Dancing with the Devil. Nestle, Chocolate and Child Labour

The world’s largest food company, Nestle, does not have a good reputation with advocates for justice. For years the company has been accused of aggressively marketing infant formula to women in the developing world, leading them to preference formula over breast milk, at great risk to baby health. For example,  a 2013 report by Save the Children estimates that breastfeeding in the first hour after birth could save 830,000 infant lives each year. In view of this many people have joined a global boycott of Nestle products.

Until recently Nestle also  left justice advocates less than impressed with the ways it acquired cocoa for its chocolate products. Like the other major chocolate companies, Nestle sources a lot of its cocoa from West Africa. The cocoa is grown in Ghana and Ivory Coast on small family farms. In the Ivory Coast there are over 800,000 households farming and selling cocoa. Most are desperately poor, employ their children in often dangerous farm-work, and a small number hold slaves.

When this was exposed in 2001 a bill was passed by the US Congress proposing development of a “child labor free” label that would be applied to chocolate products. Before it was ratified by the US Senate, intense lobbying by the chocolate industry saw it withdrawn in favour of a voluntary code. As outlined by the Harkin-Engel Protocol, the voluntary code would see the Governments of Ghana and Ivory Coast, the chocolate industry and civil society groups working together on the issue, with July 2005 the deadline for a system to certify chocolate was free of worst forms of child labour. The deadline passed without any system in place and was extended to 2008, missed, and extended again to 2010, when it was again missed.

As these deadlines were missed consumer activists around the world demanded action. In particular, we asked the major chocolate companies to have their cocoa certified as child and forced labour free via one of the existing certification bodies such as Fairtrade, Rainforest Alliance, or UTZ Certified. The response was positive. In 2010 Cadbury announced its dairy milk chocolate was certified under the Fairtrade label, soon to be followed by Mars which announced its entire global cocoa supply would be Rainforest Alliance certified by 2020.

But what of Nestle? Nestle set up its own “Nestle Cocoa Plan”. This recognised that for cocoa farms to be free of worst forms of child labour and forced labour, a number of things needed to happen, including:

1. Farmer incomes need to rise. When farmers are not earning enough to rise out of poverty, it is inevitable that they will employ their children and forced labour;
2. Communities need to be educated about the benefits of education for their children;
3. Schools need to be built and staffed.

Under the Nestle Cocoa Plan:

1. Farmers are being provided with new cocoa trees and training in improved agriculture methods. In Ivory Coast most cocoa trees are old and their yield is declining. The trees distributed under the cocoa plan are seeing these replaced, with farm yields likely to increase fourfold;
2. Farmers are forming cooperatives and selling direct to exporters. This skips two layers of middle-men and thus earns a higher return to farmers;
3. Schools are being built in communities participating in the Cocoa plan and community awareness programs run;
4. UTZ Certified is being contracted to certify that the cocoa produced by farmers in the cocoa plan is free of worst forms of child labour and forced labour.

Last week Nestle announced that all its Australian made confectionery is now UTZ certified.

These are great outcomes, and for the Australian context place Nestle at the front of the pack. But they are just the first step. The Nestle Cocoa Plan, at June 2012, covers just 20% of Nestle’s cocoa supply in the Ivory Coast. The remaining 80% is sourced through regular channels, with their high levels of abusive child labour.  The company has made no public commitments to when it will get this figure to 100%. It’s preferred approach is to make public announcements only when it has achieved a goal.

Moreover, Nestle continues to rely on pure market forces to improve farmer income. The argument is that by helping farmers increase the quantity and quality of cocoa they produce, they will get greater returns. This will be true if demand increases in line with productivity gains, which Nestle predicts will happen as the Chinese and Indian markets grow. If demand doesn’t increase sufficiently, cocoa farmers will see a declining price.

But will pure market forces ever be enough? Cocoa farmers are making a 25 year investment when they plant cocoa trees, and over that 25 years prices will fluctuate wildly. The chart below shows the price fluctuations of the last 30 years as a guide.

At few, if any points, has the market price been sufficient to lift cocoa farmers out of poverty, and at many points has been so low they are plunged into extreme poverty. It seems to me that companies like Nestle need to pay above market prices. They should determine what farmers need to enjoy a living wage (ie enough to meet their living costs) and never pay below it. This would function as a floor rather than a fixed price.

I know this will be greeted by howls of protest from my free market friends, but I would point out that this is a market with many imperfections and that we interfere with our own market all the time – minimum wages, workplace health and safety laws, immigration restrictions, tax breaks, and more – and still manage to run a viable economy. Markets should work for people, not the other way around.

So back to the issue which opened this post. Though there is still a long way to go, Nestle is doing some very good things on cocoa, and in the Australian market are the standout for consumers of chocolate. But they are still reported to aggressively promote infant formula to poor families. So am I letting them off the hook by praising them for what they’re doing on cocoa? Do I join the boycott until they are doing justice across their entire range of products, or do I buy their chocolate and simultaneously urge them to do better on baby milk?

I am not convinced boycotts achieve much. I suspect it’s better to engage with Nestle as a concerned consumer of their products, to praise them when they do well and critique them when they do injustice. It does mean buying from a company that I am told engages in some practices I deplore. Does that make me complicit in those practices? It probably does, but I also know that were I to stop buying from every company with behaviours I consider deplorable I would have to stop buying altogether. Nestle is hardly alone. It seems to me that almost all consuming is ethically tainted, but by raising my voice from inside the system I can hopefully play my part in removing some of the stains.