The Adaptive Way to Change Cocoa Culture

Chocolate is often marketed as a guilt-free treat. Initial searches online on popular search engines and social media platforms such as Google and YouTube will return with various results ranging from DIY recipes to health-focused usages. Commercially, the “guilt-free” aspect of chocolate can be viewed as both physical – health benefits – and mental – ignorance of its production process. Similar to other products in the modern globalized consumerism, the consumers are often removed from the realities of the production process, which eases one’s mind from inquiring about the history behind a product – faster spending means higher turnaround for businesses. When compared to conscientious shopping[i] that was referenced in my previous blog post, this model of fast-paced consumption can create the high demand, which forces companies to compete for higher profit and even higher inventory. In the technology field, this model of fast-paced production can be observed with electronic products such as DSLR cameras, computer components, smartphones, or TVs and monitors, where handful of major technology companies release slightly modified and upgraded products semiannually. This fast-paced production and consumption cycle also creates the demand for manufacturing and labor, which companies will do their best to minimize the cost of overhead while maximizing profit.

The question of ethics in consumerism is then left to the consumers to “stumble” upon, e.g. my discovery of the history and the reality of cocoa production, and the probabilities of discovery are decreased when companies or governments don’t put a spotlight on the issue. Although they come in different forms and tastes – varieties similar to consumer electronic products – the cocoa products’ sales and marketing are different from electronics. However, due to its global popularity and worldwide consumption, the manufacturing and production demand for both is similar. According to statistical research by the Reed Electronics Research, China led the world in electronics equipment production at 38% in 2015 (Fletcher p. 2,) with many equipment focused on integrated circuit boards and semiconductor chips (see Figure 1). In the most recent report by International Cocoa Organization (ICCO, 2017) Côte d’Ivoire’s 2015 production estimate was approximately 40% (39.87%) of the world (see Figure 2.) Therefore, the model of using one low-cost production country to dominate a large percentage of the overall production is common for many global consumer goods. In the following paper, I’ll draw comparisons between the cultural and social problems of these modern day consumer products and propose adaptive measures to resolve these issues.

Figure 1: The Yearbook of World Electronics Data 2016 — Percentage of Electronics output by Region 1995-2015[ii]

Figure 2: ICCO Quarterly Bulletin of Cocoa Statistics — Production of Cocoa Beans[iii]

Using Heifetz’s proposed view on adaptive and technical problems, where adaptive solutions work best for hard, adaptive problems such as cultural issues (Heifetz l. 137[iv],) the social issues that cocoa production has faced and continued to face have been cultural – the culture at the regions of production, and the culture at the consumer side. The solutions enacted so far by different agreements such as those proposed by the International Cocoa Organization to counter the social problems at the regions of production, e.g. child laborer and indentured servitude, have been technical solutions that were effective in solving the technical issues by implementing manufacturing and labor policies. However, the technical solutions did not address the established culture at the consumer end. For most consumer products in the U.S., the phrase “Made in China” has been part of our culture in the last few decades. The inquiry into the “Made in China” supply chain only surfaces during geopolitical debates and exploitative labor scandals, e.g. certain brand of sneakers, clothing lines from certain designers, and certain brands of popular electronics. However, cocoa products and their production have received even less attention when compared to the “Made in China” debate. One of the causes of this lack of attention is perhaps the romanticizing of chocolate in our culture through media.

In Robertson’s article on the history of cocoa[v], she referenced an iconic book and film in Willy Wonka, where in mainstream society was viewed, and continued to be viewed with the recent reboot of the film, as a unique story surrounding an eccentric factory owner and not the continuous editing out of the exploitative labor force and the real problems with cocoa production (Robertson p. 1-3.) The popularization of chocolate in media, through advertisements, has been around since the early days of mainstream advertising. Robertson referenced advertising campaigns from the early 1900s such as Rowntree’s Cocoa that presented an alternate reality of whom the audience could be when using the product (Robertson p. 26-40.) The 1900s references used showed the foundation on which modern society and culture’s perception of chocolate was built on. Coincidentally, the transfer of cocoa by the global colonial powers from South America to their respective ports and colonies – Portuguese from Brazil to their ports in the Gulf of Guinea from 1820s to early 1900s, Germany in the late 19^th century to Cameroons, and the British and the Dutch to their colonies in the East Indies[vi] – provided the supply and logistics for the subsequent promotion for their demand (Coe & Coe l. 2854.) After decades of exposure to scripted media coverage – in films, printed, and televised advertisement – the image and message of chocolate has been set in our social norms. This understanding makes the ethical issues with cocoa production as much a cultural issue as it is a technical, i.e. policy, issue in the causal effect of supply-and-demand.

From an adaptive solution point-of-view, the cultural problem cannot be solved with technical solutions alone, e.g. Prohibition of the 1920-1930s or the never ending debate of gun control, which we have observed through U.S. history some of the failures of the respective policies’ enactments. Therefore, the adaptive solution for the cultural problem on the demand side is to change the public’s perception and understanding of the ethical issues with the products – cocoa – that they are purchasing. Companies such as Divine Chocolate have been trying to spread the message of fair trade and reinvestment to the local producers, which has been marginally effective when compared to large corporate brands such as Hershey.  In one of the Social Media platforms – YouTube – a side-by-side comparison of the two companies’ channels, Hershey’s and DivineChoc, the differences in the extend of their social outreach are more noticeable: Hershey’s with a relatively small following has only 13,169 subscribers with 11 million views for their most popular video, and in contrast DivineChoc has only 457 subscribers with 55 thousand views for their most popular video[vii] (see Figure 3.) Understandably, the much larger Hershey Corporation’s operating expenses for 2016 was close to $2 million ($1,915,378) USD, which was used for administrative and product marketing[viii]. However, according to Divine Chocolate’s annual report for 2015-2016, the company’s profit was up 40% in the reporting year and certain percentages of the profit were reinvested to the local producer community at a rate of $200 per tonne sold and 2% of the profit is invested in the Producer Support and Development (PS&D) fund, which is used to fund agricultural projects in Africa[ix]. The actions of Divine Chocolate, I believe, contributed to their success in recent years. The positive message of their reinvestment efforts and their fair trade-based practice resounded with consumers. Using the viral nature of modern social media, I believe the low subscriptions and view counts will change in the future as consumers change their perception of the chocolate industry by buying the more ethical product – referring back to the “Will They Pay More?” study.

Figure 3: Social Media Comparison: Hershey’s and Divine Chocolate’s YouTube Accounts

Divine Chocolate’s actions and campaigns of investing in the local producers do pay dividends to the lifestyle and supply-side culture of cocoa production. However, the company’s ability to influence or impact the local producer’s geopolitical environment is limited. The ICCO has signed various technical solutions – policies – to help the lawful enforcement of certain cocoa practices in the region. However, even the ICCO’s political reach is limited to control or impact the region’s political and economic instability brought on by political, social, and tribal conflicts. In Chocolate Nations: Living and Dying for Cocoa in West Africa, Ryan referenced numerous examples of local changes such as change of political regimes, change in social infrastructure, or lack thereof, that are key factors to majority of the ethical cocoa production issues in West Africa (Ryan p. 54-62.) Ryan argued that in order to solve the child labor issue (one of the main ethical production issues) in the region, the “well-meaning or misguided consumer campaigns” are inadequate and that the fundamental way cocoa farming is performed would need to be addressed[x].

From an adaptive problem solving perspective, Ryan was correct in her assessment that the various campaigns only target the consumer (demand) side to influence the supply side of the equation. However, I argue that Ryan’s perspective only focused on the technical aspect of such campaigns and not on the cultural impact of these campaigns. Although the reach of consumer-side campaigns is very limited, specifically geopolitical influences, the campaigns do influence the changes that they have on public awareness and consumer behavior. The consumer-side campaigns might not have an immediate impact on the socioeconomic or political problems in the cocoa producer nations – supply side; however, these campaigns often include a fundraising charity aspect that redistributes the funds back to the locals of those nations. Similar to Divine Chocolate, another example of changing the consumer-side culture to impact supply-side infrastructure is the “No Child for Sale” campaign of World Vision Canada – a Christian humanitarian organization – that promotes public awareness of the child labor problem in cocoa production as well as invest monetary and human resources to the region to directly impact and improve the living conditions and infrastructure in the region[xi]. These efforts, similar to Divine Chocolate’s reinvestment efforts, contribute to the establishment of a stable local infrastructure and the socioeconomic development – impacts that might not be realized immediately but will be critical in the regions’ long-term development.

The long-term impact of culture and social change can be realized through consumer influences such as social and political campaigns or lobbying. The migration of Foxconn manufacturing plant from Guangdong – a traditionally low-wage and low cost-of-living city – to Sichuan was partially contributed to the public’s awareness of the horrid working conditions at the Foxconn facilities in Shenzhen – an exposé that led to the individual worker’s conditions to improve and whose improvement impacted the local economy and the eventual raise in cost-of-living[xii]. Traditionally, the development model for a developing region is the shift in the economy from agricultural to service based industries such as tourism, financial services, transport, education, etc.[xiii] In the example of Shenzhen, Guangdong China, the increase in individual spending power via the raise in wages enabled the launch of various service-based businesses. For the West African countries like Côte d’Ivoire the change in the regional culture, which is greater than the issues of cocoa production, will have a larger impact to the future of the nation’s development – invest in the people and regional change will follow.

[i] Prasad, M., Kimeldorf, H., Meyer, R., & Robinson, I. (2006). Consumers With A Conscience: Will They Pay More? Contexts, 5, 24-29. Retrieved from http://www.npr.org/documents/2013/may/consumer_conscience_study_ME_20130501.pdf

[ii] Fletcher, Andrew. (2016). The Yearbook of World Electronics Data 2016 – An Overview of Global Electronics Production & Markets. Reed Electronics Research. OX:UK. Retrieved from http://www.rer.co.uk/image/data/Downloads/Yearbook%20of%20World%20Electronics%20Data%202016%20-%20Overview%20&%20Sample%20Pages.pdf

[iii] International Cocoa Organization. (2017) ICCO Quarterly Bulletin of Cocoa Statistics, Vol. XLIII, No. 1 — Cocoa Year 2016/2017. Retrieved from https://www.icco.org/about-us/international-cocoa-agreements/doc_download/2582-production-qbcs-xliii-no-1.html

[iv] Heifetz, A. Ronald. (1994). Leadership without Easy Answers. Cambridge: Massachusetts. Harvard University Press.

[v] Robertson, Emma. (2009). Chocolate, Women and Empire – a Social and Cultural History. New York: New York. Manchester University Press.

[vi] Coe, D. Sophie & Coe, D. Michael. (2013). The True History of Chocolate, Third Edition. London: UK. Thames & Hudson.

[vii] YouTube. (2017). Hershey’s – Social Media Account Information. Retrieved from https://www.youtube.com/user/hersheys/videos?sort=p&view=0&flow=grid
YouTube. (2017). DivineChoc – Social Media Account Information. Retrieved from https://www.youtube.com/user/DivineChoc/videos?sort=p&view=0&flow=grid

[viii] U.S. Securities and Exchange Commission. (2017) Hershey Co. 10-K Filing – Statement of Income for Year Ending Dec. 31, 2016. Retrieved from https://www.sec.gov/cgi-bin/viewer?action=view&cik=47111&accession_number=0000047111-17-000005&xbrl_type=v#

[ix] Hartzell, Jamie. (2016). Divine Chocolate: Annual Report 2015-2016. Retrieved from http://www.divinechocolate.com/uk/sites/default/files/Divine-Annual-Report-2015-6.pdf

[x] Ryan, Órla. (2011). Chocolate Nations: Living and Dying for Cocoa in West Africa. London: UK. Zed Books.

[xi] World Vision Canada. (2017). No Child for Sale Campaign. Retrieved from https://nochildforsale.ca/ and http://www.worldvision.ca/ourwork/Pages/default.aspx

[xii] Culpan, Tim. (2013). “Foxconn Inland China Push Spurred by Labor, BI Says.” Bloomberg. March 3, 2013. https://www.bloomberg.com/news/articles/2013-03-03/foxconn-inland-china-push-spurred-by-labor-bi-says

[xiii] Cali, M., Ellis, K., Te Velde, D.W. (2008). The Contribution of Services to Development and the Role of Trade Liberalisation and Regulation – ODI Working Paper 298. Overseas Development Institute. London: UK. Retrieved from https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3484.pdf

The Cost of Consumption

In a developed world such as ours, the enjoyment of luxury living often comes with a price – both figuratively and literally. The literal monetary price of certain common items is based on the cost of production – lower the overhead cost; more the consumer can save on spending. The figurative moral cost of these goods is based on the extreme conditions and measures taken to cut production cost. Often in developed worlds, there is ignorance – willful or genuine – between the products we buy and the production process the items had undergone. The products range from electronics such as smartphones to food stuff like chocolate. As different as these products are, they share the same production measures used in order to become marketable to consumers in the developed worlds. The main focus of the cost-cutting in production supply chain is the cut to labor cost; specifically the lowest wage one can pay one’s employees for the production of goods in order to flood the market with the products. This practice of labor cost-cutting is not new at the local level, but globally, the origin and impact of this practice can be traced back to the Atlantic Slave Trade that started in the 15^th century in the New World of the Americas. In the following assessment, I’ll talk about the past history of slave trade and globalization of trades and the modern slave trade and its impact.

Globalization and Historical Slavery

Long before “Made in China” became a hot contested topic during U.S. Presidential campaigns, the need for cheap labor to maximize corporate profit was in the minds of settlers and first-generation corporations – joint-stocks – such as the West India Company and the Dutch East India Company and the British East India Company respectively for trades in the Americas and Southeast Asia. The plantation system setup by the mass production of sugar, also known as Brown Gold, in the Caribbean sets the stage for the use of a massive slave labor force. The two main reasons for this were the decline in European indentured workers due to the tough sugar labor practices and the plantation owners’ thought that Africans were better suited for the tropical climate (Higman p. 120-125.) According to the Trans-Atlantic Slave Trade Database, there were a total of over 12.5 million slaves traded from West Africa (see Figure 1 below.) The more profitable practice of using free African slave labor instead of indentured European workers continued until the former’s abolition and upon which saw a massive inflow of indentured workers from India who continued on and saved the sugar and cocoa industry (see Figure 2 below) in the 19^th century (Higman p. 218-220.) As religious as most Europeans were in the past, certain groups had stood up and fought against the immoral and unethical practice of slavery. A curious case in history: in 1596, a captured Portuguese ship turned up in the Netherlands (Middleburg, Zeeland province) with 130 African slaves, and when the townspeople rejected the practice of slave trade, the slaves were set free. During that time, the Spanish and the Portuguese (Catholics) were enemies of the Dutch Protestant Republic of the Seven United Provinces. However, after the Dutch established sugar product in Brazil, a large workforce was needed so went the moral high ground (Emmer p. 13-14.)

Figure 1 : Voyages: The Trans-Atlantic Slave Trade Database. Broad Disembarkation Regions and Flags of the Slave Trade Ship.

 

Figure 2[i]: Vaquero: “Breaking Cocoa” on Balthazar Estate

Globalization and Modern Slavery

According to a New York Times’ reporting, in 2012, then-President of the U.S. Obama had a meeting with leaders of the IT Industry where he asked Apple’s Steve Jobs about the possibility or probability of making the popular iPhone in the U.S., to which according to an attendee Jobs answered improbable. The NYT’s report continued to state that in 2011, Apple earned more than Goldman Sachs, Exxon Mobil, or Google, at over $400,000 per employee. Such profit margin is made possible by a large, cheap Chinese labor force. For cocoa production, a similar practice can be found. According to an analysis done by the non-profit organization, Food Empowerment Project (FEP), child slavery for cocoa production in West African states is a big issue, specifically Cote d’Ivoire and Ghana. According to the FEP research, the main cause of child slavery and trafficking in the West African countries was extreme poverty. In the U.S. State Department’s 2016 Trafficking in Persons Report, the trafficking expanded to include children from Benin, Burkina Faso, Ghana, Mali, and Togo, who were found in Cote d’Ivoire (DoS p. 142-144.)  The question one might ask, then, does the $1 USD candy bar worth the pain and suffering of children in another continent? In an interesting 2006 conscientious consumption study done by a group of scholars, a choice between ethical and unethical products was given to a group of people in Detroit area of around 40,000 people. The subjects were given a choice between common cheap socks and “ethically” produced – sweatshop free – socks but with a premium added to its final price. The initial response from the subjects was not exactly in tune with their final decisions, where only some would pay the higher premium. However, the study did highlight the need for consumers’ education in identifying and knowing the origin of the product that they purchase.

Conclusion:

Comparing the moral high ground taken by the Dutch in the late 1500s and their eventual caved-in to the production demand to the conscientious consumer study of 2006, I discovered that organizations, or simply a group of people, will hold a moral high ground as long as it’s convenient to do so. However, I also noticed the impact of demand and its effect on the production practices. Growing up in Hong Kong and Macau in the 1980s, I often find myself hanging around my mum at her place of work – a clothing factory. Like most poor families at the time, I was presented with an opportunity to work off-the-books doing tasks such as trimming the loose string from the sewed labels on t-shirts, jeans, etc. Like many children living in poverty, I never thought of it as child labor at the time. Is it truly possible for a consumer society to demand corporations to be more responsible, especially when the consumers, directly (stocks) or indirectly (pensions or mutual funds), are investors in those companies? Before I end my assessment, I’d like to leave the readers with an artwork done by Benjamin Harris in 2016 titled “You Are Eating My Flesh.”

 

References Cited:

Harris, B. You Are Eating My Flesh. 20 August 2016. Walsall Old Square, U.K. http://benjaminharrismusings.blogspot.com/2016/08/you-are-eating-my-flesh-2016-chocolate.html Accessed 09 March 2017.

Duhigg, C. & Bradsher, K. “How the U.S. Lost Out on iPhone Work.” The New York Times, 21 January 2012, Business Day-The IEconomy. Retrieved from http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html

Food Empowerment Project. Child Labor and Slavery in the Chocolate Industry. 2017. Accessed 09 March 2017. Retrieved from http://www.foodispower.org/slavery-chocolate/

U.S. Department of State. Trafficking in Persons Report June 2016. U.S. Government. June 2016. Accessed 09 March 2017. Retrieved from https://www.state.gov/documents/organization/258876.pdf

Prasad, M., Kimeldorf, H., Meyer, R., & Robinson, I. (2006). Consumers With A Conscience: Will They Pay More? Contexts, 5, 24-29. Retrieved from http://www.npr.org/documents/2013/may/consumer_conscience_study_ME_20130501.pdf

Vaquero. Life and Adventure in the West Indies: A Sequel to Adventures in Search of a Living in Spanish-America. London: John Bale, Sons & Danielson, 1914.

Higman, B.W. A Concise History of the Caribbean. Cambridge University Press, 2011.

Emmer, P.C. The Dutch Slave Trade: 1500-1850. New York: Berghahn, 2006.

Estimates Database. 2009. Voyages: The Trans-Atlantic Slave Trade Database. http://www.slavevoyages.org/estimates/qwQasWCo accessed 8 March 2017.