One day, Willy Wonka

1

• 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.

2

• 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

3

• 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

4
(No Transcript)
5
The chocolate industrys romantic image
6

• Charlie and the chocolate factory
• The brand Freia Melkesjokolade chosen as Norways
  Superbrand
• The tradition of Freia gründer Johan Throne Holst

7

• Romantic, naïve image
• Distinctly different from other food products
  (e.g. coffee)
• Image based on marketing
• Realities of production little known

8
Realities
9
Realities

• World market dominated by six multinationals
  Mars/Masterfoods, Nestlé, Hershey, Cadbury,
  Ferrero, Kraft Foods

10
Realities

• World market dominated by six multinationals
  Mars/Masterfoods, Nestlé, Hershey, Cadbury,
  Ferrero, Kraft Foods
• Increasing concentration (Three companies
  dominates 70 of Norwegian market)

11
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)

12
Questions of business ethics

• Marketing to children

13
Questions of business ethics

• Marketing to children
• Industrys role in the obesity epidemic

14
Questions of business ethics

• Marketing to children
• Industrys 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)

15
Questions of business ethics

• Marketing to children
• Industrys 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

16
Questions of business ethics

• Marketing to children
• Industrys 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

17
Squeeze on cocoa prices

• The tremendous power of the manufacturers enable
  them to squeeze the prices in both ends of the
  production- and distribution-chain the
  impoverished farmers who produce the commodity at
  one end, and consumers all over the world at the
  other end. (French economist Frederic Clairmont)

18
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)

19
More than 70 of all cocoa grown in West Africa

20
Leading producers

• Côte dIvoire 37
• Ghana 19
• Indonesia 14
• Nigeria 6
• Brasil 6
• Cameroon 5
• (UNCTAD, 2003)

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Leading producers

• Côte dIvoire 37
• Ghana 19
• Indonesia 14
• Nigeria 6
• Brasil 6
• Cameroon 5
• (UNCTAD, 2003)

22
Cultivated from cocoa plants
23
Production in small villages
24
No telephones. No electricity. No running water.
25
No public transport
26
WorkersManually, hard work. Land clearance with
machetes.
27
WorkersPayment 2 a day
28
Cocoa farmers Income averages 829 per family
(7-8 persons)
29
Cocoa prices drop over time

30
Living standards deteriorate
31
Living standards deteriorate
32
Côte dIvoire

• Living standards increase until 1985, then drop

33
Côte dIvoire

• Living standards increase until 1985, then drop
• Life expectancy fall from 45 (1970-75) to 41
  (2000-2005

34
Côte dIvoire

• 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 (1975-2002)

35
Côte dIvoire

• 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 (1975-2002)
• Half the population live on less than 2 a day
  (1990s)
• (Source UNDP)

36
Côte dIvoire

• 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 (1975-2002)
• Half the population live on less than 2 a day
  (1990s)
• Civil war in Côte dIvoire affects immigrant
  farmers (driven off their land)

37
Farmers send children to work
38

• 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)

39

• Because of the weakness in commodity markets
  since the late 1980s, farmers have been forced
  to cut costs by reducing expenditures and
  increasing the household labour including
  children (IITA)

40

• Because of the weakness in commodity markets
  since the late 1980s, farmers have been forced
  to cut costs by reducing expenditures and
  increasing the household labour including
  children (IITA)

41
625100 children work on cocoa farms140800 of
these are 6 to 9 years old (IITA estimates)
42
Most working children from farmers family
43
But 129 400 children employed in hazardous work
44
Hazardous work

• Application of noxious pesticides

45
Hazardous work

• Application of noxious pesticides
• Working with machetes

46
Hazardous work

• Application of noxious pesticides
• Working with machetes
• Transporting excessively heavy loads

47
5120 children are full time permanent workers
48
Vulnerable immigrant workers from Mali, Burkina
Faso
49
Child labourers testimonies of slave-like
conditions
50

• 1485 children could not leave their work without
  permission from adults

51

• 1485 children could not leave their work without
  permission from adults
• 88 percent of child labourers had never attended
  school

52

• 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

53
Conclusion

• Chocolate fortunes are built on cocoa made with
  child labour

54
Why this situation?

55
Why this situation?

• The cocoa economy (IITA)

56
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.

57
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.

58
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

59
Economic trends give cocoa farmers a hard time

60
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)

61
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)

62
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)

63
Farmers get a declining share
64
Farmers get a declining share
65
Farmers get a declining share
Survey 5.9 to cocoa farmer
66
Farmers get a declining share
Survey 5.9 to cocoa farmer (6.9 in 1992)
67
Farmers get a declining share
Survey 5.9 to cocoa farmer (6.9 in 1992) 70.4
to distributor and manufacturer
68
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)
69
Farmers get a declining share
EU directive may decrease amount of cocoa in
chocolate (5 other vegetable fats than cocoa
butter allowed)
70
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)
71
Colonial structure
72
Colonial structure

• Cocoa production in former colonies Côte
  dIvoire. Ghana. Indonesia. Nigeria. Brasil.
  Cameroon

73
Colonial structure

• Cocoa production in former colonies Côte
  dIvoire. Ghana. Indonesia. Nigeria. Brasil.
  Cameroon
• Chocolate produced and eaten in Europe and the
  US. Profit made in producing countries.

74
Colonial structure

• Cocoa production in former colonies Côte
  dIvoire. 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

75
Solutions
76
Solutions

• Raise the issue (awareness)

77
Solutions

• Raise the issue (awareness)
• Consumer consciousness

78
Solutions

• Raise the issue (awareness)
• Consumer consciousness
• Pressure on producers (CSR)

79
Solutions

• Raise the issue (awareness)
• Consumer consciousness
• Pressure on producers (CSR)
• Pressure on governments (reform of customs,
  regulations of industry)

80
Solutions

• Raise the issue (awareness)
• Consumer consciousness
• Pressure on producers (CSR)
• Pressure on governments (reform of customs,
  regulations of industry)
• Encourage international cooperation (OPEC?)

81
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

82
Fair trade
83
Fair trade
84
Fair trade

• Farmers get a greater share

85
Fair trade

• Farmers get a greater share
• Cooperatives

86
Fair trade

• Farmers get a greater share
• Cooperatives
• Social profile, no child labour

87
Fair trade

• Farmers get a greater share
• Cooperatives
• Social profile, no child labour
• Environmentally friendly

88
Fair trade

• Farmers get a greater share
• Cooperatives
• Social profile, no child labour
• Environmentally friendly
• Not perfect, but only alternative

89
Fair trade

• Farmers get a greater share
• Cooperatives
• Social profile, no child labour
• Environmentally friendly
• Not perfect, but only alternative

90
Fair trade

• Fair trade alternatives

91
Fair trade

• Fair trade alternatives
• Fair trade alternatives

92
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate

93
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate
• Chocolate producers fear they wont qualify for
  the label

94
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate
• Chocolate producers fear they wont qualify for
  the label
• Agree to sign a protocol to fight worst forms of
  child labour in cocoa fields

95
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate
• Chocolate producers fear they wont qualify for
  the label
• Agree to sign a protocol to fight worst forms of
  child labour in cocoa fields
• Pilot programs

96
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate
• Chocolate producers fear they wont qualify for
  the label
• Agree to sign a protocol to fight worst forms of
  child labour in cocoa fields
• Pilot programs
• Communication to consumers

97
CSR-efforts

• 2001 US Congress want to introduce slave free
  label on chocolate
• Chocolate producers fear they wont qualify for
  the label
• Agree to sign a protocol to fight worst forms of
  child labour in cocoa fields
• Pilot programs
• Communication to consumers

98
Questions on the CSR-effort

99
Questions on the CSR-effort

• Results?

100
Questions on the CSR-effort

• Results?
• PR considerations first?

101
Questions on the CSR-effort

• Results?
• PR considerations first?
• Contradictory? (Wage increase for cocoa farmers
  make more expensive production for the chocolate
  industry)

102
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?)

103
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?)

104
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?)

105
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?

106
More information