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Don't ban cocoa imports. Invest U.S. aid better.

Part 6 on why the U.S. should not ban cocoa imports from Ivory Coast

· Africa

The cocoa sector is a highly volatile one. Bad forecasting coupled with bad trade policy – banning U.S. cocoa imports from Ivory Coast - hits farmers (and their children) with a double whammy. The children are the ones who suffer the consequences the most.

In Ivory Coast, cocoa is more valuable than gold. Cocoa beans and related products are at the heart of its economy and account for over 40% of its exports. An estimated 1.5-2 million small family farms of 1-3 hectares produce 90% of Ivory Coast’s cocoa beans. A family has on average 9-12 members, of which 4-7 are children, and an income of $2,707/year. This is about 37% below a living income of $7,318/year and is generated mainly by household members.

Do your research and stop playing with statistics

When the international price of cocoa crashed by 30% between 2015 and 2017, the global chocolate industry raked in an estimated $100 billion annually. Meanwhile, farmers in Ivory Coast continued living in poverty. As the largest cocoa producer in the world, Ivory Coast was particularly hit. The military unrest and open gunfire that followed the 2011 outbreak of civil war didn’t help either.

After global demand for cocoa turned out to be weaker than what the Ivorian government had predicted for 2017, the combined global overproduction, the Ivorian government’s record high price setting per kilo, the dramatic international price drop, and higher national fees caused many cocoa buyers to pull out of their deals with farmers to avoid huge losses. This wreaked incalculable damage to the 2 million families who depend on the sale of their cocoa production.

Cocoa accounts for more than 50% of household income for cocoa farming families. The pull-out of cocoa buyers resulted in a 36% decrease in farmer incomes. This amplified family poverty and seriously hampered the industry’s efforts to improve sustainable business and boost the living standards of those who work on cocoa farms, including children.

According to Cocoa Barometer 2018, the number of children laboring in the cocoa industries of Ivory Coast and Ghana alone rose in absolute terms to 2.1 million. But this does not mean that there are 2.1 million children engaged in dangerous labor, as purported by the July 3, 2019 Washington Post article “West African countries plan to hike cocoa prices to boost farmer incomes”. The approximately two million cocoa farmers in Côte d’Ivoire and Ghana may represent 10 million children. But that does not mean there are 10 million children in forced labor.

Don’t ban trade, invest aid better for more inclusive impact

An estimated 600,000 farmers produce cocoa and about 6 million people work in the cocoa industry in Ivory Coast. Of those 6 million, it is estimated that 1.4 million children work on cocoa farms.But it is not really known how many children actually work on cocoa farms nor how many who do are victims of the forced or indentured labor that U.S. senators Sherrod Brown (D-Ohio) and Ron Wyden (D-Oregon) refer to as “ingrained” and “prevalent” in their July 12, 2019 letter to to Acting Secretary of Homeland Security, Honorable Kevin McAleenan.

What we do know is that child labor is both a symptom and a self-perpetuating cause of poverty. Households in cocoa growing areas face the realities of rural poverty, and some parents have little choice but to put their children to work, which keeps them out of school, to reduce labor costs on family farms. This often, in turn, deprives children of the chance to develop and advance themselves, and so entrenches the household’s impoverishment for subsequent generations.

The Millenium Challenge Corporation (MCC), an independent US foreign assistance agency, was established with broad bipartisan support in January 2004 with a single objective: reduce poverty through economic growth. “The agency was designed to deliver aid differently, with a mission and model reflecting key principles of aid effectiveness.” It invests mostly in low-income countries through multi-million dollar grants that reward countries who have demonstrated a “commitment to free market economic and democratic policies as measured by objective performance indicators.”

A $525 million Compact Agreement was signed with Ivory Coast Compact in November 2017. Eligibility was determined on the basis of quantitative, third-party indicators in three broad areas: ruling justly, investing in people, and economic freedom.

In keeping with MCC’s concept of “country-ownership”, the Compact Program was developed by the Ivory Coast government in conjunction with MCC economists and consultants and, supposedly, with the required broad public participation through nationwide discussions that included representation of civil society and the business community. Pre-Compact activities analyzed the principal constraints to economic growth and poverty reduction and sought to identify the most severe binding constraints and root causes “that deter households and firms from making investments of their financial resources, time, and effort” to significantly increase incomes.

The Compact Agreement was signed after the collapse in cocoa prices that occurred between September 2016 and February 2017. As mentioned before, this collapse resulted in farmers seeing their income drop as much as 37% from one season to the next. A total of 6 million people, or 25% of Ivory Coast’s population earning on average $1 a day (below the extreme poverty line) were hit hard.

If before the price collapse farmers already found it difficult if not impossible to cover a basic, nutritious diet, decent housing with proper sanitation, school fees for the children, healthcare and other essential needs, the dire situation they found themselves in after the collapse is indescribable. They, of course, have the option to earn a premium if they become certified. But that costs time and money they don’t have.

MCC’s mandate is to reduce poverty through economic growth. Yet, in spite of having worked in partnership with Ivory Coast to develop and implement an aid program premised on investments most likely to be effective and sustained, the $525 million Compact did not make any significant adjustments before finalizing the Program to be implemented.

The Program did not factor in the disturbing deteriorating conditions of 25% of the country’s population. In did not reflect what should have been changing priorities to ensure widespread reduction in poverty and, with it, forced child labor. Nor did it reflect full accountability of the Ivorian government to its citizens. Nevertheless, the Compact was signed with full pomp and circumstance. And all through the Senate not a legislator was heard.

Economic diversification at the expense of children?

If, as U.S. senators Brown and Wyden allege in their July 2, 2019 letter calling for a ban on U.S. imports of cocoa from the Ivory Coast, forced child labor is such a deep-rooted and widespread problem in that country’s cocoa industry, why was nothing said about including the issue in the MCC Compact before it was signed? After all, ruling justly includes respect for human rights, and investing in people includes education.

It is to be assumed that the scope of impact of MCC assistance aims to be as wide as possible and applies to all of the people, not just some of the people, in the geographical areas targeted for intervention. Yet, the Ivory Coast Compact focuses on diversifying the Ivorian economy through two projects that both make no mention of child labor nor seek to have any direct impact on reducing it.

One project focuses on human capital development through investments in secondary education and technical and vocational training. The other project focuses on urban transport improvement in Abidjan, Côte d’Ivoire’s growth engine, through investments in road infrastructure, policy reform, and technical assistance.

Economic diversification is, of course, of critical importance as a strategy to encourage positive economic growth and development. But the goal of spurring economic transition is, or should be, an inclusive economy, one that diminishes socio-economic inequalities and includes all members of society in the growth process; one that factors in the environment, in order to achieve a more sustainable economy; one that stresses the participation of people, including farmers, in the economic, political and social institutions, as an integral part of the ongoing process of democratization; one that improves access to social, health, educational, financial, and production resources for those who most need them. Inclusive development implies focusing on a larger role for local market economies rather than one-sidedly on the global markets that can be accessed from improved sea ports.

In the 98 pages of the Compact Agreement, there is no mention of primary or middle school children who work on cocoa farms to help their families, who are too poor to go send them to school. These children were just not lucky enough to qualify for inclusion in the Compact. Yet they are the most vulnerable to unjust rule and lack of investment in people.

The children absent in the Compact Program and its activities are the most vulnerable to human rights violations in the cocoa producing regions bordering the three main zones of MCC’s Compact intervention: 1) Abidjan, the capital; 2) San Pedro on the Atlantic coast, in the south-west, which is a key gateway for the country’s exports; and 3) Gbêkê, an agricultural region in the center of the country that was formerly in the cocoa loop but today produces rice, yam, millet, corn, gombo, banana and plantain.

Over a twenty year period, the Compact is expected to benefit at least 11,300,000 people. How many of those impacted by the program are children working in cocoa farms? Will that impact be positive or negative? How will the results of the two projects actually help reduce the country’s “ingrained” forced child labor? Will the Compact make cocoa production in Ivory Coast sweeter or bitterer?

If forced child labor and indentured labor on cocoa farms in Ivory Coast is such an “ingrained” and “prevalent” human rights violation, why were there no red flags raised before the Compact was signed? Political expediency for both the U.S. and Ivory Coast?

Don’t ban, invest better

Instead of calling for a ban on cocoa imports, why don’t senators Brown and Wyden call for greater investment in local value-addition in the processing sector in Ivory Coast? Of the $100 billion spent annually on chocolate, the African Development Bank reckons the continent keeps just $5 billion. Labor-intensive processing work happens elsewhere. According to International Cocoa Organization figures, Ivory Coast ground just 559,000 tons of beans in 2018 less than the Netherlands.

Of course, developing a cocoa processing sector requires lots of investment and expertise… or not. There are a number of high-quality, small scale cocoa processing systems available from Nigeria, India, China, and Germany, among others, from small pilot plants or artisan size machines up to large industrial size factories.

Must multi-million dollar U.S. aid investments be made at the expense of children? Is it not possible to invest even a small part of the MCC Compact in the sector which is at the heart of Ivorian economy and in a way that works in benefit of children who toil on cocoa farms, instead of just slapping a trade ban on the sector that feeds them?

Astrid Ruiz Thierry, Principal, Upboost LLC

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