle of
poverty. Salaried child workers were most clearly
wrapped in a vicious circle. The majority of these
children had never been to school and were
earning subsistence wages, forced into this
labor by economic circumstances”
Economic trends give cocoa
farmers a hard time
Economic trends give cocoa
farmers a hard time
1) Commodity prices fall.
Industrial
commodity-price index fallen to the lowest level in real terms since
the start in 1845. (The Economist)
Economic trends give cocoa
farmers a hard time
1) Commodity prices fall.
Industrial
commodity-price index fallen to the lowest level in real terms since
the start in 1845. (The Economist)
2) Prices fluctuate. Speculation in commodity
exchanges, fluctuation makes long term planning difficult for
farmers. (UNCTAD)
Economic trends give cocoa
farmers a hard time
1) Commodity prices fall. Industrial
commodity-price index fallen to the lowest level in real terms since
the start in 1845. (The Economist)
2) Prices fluctuate. Speculation in commodity
exchanges, fluctuation makes long term planning difficult for
farmers. (UNCTAD)
3) Liberalisation of cocoa economy.
Increased fluctuations, no national mechanisms for stability.
Consumers and multinationals win, smallholder farmers lose.
(Gilbert/Varangis)
Farmers get a declining share
Farmers get a declining share
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
Survey:
5.9% to cocoa farmer
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
Survey:
5.9% to cocoa farmer
(6.9% in 1992)
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
Survey:
5.9% to cocoa farmer
(6.9% in 1992)
70.4% to distributor
and manufacturer
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
Survey:
5.9% to cocoa farmer
(6.9% in 1992)
70.4% to distributor
and manufacturer
(63.1% in 1992)
(Dorin/CIRAD, France)
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
EU directive may
decrease amount of
cocoa in chocolate
(5% other vegetable
fats than cocoa
butter allowed)
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Farmers get a declining share
EU directive may
decrease amount of
cocoa in chocolate
(5% other vegetable
fats than cocoa
butter allowed)
Cocoa producers’
income estimated to
decrease by 12
percent (K. Burger)
70
60
50
40
Kakaobønder
30
Distributør og
produsent
20
10
0
1992
2002
Colonial structure
Colonial structure
• Cocoa production in former colonies: Côte
d’Ivoire. Ghana. Indonesia. Nigeria. Brasil.
Cameroon
Colonial structure
• Cocoa production in former colonies: Côte
d’Ivoire. Ghana. Indonesia. Nigeria. Brasil.
Cameroon
• Chocolate produced and eaten in Europe
and the US. Profit made in producing
countries.
Colonial structure
• Cocoa production in former colonies: Côte
d’Ivoire. Ghana. Indonesia. Nigeria. Brasil.
Cameroon
• Chocolate produced and eaten in Europe
and the US. Profit made in producing
countries.
• Colonial pattern maintained by duties and
excises
Solutions
Solutions
• Raise the issue (awareness)
Solutions
• Raise the issue (awareness)
• Consumer consciousness
Solutions
• Raise the issue (awareness)
• Consumer consciousness
• Pressure on producers (CSR)
Solutions
•
•
•
•
Raise the issue (awareness)
Consumer consciousness
Pressure on producers (CSR)
Pressure on governments (reform of customs,
regulations of industry)
Solutions
•
•
•
•
Raise the issue (awareness)
Consumer consciousness
Pressure on producers (CSR)
Pressure on governments (reform of customs,
regulations of industry)
• Encourage international cooperation (OPEC?)
Solutions
•
•
•
•
Raise the issue (awareness)
Consumer consciousness
Pressure on producers (CSR)
Pressure on governments (reform of customs,
regulations of industry)
• Encourage international cooperation (OPEC?)
• Encourage research
Fair trade
Fair trade
Fair trade
• Farmers get a greater share
Fair trade
• Farmers get a greater share
• Cooperatives
Fair trade
• Farmers get a greater share
• Cooperatives
• Social profile, no child labour
Fair trade
•
•
•
•
Farmers get a greater share
Cooperatives
Social profile, no child labour
Environmentally friendly
Fair trade
•
•
•
•
•
Farmers get a greater share
Cooperatives
Social profile, no child labour
Environmentally friendly
Not perfect, but only alternative
Fair trade
•
•
•
•
•
Farmers get a greater share
Cooperatives
Social profile, no child labour
Environmentally friendly
Not perfect, but only alternative
Fair trade
Fair trade alternatives:
Fair trade
Fair trade alternatives:
Fair trade alternatives:
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
• Chocolate producers fear they won’t qualify for
the label
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
• Chocolate producers fear they won’t qualify for
the label
• Agree to sign a protocol to fight ”worst forms of
child labour” in cocoa fields
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
• Chocolate producers fear they won’t qualify for
the label
• Agree to sign a protocol to fight ”worst forms of
child labour” in cocoa fields
• Pilot programs
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
• Chocolate producers fear they won’t qualify for
the label
• Agree to sign a protocol to fight ”worst forms of
child labour” in cocoa fields
• Pilot programs
• Communication to consumers
CSR-efforts
• 2001: US Congress want to introduce ”slave
free” label on chocolate
• Chocolate producers fear they won’t qualify for
the label
• Agree to sign a protocol to fight ”worst forms of
child labour” in cocoa fields
• Pilot programs
• Communication to consumers
Questions on the CSR-effort
Questions on the CSR-effort
• Results?
Questions on the CSR-effort
• Results?
• PR considerations first?
Questions on the CSR-effort
• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
make more expensive production for the chocolate
industry)
Questions on the CSR-effort
• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
make more expensive production for the chocolate
industry)
• How much does it cost? (Kraft Foods net
revenue in 2003: $31 billion. Nidar after tax profit: $21
million. Total amount spent on projects in West Africa:
less than $80000?)
Questions on the CSR-effort
• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
make more expensive production for the chocolate
industry)
• How much does it cost? (Kraft Foods net
revenue in 2003: $31 billion. Nidar after tax profit: $21
million. Total amount spent on projects in West Africa:
less than $80000?)
Questions on the CSR-effort
• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
make more expensive production for the chocolate
industry)
• How much does it cost? (Kraft Foods net
revenue in 2003: $31 billion. Nidar after tax profit: $21
million. Total amount spent on projects in West Africa:
less than $80000?)
Questions on the CSR-effort
• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
make more expensive production for the chocolate
industry)
• How much does it cost? (Kraft Foods net
revenue in 2003: $31 billion. Nidar after tax profit: $21
million. Total amount spent on projects in West Africa:
less than $80000?
More information: