The proceedings are rebounding in the United States against the multinational chocolate companies accused of having encouraged child labor. This subject continues to occupy the news despite the efforts of the countries concerned.

Cocoa is paid too little to be sustainable, says ICCO

Ivorian cocoa producers in a plantation near Sinfra, central region of Côte d'Ivoire, October 12, 2019. ISSOUF SANOGO / AFP

Text by: Claire Fages Follow

13 min

The proceedings are rebounding in the United States against the multinational chocolate companies accused of having encouraged child labor.

This subject continues to occupy the news despite the efforts of the countries concerned and the industry to resolve it.

As is deforestation, particularly in Côte d'Ivoire.

Interview with Michel Arrion, Director General of the International Cocoa Organization.

ICCO brings together 22 producer countries and 29 consumer countries.

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: Child labor, deforestation ... How can West African cocoa effectively free itself from these scourges

?

Michel Arrion:

We absolutely have to make a sort of deal by accepting that all the issues of sustainability of cocoa which are very hot, in Europe and the United States, issues of deforestation, environmental sustainability,

child labor

etc.

of social sustainability, are just a reflection of either side of the coin, prices.

International prices are too low.

If you take today's prices - $ 2,000 a tonne - that's a third of the cocoa prices of forty years ago.

I do not think that we will ever be able to substantially increase the price paid to peasants, to small producers, and at the same time also give additional income to the governments of producer countries, with reasonable taxation of the sector, if we do not There is no room for precisely an increase in the producer price and taxes and all the other costs.

I think it is important to include the true cost in the cost of cocoa, what we call in English the

true cost

true price

This means integrating all the costs of externalities: the cost of deforestation, the cost of the economic infrastructure that must be developed in production regions, etc. And so if we take all these costs into account, we arrive at a price. much higher, of the order of what it was forty years ago.

It is only if we manage to resolve this price problem that we can at the same time, I think, find a solution to the issues of deforestation and child labor, for example.

In other words, the root cause of the cocoa problems is first of all poverty, it is first of all

rural poverty

And in cocoa growing areas, this poverty is due to the fact that cocoa is bought or sold at far too low amounts.

But by increasing prices, don't we run the risk of encouraging overproduction of cocoa

This is a very well known argument.

Those who do not want to raise prices say "be

careful if you increase the prices you will encourage production and you will start a vicious circle: better price equals more production equals surpluses equals negative impact on prices which will go down.

When I say we have to tackle price, we have to look at the two branches of the market equilibrium: both demand and supply.

We need to increase prices without increasing production.

Or in any case not to increase it more than the increase in consumption and demand.

We must do it collectively, better understand the way we produce cocoa.

It's very complicated, but we never really coordinated the marketing between all the producing countries.

We also need more proactive actions in the area of consumer promotion.

For Ivorian production, if we are today at 2 million tonnes, ten years ago we were at 1.2 to 1.3 million tonnes.

There has been a great increase in the last ten years.

I am not saying that we must produce less, but that we must stop producing more.

Within the framework of these rural development and diversification policies, the voice of the peasants must be better organized, everyone agrees on that too.

One of the problems with the world cocoa market is that production is atomized into millions of small producers and you have about ten operators, there is an asymmetry in the ability to negotiate prices.

Of course, there are regulatory bodies, but they themselves have difficulties in organizing the peasants and obtaining the voice of the peasants who are still very often unorganized.

The cooperative movement still has a lot of future but also a lot of progress to make.

►

To listen and read also: To be sustainable, cocoa should be paid three times more expensive, according to the ICCO (

Chronicle of raw materials
)

The attempt to form a cocoa OPEC led by Côte d'Ivoire and Ghana is therefore going in the right direction

This is an excellent initiative and it shows the way.

But between them it is 65% and they continue to be dependent on the international markets of London and New York, whereas if we reached a percentage of 90 to 95% of the supply;

there we would really have an impact on the market.

Most producing countries recognize that international prices are too low, they agree on the objectives and on the measures to be taken: of coordination of the marketing and promotion of consumption, but we are not yet Having managed to set up a system or a forum where all the producers speak with one voice, we are of course far from it.

What form could this marketing coordination take between producing countries

It could be consultations where everyone agrees not to exceed certain quantities, it could be pooling of storage.

There are 22 producers but there are 10 ports in the world, one could imagine strategic storage where several countries are storing.

We are at the very beginning of these discussions, I cannot come up with concrete proposals, but we will contribute to these reflections in the most pragmatic way possible.

Everyone agrees on the principles, on the analysis, on the nature of the problems.

But when you have to go to the next step, to agree on practical actions, it's obviously much more complicated.

But we have to go beyond OPEC, often taken as a comparison, because it only brings together the producing countries.

It is more positive to engage in a dialogue between producing and consuming countries.

What is developing now between Côte d'Ivoire and Ghana on the one hand and the European Union on the other hand.

This initiative could perfectly be developed by adding more producer countries, on the export side, and more consumer countries, on the import side.

►

See also: Sustainable cocoa: Côte d'Ivoire must adapt to new EU requirements

Our organization, the International Cocoa Organization, brings together 51 members, including 22 producing countries, 29 consuming countries and with that we would have 90 to 95% of the cocoa market.

It is a discussion that we are starting to have, that we will have next April during our next council, I have the agreement of the spokespersons of producer and consumer countries to put the subject on the agenda.

When we adopted our last strategic plan 2019-2024, the main objective of which is to increase the income of producers, we mentioned measures in the management of supply and the development of consumption.

We must translate words into action.

Do you have the hope that concrete measures will be implemented

We can only have hope.

In recent months things have been moving.

All these discussions around the decent development differential have forced governments and the private sector to discuss these issues.

When I took office two and a half years ago, the question of prices was absolutely taboo, the manufacturers did not want to talk about it.

They took refuge behind questions of competition law, they said: "

We do not want to discuss prices, we are going to be accused of violating the rules of competition.

But we are not talking about the prices they charge in their market.

What we are talking about is the regulated producer price.

Nobody is going to blame private companies for discussing together the prices paid to the peasant to fight against poverty.

Why is cocoa-growing Latin America doing better than West Africa

She is doing a little better, or a little less badly… But I am not sure that the Ecuadorian planter is so much in a better position than the West African planter.

What we actually see in Latin America is small farms producing superior quality cocoa, fine and aromatic cocoa, but that represents less than 10% of the global market.

I don't think that the solutions linked to the development of super qualities are really the answer to the global problems of the sector.

It's as if you were saying that we are going to solve the wine problem by developing the grands crus.

Yes, it's a solution, but not everyone can make a grand cru.

Of course, quality is an interesting avenue to develop, the European or American markets are ready to pay more for cocoas of better quality, both tastefully and ethically.

The European or American consumer is prepared to pay more for their chocolate if they are guaranteed that the cocoa is not produced on plantations that use children or in national parks.

But the increase in quantity or volumes purchased will no longer come from the United States or Europe, because these markets are saturated.

It will be marginal.

Today we consume between 5 and 8 kg of chocolate per capita in these markets, while in China or India, we are less than 500 grams: there is enormous potential for consumption.

In Latin America, cocoa production is in the genes of peasants, it has been millennia.

And the cooperative movement has existed since the 19th century.

Women have power there and their capacity to negotiate and to assert their rights and interests is remarkable.

The money collected goes to the development of the household.

Is the solution a “

decent income differential

” not only Ivorian and Ghanaian, but global

?

No, this decent income differential that was calculated for Côte d'Ivoire and Ghana is not necessarily the same everywhere.

It is only the beginning of a long road, the beginning of a process and it must be able to be applied flexibly.

If other countries followed this path, we would surely be talking about different amounts.

So no, I don't think that we can dream of a worldwide DRD. What is especially important is to show that this DRD or these different DRDs depending on the country will necessarily have to go through an overall increase in international prices.

When we talk about DRD we are talking about the prices paid to the farmers, this is important of course, but it is capped by world prices.

When you hear the industrialist or the private sector say: "

we can no longer continue to pay this differential because we arrive at a cost price that is too high compared to the market

", the solution is precisely to have a impact on the market price and not reduce the differential.

The market price cannot be decided.

The impact on the market means better adapting supply to global demand; action must also be taken in relation to global consumption.

Can we imagine that storage will be put in place when production is too high, as at the moment, because of the Covid which has caused demand to fall

It is part of the panoply of measures intended to manage the supply.

We talked about quotas.

We can also talk about storage.

But it's complicated, it's expensive warehouses, there are financial costs of maintenance and conservation.

And most importantly, if the inventory amount is known, it is very dangerous because buyers are waiting for you to be forced to sell and know how many quantities you have.

Sometimes storage would tend to have a negative price trend.

If we have stocks, we must not say so.

Should we therefore act on supply by reducing production

I am not saying that production should be reduced, but that it should stop increasing it every year.

To do this, we are pursuing a rural development policy that promotes diversity.

We are trying to implement programs that increase productivity: we produce as much cocoa but in less space, so we free up land for food crops (rice, tubers) to lower the cost of imports and increase the income of farmers. peasants.

Some measures need to be implemented.

This is the main subject of discussions between the European Union on the one hand and Ghana and Côte d'Ivoire on the other.

They could be put on the agenda of our organization. Beyond the European Union, there are Switzerland and Russia in the International Cocoa Organization.

The big absentee is the United States.

A way should be found to involve them in the discussions: they represent a significant volume of imports.

And the big chocolate companies are mostly American

► To read also: Cocoa: Ivorian cocoa traders demand the end of the "multinational monopoly"

Cocoa is paid too little to be sustainable, says ICCO

Cocoa is paid too little to be sustainable, says ICCO

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