The new grant is part of the Gates Foundation's Agricultural Development initiative, which has come under major criticism already. The Gates Foundation has invested heavily in the Alliance for a Green Revolution in Africa which essentially increases production of genetically modified crops and industrialized agriculture, which can end up being highly profitable for multinational corporations.
The new cocoa grant will be going to the World Cocoa Foundation (WCF). The WCF is funded by the biggest chocolate and food companies in the world. It is a major part of the companies' argument that they are helping cocoa farmers when questioned by advocates about the poor living and working conditions on cocoa farms throughout West Africa. There are a number of problems with the WCF and the broader chocolate industry's approach to improving the livelihoods of cocoa farmers.
The bottom line is that almost eight years after the major chocolate companies signed an agreement called the Harkin-Engel Protocol that they would stop the worst forms of child labor in their cocoa supply chains, most of these companies -- the same ones that fund the WCF -- have not instituted supply chain management programs to ensure that they are complying with international labor standards. The WCF is designed to fund local programs in West Africa that will improve the lives of poor cocoa farmers and especially children. However, journalist Christian Parenti found in his article in Fortune last year that many of the programs the cocoa companies hold up as examples of their commitment to helping children leave much to be desired. Parenti then debated WCF president Bill Guyton on Democracy Now! and that audio segement is absolutely essential listening. The Payson Center at Tulane University has been contracted by the US Department of Labor to offer oversight research on the implementation of the Harkin-Engel Protocol. Their 2008 report found that of the thousands of children interviewed in Cote d'Ivoire, only 1.7% reported that they benefited from a project funded by WCF or a wide range of other international organizations and companies. After millions of dollars and many years, it appears that the chocolate companies, through their charitable organizations, are not having a broad impact on improving the lives of children on cocoa farms.
One of the major reasons why children work on cocoa farms is because adult farmers do not receive a fair price for their beans and live in poverty. They are forced to cut costs by reducing their labor expenses, which often means using child labor. Small farmers throughout West Africa are often not equipped with up-to-date information about the price of cocoa on the world market and often even lack scales to wieght their beans themselves. As a result, they have little bargaining power with the middlemen who buy their cocoa beans to sell to multinational corporations and end up consistently being paid below the market price.
A major part of WCF-funded projects in West Africa are programs that are meant to teach farmers more sustainable farming techniques. The idea is that if cocoa farmers can increase their production yield by using different farming techniques, they will be able to sell more beans which will then improve their incomes -- and provide companies with more cheap beans. However, this concept flies in the face of supply and demand. If this trend were to continue for years, cocoa farmers would be producing more and more beans and if there isn't a significant increase in global demand, then cocoa farmers' incomes could be very negatively impacted. The WCF logic also flies in the face of recent events in the global cocoa market. Unlike most commodities, the global price for cocoa has actually been keeping steady or increasing recently. The rise in cocoa prices is linked to a recent decrease in exports of cocoa from Cote d'Ivoire (the world's largest cocoa producer). While some of the decrease in exports is due to crop pests another major reason is that early in the season, farmers were withholding their cocoa beans to protest the low pay they receive for their beans. If it turns out at the end of the year that farmers actually got higher prices and improved their overall incomes by withholding their cocoa beans, that would complete contradict the big chocolate companies' theory of how to increase farmer income. There have been many other proposals out there of other ways to improve farmers' income. First, you can look to Cote d'Ivoire's neighbor, Ghana, where the government sets a standard price for cocoa farmers which is often higher that Cote d'Ivoire and they also assist farmers with improving cocoa quality as well as helping farmers pruchase fertilizer. We have also been very interested in this paper by ROPPA which discusses how West African countries could use supply management to increase farmgate prices and asks if there should be an OPEC for cocoa. Additionally, why don't major chocolate companies just pay a fair price for their cocoa beans (or at the very least ensure that Ivorian cocoa farmers aren't getting paid below the world market price)? The big chocolate companies always seem to get squeamish when you suggest that they just offer higher prices for cocoa as a way to reduce farmer poverty and child labor, but this is a very consistent demand coming from cocoa farmers. There are also other factors like corruption in the government cocoa management in Cote d'Ivoire that have a major affect on farmer incomes.
So, while the Gates Foundation grant is supposed to help cocoa farmers "lift themselves out of hunger and poverty," if the Foundation continues to support the WCF's methods, they might not achieve their goal. Some of the press releases from the Gates Foundation and WCF correctly identify improving farmer access to market information and agricultural inputs as well as strengthening farmer organization as key areas to focus on, but we wonder if the WCF is best suited to achieve these goals. We encourage the Gates Foundation to engage directly with farmers, cooperatives and unions in West Africa to hear directly from them what they need to improve living and working conditions. Our suspicion is that they would get different answers than from the multinational chocolate companies.