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Skeletons in the Corporate Closet: Big Chocolate


Chances are good that the cocoa in your favorite candy bar was picked by a child laborer.


A cheap sugar buzz that's available on every corner, chocolate was one of the few consumer goods that stayed in demand through the recent recession.

In the US, chocolate purchases rose 2.6% in 2009, according to reports by Mintel research group. Sales were even sweeter in the UK, rising 5.9% over 2008 figures. In China, which is not yet known as a chocolate-buying nation, sales of chocolate candy rose by a whopping 18%.

But all this indulging and unwrapping of fancy foil packages has done little to change a dark truth about the multi-billion dollar industry: It has yet to eliminate the child and slave-like labor used to harvest cocoa in the nations where most of the world's supply is grown. According to some human rights activists, "Big Chocolate" hasn't even made a noticeable dent in the problem.

The challenge is not a new one. For more than a decade, international labor groups, along with journalists from the New York Times, the BBC, and other major agencies, have been reporting on the West African practice of using young kids, many under age 10, to harvest the cocoa that -- after passing through the hands of farming co-ops, exporters, and food conglomerates -- becomes the chocolate used to make the candy in your local deli or office vending machine.

Field researchers have estimated that hundreds of thousands of children work the fields on remote farms in the Ivory Coast and parts of Ghana, two countries that supply 60% of the world's chocolate. Although it's not illegal for children to work on farms, it is a violation of human rights laws for children to work so many hours that they're unable to attend school. It's also a violation to ask kids to use dangerous tools such as machetes, which are used on cocoa farms. Many of the children who work on the farms are brought there by child traffickers; others are employed by small operations run by their families.

In 2001, a New York Times report described a typical scenario, focusing on a boy from Mali named Yacouba Diarra, who, at age 14, fell into the hands of a child smuggler and was taken to the Ivory Coast.

He was with another boy of the same age, both drawn by the promise of $135 each for a year's labor. "I did not know what kind of work I would do," Yacouba said. "I did not even know we were coming to Ivory Coast."

Yacouba was taken to a village of mud houses, miles from the nearest paved road, where he worked every day on a cocoa plantation, hacking brush with a machete and slicing ripe cocoa pods from trees. But after a year in the village, Petit Tiémé, the owner paid him only $13 -- or about 4 cents a day.

An investigative BBC documentary that aired earlier this year, illustrated that such stories are still common. In this case, BBC reporter Paul Kenyon posed as a cocoa dealer to go undercover and trace the sale of cocoa beans in Ghana. In one village, according to the BBC, "Kenyon met 12-year-old Ouare Fatao Kwakou, who was sold to traffickers by his uncle and taken from neighboring and impoverished Burkina Faso to work as a cocoa picker.

"More than a year later, he had not been paid a penny for his work -- the profits of his labor going instead to his new cocoa masters and to the uncle who sold him."

Big chocolate companies have responded to the situation by setting up several well-funded programs aimed at tracing cocoa to its source, educating families in the region, and changing cultural norms about what is acceptable work for children. In 2001, major chocolate-making companies, including Hershey (HSY), Mars, and Nestle, signed something called the Harkin-Engel Protocol, which called on governments, exporters, and major stakeholders to eradicate the worst forms of child labor in the industry. The protocol, established by US Rep. Eliot Engel, a Democrat from New York, and Sen. Tom Harkin, a Democrat from Iowa, did not see its goals met by its initial 2005 deadline, nor could it claim success by its extended deadline of 2008, according to a study by researchers at Tulane University in New Orleans.

Still, says Susan Smith, spokesperson for the National Confectioners Association in Washington, DC, each company is working toward the goals laid out by the plan, and each has its own approach to the problem. "Some folks pursue fair trade, other focus on education," says Smith. On their respective websites, Hershey, Mars, Cadbury (KFT), and Nestle each identify their own transparency initiatives.

Are the efforts enough? Minyanville put the question to Congressman Eliot Engel, who responded:

Since the signing of the Harkin-Engel Protocol in 2001, significant progress has been made in curbing child and adult forced labor in the cocoa sector in West Africa. In particular, data collection by the governments of Ghana and Cote d'Ivoire along with the cocoa and chocolate industry has given us a better sense of the problems we face in the cocoa sector.

Now that we have improved data, the time has come to redouble remediation efforts. This means doing more to curb child labor in the cocoa sector by investing heavily in education and child labor sensitization programs. I will continue to push the cocoa and chocolate industry to invest in remediation efforts, particularly through the International Cocoa Initiative, a foundation created through the Harkin-Engel Protocol to curb child labor in the cocoa sector.

Activists such as Adrienne Fitch-Frankel, fair trade program director at Global Exchange, a San Francisco-based human rights group, argues that Big Chocolate needs to go further. She tells Minyanville that the industry needs to establish floor prices for cocoa that are high enough to allow a farmer to pay for real labor and send his children to school. Fair trade practices ensure such prices, without drastically raising the end price of a chocolate product, she explains. (As it is, the price of chocolate is largely controlled by exporters such as Cargill, Archer Daniels Midland (ADM), and Barry Callebaut, which do not own plantations but buy beans from the middlemen who travel deep into the jungle to buy cocoa from small farmers.)

Fair trade systems also install enforcement mechanisms, making it possible to pressure farmers to meet international labor standards. The chocolate buyers and sellers, she says, are "not doing a fabulous job of the inspection and enforcement side of things."

But in the past year, some key announcements from major chocolate makers have heartened human rights watchers.

Last March, Cadbury announced that it would produce all of its Dairy Milk bars with fair trade chocolate. "That's an iconic chocolate bar, and it means that you can walk into any store and buy a fair trade bar. You don't have to go to a health food store," says Fitch-Frankel. The bar was so well-received in England that Cadbury expanded its production to Australia, Canada, and New Zealand. (Hershey makes Cadbury's bars in the US.)

On the heels of that announcement, Nestle announced that it would go fair trade with its four-finger Kit Kat bar, but only in the UK.

And then Green and Black's spoke up: The Cadbury subsidiary announced it would turn 100% of its offerings into fair trade products -- globally.

That leaves open the possibility that one major chocolate maker in the US will take advantage of "the sheer marketing potential" of having the first fair trade chocolate bar in American supermarket aisles, says Fitch-Frankel. "It would be a windfall."

"Shareholders should be angry because not making this bar is reducing the company's potential profitability," she suggests, "especially in light of the fact that it's cheap to go fair trade."

Now the question is, which major brand will be first to bite?

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