Chocolate

U.S. Cocoa Imports: Secretive mega-traders get the lion’s share. 

Mighty Earth and Stand.Earth partnered together to undertake preliminary cocoa supply chain research to improve our understanding of how cocoa enters the U.S.—the biggest chocolate market in the world. Though the results confirm a lot we know already, some new revelations are stunning. Our findings uncovered a damning story of the action of a few dominant traders, the secrecy in cocoa/chocolate imports, an international web of opaque cocoa-laundering, and a cover-up of corporate value captured from poor producer countries.

These results are from the analysis of vessel tracking and American vessel manifest data from January to October 2020, using various algorithms to clarify the data. We focused on American imports of cocoa from four major cocoa-producing countries: Ghana, Cote d’Ivoire, Ecuador, and Peru.

Patterns of exploiting cocoa farmers continue: Our research exposes the extent to which cocoa-producing countries are losing substantial revenue by not exporting directly to consumers, and by exporting raw materials rather than processed cocoa products. This is due to post-colonial models of exploitation of the Global South by predatory Western corporations, unfair trade deals dictated by former colonial powers, and a failure of governance, commitment, and development by cocoa-producing governments. Large volumes of Ivorian and Ghanaian cocoa beans are sold to the U.S. via Belgium and Spain, meaning that revenue and profits that could go to farmers are diverted to foreign traders instead.

This also extends to grinding capacity ownership. Cote d’Ivoire's grinding capacity is considerably large—16 percent in 2019—but much of its installed grinding capacity is owned by foreign companies. Although grinding cocoa beans brings more value to the country, capital flight drains most of this revenue from the country. Ghana mostly sells cocoa beans, but comparatively, gains more from the trade due to its less liberalized market where the regulators action reduces the negative market shocks.

The EU exports cocoa into the U.S.: 43 percent of cocoa beans from Ghana and Cote d’Ivoire pass through Europe—specifically Spain and Belgium—often re-exported without any value addition. This tells us that whatever the EU decides on cocoa sustainability will have a massive impact on American cocoa trade policy, and vice versa.

Other cocoa laundering countries - Panama and Columbia: Large amounts of Peruvian and Ecuadorian cocoa funnel through Panama and Colombia into the U.S. Yet Panama has never made any sustainable cocoa commitments, has no traceability or transparency goals for cocoa, and is not yet appropriately scrutinized as a major cocoa player. The sustainability of Panama's cocoa industry must be re-examined, and a “Cocoa & Forests Initiative” (CFI) for Panama would be a good start. Colombia has already taken steps with its own “Cocoa, Forests and Peace Initiative” to reform its sector. Our research points to one clear conclusion: this initiative should now cover all cocoa that passes through, not just what Colombians grow.

The irony of traceability: Traceability sheds light on where cocoa comes from to address problems at the farm level, but it also needs to show where cocoa products go. Besides the murkiness of traceability or re-exported cocoa from Europe, there are widespread omissions and normalized errors in American import data. What should be seen in vessel manifest data is often missing or difficult to trace, because shipper and consignee information is removed. Our research shows such a pattern and practice of obfuscation that we must now ask, "What are the importers hiding?" In 2020, 40 million kilos of untraceable chocolate products entered the U.S. The U.S. government must revise its systems to ensure that cocoa becomes traceable to the companies involved in the actual transaction, not just forwarding companies. This means that American data on imports and exports must dramatically improve, and chocolate companies should be obligated by the U.S. authorities to disclose their entire global supply chains at both ends, not just their suppliers.

The EU is far behind on importer-side traceability: While U.S. customs manifest data needs to greatly improve, the EU has a long way to go. Currently, the data ends at the EU ports. The EU’s opaque systems of customs manifest data facilitate concealment of crimes, thus there is no way to trace cocoa from producer countries to processors or manufacturers. This lack of transparency is unacceptable for a major cocoa consumer block like Europe. The EU must urgently reform its customs data to bring it in line with best practices on commodity transparency. France has recently set a new model with reforms for transparency around customs data, which the rest of the EU ought to emulate.

The trader's trick to hide: While beans get sold in vast bulk shipments through integrated supply chains like Olam and Cargill, finished chocolate goes from a wide variety of manufacturers to what seems at first glance to be a wide variety of consignees. A closer look reveals, however, that these are often different iterations of the company name. For instance, we found 35 versions of the name of the world’s largest cocoa trader called ‘Barry Callebaut’ — breaking up the volume across a variety of businesses so that the full size of its monopolies or value of its trade is hidden. After delving into all the versions of names, our research clearly shows how the biggest cocoa traders—Barry Callebaut, Olam, ECOM, Sucden, and Cargill—are running the show. We were even able to pierce through the fog to show how ECOM is the biggest trader of cocoa beans into the U.S., though it masquerades amongst other things behind the name Atlantic Specialty Coffee. If Barry Callebaut, Cargill, Olam, Sucden, ECOM, and other cocoa trading companies are serious about traceability, they should solve this data challenge of nomenclature immediately, with or without American regulatory action. America's largest grinder, Blommer, is conspicuously absent from the consignee space and delivers little or no data on its website to guarantee traceability. If they have nothing to hide, they should publish their names properly on all their transactions–no more games.

 Where do we go: Our research underscores how the Biden administration must act decisively to advance cocoa sustainability and bring together chaotic, siloed, and disparate engagement various government agencies. The U.S. should also seriously consider establishing an "ISCO." The multi-stakeholder platform could bring together the appropriate federal government agencies, NGOs, chocolate manufactures, and cocoa traders together to strengthen the cocoa industry's traceability, transparency, and sustainability. Legislatively, regulation to restrict imported deforestation is long overdue for chocolate and other commodities. And beyond passing legislation, the U.S. must regularly engage with cocoa-producing countries to improve governance and strengthen the voices of farmers and local civil society in cocoa discussions.


Open Letter on Racial Injustice in the Cocoa Sector

To mark Juneteenth 2021, NGOs across the Global North and South published this open letter, calling on all of us to stamp out residual slavery within the chocolate industry and throughout our food production systems. To join us, sign on here...

 

Open letter about Racial Injustice in the Cocoa Sector Update

It's Juneteenth, but these American companies are still driving slavery

Juneteenth marks the date in 1865 where an estimated 250,000 enslaved people in Texas were freed, marking the official end of slavery in the Confederacy-- two years after the Emancipation Proclamation, and six months before the 13th Amendment to the Constitution finally banned slavery nationwide.

As much as Juneteenth is worthy of celebration, liberation is not complete. In our work, the most egregious and direct manifestation of that delayed justice is that American companies and institutions are continuing to drive slavery today at scale. The Emancipation Proclamation may have made it to Texas in 1865, but some companies are acting today as if it still doesn’t apply in their corporate suites. And on Wednesday, those companies got a free pass from the Supreme Court to continue the profit from slavery.  

There is probably no company that better symbolizes continued complicity with slavery than Cargill, America’s largest privately-held company and the world’s largest agribusiness.  Cargill isn’t a household name, but it’s bigger than even Koch industries, and sits astride much of America and the world’s food system. 

Cargill sells the chicken, beef, palm oil, corn, grain, cocoa and many other raw ingredients that’s found in much of what’s sold in supermarkets and restaurants. You may not know it, but you’re probably eating a Cargill product today. For instance, it’s actually Cargill that makes chicken McNuggets and Big Mac patties - and then just sends them to McDonald’s to be warmed up. The company has a terrible and well-documented record of driving destruction of forests, causing outsized climate pollution, and displacing Indigenous communities. 

While the company has many rotten elements, one of the worst is its role in the chocolate industry. Cargill’s agents go out into cocoa-growing regions in West Africa to purchase cocoa and finance expansion of cocoa operations, and then sell that cocoa to large chocolate companies like Nestle, Hershey’s and Mars.

The cocoa sector is notorious for its widespread use of child labor and other abuses-- so much so that in the wake of the murder of George Floyd, groups from both cocoa producing and consuming countries signed an open letter on racial injustice in the cocoa sector.  It is estimated that 1.56 million children work in the cocoa industry; many are forced to use dangerous tools and chemicals and carry enormous weights, in direct violation of international labor standards, the UN convention on child labor, and domestic laws.

While a majority of the child laborers in the cocoa industry are living and working on their parents’ farms, at least 16,000 children, and perhaps many more, are victims of forced labor-- a euphemism for slavery, working on West African cocoa farms far from home. The Washington Post recently did a series of exposés about the extent of this problem and how Cargill and other companies had continued purchases linked to forced child labor for decades after pledging to work to end it. 

Indeed, most cocoa farmers in West Africa earn less than one dollar per day as they grow the raw ingredients that go into Kit-Kats, Haagen-Dazs ice cream, and Nesquik chocolate milk. Living in some of the worst poverty in the world, Cargill and others finance the use of toxic chemicals that create health risks, while overall poverty contributes to related problems such as low life expectancy rates, illiteracy, and malnutrition. Farmers face tremendous obstacles in sending their children to school. 

It’s worth saying today that all of these children are Black and the chocolate companies are run largely by comfortable American and European executives who seem unable to gird themselves to take sufficient action to end their companies’ continued connection to Black slavery more than 150 years after the Civil War.

As a result, a group of formerly enslaved children from Mali sued Cargill and Nestle for buying cocoa from the owners of the farms where they worked under brutal conditions. The plaintiffs provided evidence that Cargill and Nestle representatives had visited the farms, and that the companies had provided financial and technical assistance in exchange for exclusive access to their crops. The plaintiffs sued under the Alien Tort Act which can be used to bring legal accountability for human rights violations and other breaches of international law. 

Unfortunately, on Wednesday, the Supreme Court ruled that the plaintiffs needed to provide more information to establish their standing to sue, giving Cargill and Nestle at least temporary impunity for their complicity in conditions of slavery. However, the plaintiffs are planning to refile their suit in ways that meet the standards laid out by the Court, though any successful legal action is likely to take years more - cold comfort for the formerly enslaved children.

That doesn’t mean these companies can’t be held accountable. For those looking to go beyond symbolic action on this Juneteenth, consider ways to bring pressure to bear on these companies. Send a message to chocolate companies like Nestle, Hershey’s and Mars asking them to end their connections to slavery. Consider how companies are performing on slavery and child labor when you purchase chocolate - our buying guide is a way to do that. And contact your legislators to urge them to ban import of cocoa and other agricultural goods connected to egregious human rights and environmental abuses.  

So today, celebrate Juneteenth for the progress it brought, but continue the fight against American companies’ ongoing contributions to Black slavery.


Ivorian Ministry of Forest Pledges Progress on Joint Monitoring Program

In November 2017, the cocoa industry and the Government of Côte d'Ivoire pledged to halt deforestation caused by cocoa and "adopt a transparent satellite monitoring system whose results are independently validated and which provides an early warning of deforestation, quickly supplemented by field verification. This system [was] to be made available to the public immediately after the signing of the Common Framework for Action (CFA) so that all stakeholders can measure and monitor progress towards the overall deforestation target". Three years later, this has still not been achieved. 
 
It is in that context that Mighty Earth welcomes with great satisfaction the Ivorian Minister of Water and Forests' announcement, seconded by the President of the World Cocoa Foundation, of the rapid implementation of the long promised joint monitoring of deforestation and remedial measures. This announcement was made on February 25 during the last Cocoa and Forests Initiative (CFI) steering committee in which the two senior officials took part, along with 66 other participants. Joint monitoring is one of the CFI’s major commitments, and Mighty Earth has constantly called for its effective implementation. The launch of the Cocoa Accountability Map in 2020, recently updated in February 2021, is precisely an attempt to remedy this shortcoming.

Standing up for forests and farmers

Mighty Earth applauds the government of Cote d’Ivoire for seeking to better protect its forests and for its willingness to move towards a greener future, putting behind the bitter past of losing 85 percent of its forests since 1990. Likewise, we welcome positive elements in the new Ivorian forest code, recently adopted by the Ivorian National Assembly.

However—we are gravely concerned by the implications of mass evictions from parks and protected areas.  Incentivized by decades of the $100-billion-a-year chocolate industry turning a bind eye to forest destruction and funding illegal cocoa production in these areas, 1.5 - 2 million people thought to be living illegally in the parks and protected areas of Cote d’Ivoire and Ghana

In its declaration, the Ministre des Eaux et Forêts was clear that protected areas will be emptied of their inhabitants.

We call urgently for the recognition and respect of the human rights of these  inhabitants. These people have rights and must be protected from abuses.

Published below is our recent Joint Human Rights Watch-Mighty Earth Cote d'Ivoire Dispatch regarding the urgent need to guarantee the human rights of illegal cocoa farmers. Also below is  a 2018 open letter, co-signed by Mighty Earth, Human Rights Watch (HRW), Le Regroupement des Acteurs Ivoiriens des Droits de l'Homme(RAIDH), and Fern, regarding egregious abuses of illegal cocoa farmers inside the Ivorian national park of Marahoue.

This previously unpublished letter presents the findings of a joint investigation to the government of Cote d’Ivoire.  Following unsuccessful negotiations with the government, led by senior environmental advisor to the president, Dr. Mamadou Fofana, authorities declared that the government of Cote d’Ivoire would refuse to hold any perpetrators accountable or to compensate victims in any way. Given the risks that farmers now face, the Marahoue case has renewed relevance, and so we publish it today, along with videos and photos taken during the Marahoue field investigation.

We call on the Ivorian authorities to protect human rights and allow independent civil society monitors to observe any actions taken. In parallel, we call upon the chocolate industry to create a humanitarian aid fund to compensate farmers who are expelled from parks and protected areas. Having created the conditions leading to the illegal occupations of these areas the industry has a moral responsibility to finance solutions, and assist expelled farmers in rebuilding their lives.


Farmers Face New Round of Eviction from Protected Forests in Côte d’Ivoire

Government Should Ensure Small-Scale Farmers Receive Adequate Notice, Compensation

Jim Wormington, Researcher, Human Rights Watch
Etelle Higonnet, Campaign and Legal Director, Mighty Earth

Côte d’Ivoire, fighting widespread and rapidly advancing deforestation, is embarking on an ambitious plan to reclaim and rehabilitate its forests. As it moves to protect a key national resource, the government needs to be careful not to trample of the rights of the thousands of small-scale farmers now facing eviction.

Côte d’Ivoire has seen its forest decline from 50 percent of its territory in 1900 to less than 12 percent in 2015. Much of the deforestation has been driven by Côte d’Ivoire’s cocoa industry – the world’s biggest – with the government estimating between 30 and 40 percent of cocoa comes from protected forests. Most cocoa is produced by small-scale farmers who receive only a fraction of the profits from crop sales.

In June 2018, Côte d’Ivoire published a new forestry policy that would convert most of its decimated protected forests to Agro-Forests, with multinational companies – mostly from the lucrative global chocolate industry – responsible for developing sustainable agroforestry cocoa farming methods. For the remaining forests, the Ministry for Water and Forests proposes to strictly enforce long-neglected laws banning farming and occupying protected forests and national parks.

The implementation of the new forestry policy will likely result in the evictions of thousands of small-scale cocoa farmers, with an estimated 1.5 to 2 million cocoa farmers living in protected forests and national parks in Côte d’Ivoire and neighboring Ghana. The Ivorian protected forest of Scio, for example, where thousands of people live, reportedly received notice of an eviction operation planned for July.

Although the Ivorian government has the right to reclaim forests intended for conservation, international law protects anyone who occupies land from forced evictions that do not respect the dignity and rights of those affected, regardless of where they are living.

Past eviction operations in Côte d’Ivoire have left farmers’ families without adequate shelter, food, and education, and we have documented extortion, corruption, and physical abuses committed by government agents conducting evictions. In an October 2017 letter on the creation of Agro-Forests, we also warned that large agricultural companies often fail to protect the rights of small-scale farmers, especially when national regulations are unclear or not enforced.

The Ivorian government is right to want to protect and rehabilitate forests. But it should ensure that evictions are only used as a last resort and farmers receive adequate notice, compensation for property and crops, and assistance finding new land or obtaining new livelihoods. Measures to protect the environment, such as the protection of protected forests, should be implemented while respecting the rights of those who live in the area.

This piece is crossposted from Human Rights Watch


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More photos and videos.

Read Marahoue letter in French here.

Read Marahoue letter in English here.


Return to Côte d'Ivoire and Ghana - Second Field Investigation and Satellite

 From the field: Ongoing Deforestation in Cote D’Ivoire

Mighty Earth returned to Côte d’Ivoire to see what’s happened on the ground, since the chocolate industry and government promises made at the November 2017 COP in Bonn — to go deforestation-free


One year ago, the world’s largest chocolate and cocoa companies stood beside representatives of Côte d’Ivoire and Ghana, the two major cocoa-producing countries, and committed to transform their industry. They said they would end deforestation linked to the production of cocoa and protect human rights better. Mighty Earth monitored these promises all year. We conducted analysis of remote sensing data of forests in the cocoa-growing regions of Côte d’Ivoire and Ghana. In October 2018, Mighty Earth sent a field team to check things out on the ground in Côte d’Ivoire. Did the reality live up to the promises?


This is what we found.

In the Goin Debé classified forest, deforestation for cocoa was continuing, and the local cocoa farmers reported that families were exchanging land to make room for more cocoa. One forest had been cleared and planted with cocoa just two days before our team arrived – in the protected area we had investigated less than a year prior.

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In the Cavally Forest Reserve, the team headed into a dense intact forest, their path cleared by the machete swings of SODEFOR rangers. After 30 minutes, the forest cover began to thin and cocoa trees appeared. Some were one year old or less, indicating that they had likely been planted after the Frameworks of the Cocoa and Forest Initiative were announced in November 2017 at the Bonn COP.


 

 

Some protected areas are on the verge of extinction in the next 10 years, if the deforestation rates of the last year continue. These forests are mostly in the Southwest of the Côte d’Ivoire, in the cocoa producing heartland. Goin Debé is projected to vanish in around fifty years, if we continue with business as usual. Moyen Cavally the same.


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Full-sun cocoa prevents the growth of other species, and creates a biodiversity wasteland – a food desert for birds, bats, bees, and other living things. In contrast, densely shaded agroforestry retains important benefits of a natural forest.


While top chocolate companies and their executives and investors make sizable profits in this industry worth $100 billion a year, they pay very low wages and rely on extensive child labor. Our team found child labour in the field.


Some Ivorian forests we studied saw improvements, with deforestation rates going down. The top performers included the forest authorities protecting Tai, Nzo, Semien, Fransobi, Port Gauthier, Rapides Grah, Dassioko Sud and Nord, with Haute Dono and Bolo Ouest seeing the strongest positive changes of any area.

Unfortunately, other Ivorian forests saw things actually get worse, not better. Despite the promises made by industry and government, as this photo essay demonstrates in Goin Debe and Cavaly, the deforestation rates rose. Other poor-performing protected areas were Mont Kourabahi and Niouniourou Bloc Deux. But Cavaly Mont Sante (similar name but different protected area) stood out far and away as the worst of all. Tragically, even the national park designation was not enough to save Mont Peko, where deforestation rates rose as well.


Farmers hack down the smaller trees with machetes, but the oldest are too large to chop. They are burned instead; like this ancient giant we walked past, whose base has been charred by an illegal fire.


The Ivorian and Ghanaian governments have clearly failed to clamp down on this ongoing deforestation, and companies, despite their public commitments, have continued to buy cocoa from suppliers connected to deforestation. While companies and local authorities have taken some actions to limit deforestation, and some areas saw improvements, we nonetheless documented that farmers who engaged in deforestation for cocoa were still able to openly sell their cocoa without repercussions.


Deforestation in Ghana from 2001-2017. Red dots represent forest loss.

Deforestation in Ghana from November 2017-2018.

To assess the impact of the Cocoa and Forests Initiative, we conducted analysis of remote sensing data across national parks and other protected areas in the cocoa-growing region in Ghana too.

This shows new tree cover loss in Ghana’s cocoa region in 2018. Ghana made tremendous progress this past year in mobilizing to end deforestation for cocoa, but they have a long way to go. Most of their forests are already gone. And satellite mapping shows that deforestation for cocoa is still continuing.


 

A year ago, we were all filled with hope when Prince Charles, Initiatief Duurzame Handel, and the World Cocoa Foundation helped industry and governments pledge to do better. Clearly key actors are failing and have not kept their promises. However, there is still room for optimism. Some authorities and companies have already gotten on the right track, proving that solutions are within are grasp. We can all do better. It’s not too late.


The future is in all of our hands.

Take action now.