Larger private sector role in new cocoa agreement

by Chakravarthi Raghavan

Geneva, 2 Mar 2001 - - The United Nations Cocoa Conference under the auspices of UNCTAD was due to conclude Friday with a new agreement, providing for an increased, but consultative  role for the private sector.

The new accord, ‘The International Cocoa Agreement, 2001’ will be a successor to the International Cocoa Agreement of 1993, and includes concepts relating to environment and labour.

The agreement has in fact no economic provisions for collectively influencing the market.

The agreement provides for a consultative board on the world cocoa economy, with the participation of experts from the private sector, defined as “all private entities which have main activities in the cocoa sector, including farmers, traders, processors, manufacturers and research institutes” and including public enterprises, agencies and institutions which, in some countries, fulfil the role of private entities.

While the Executive Director of the International Cocoa Organization, Mr. Edouard Kouame, and the spokesperson for the consumers, Mr. Hagen Streichart (of Germany), at a news conference, suggested that this will provide for a bigger role for producers and consumers, it is clear that this will enable the half-dozen or less big corporations in cocoa grinding and production of cocoa butter and downstream products to dominate and influence the governments and their policies.

The producers of cocoa in most countries, and more so in Africa, comprise a large number of small farmers with 5-10 hectare holdings.  As UN/UNCTAD reports on Africa have brought out; with the end of state purchasing boards, thanks to the IMF/World Bank structural adjustment and liberalization policies forced on these countries, the large numbers of these farmers have to deal with a few corporations, who as major buyers, often have monopsonic power.

Kouame admitted that this was the case in Cameroon, but suggested that the cocoa organization and the plans for a sustainable cocoa economy are aimed at preventing this happening in other countries and ensuring that the farmers get better benefits - especially by undertaking the first stage of processing, cleaning and grading the cocoa beans for sale.

The subsequent activities like cocoa grinding and conversion into cocoa butter involve costlier investments and technology. Though there are now enterprises engaged in grinding and thus accounting for greater value-added being retained in the country, these enterprises are mostly foreign-owned.

The agreement has introduced some concepts like ‘sustainable cocoa economy’, defining it as “a system in which all stake-holders maintain productivity at levels that are economically viable, ecologically sound and culturally acceptable through the efficient management of resources.”

The agreement has an article about Members giving due consideration to the “sustainable management of cocoa resources in order to provide fair economic returns to all stake-holders, bearing in mind the principles and objectives of sustainable development contained in Agenda 21...”

How this will be achieved and what programmes are envisaged were not spelt out.

There is also an article about ‘Standard of living and working conditions’ of populations engaged in the cocoa sector, consistent with their stage of development and bearing in mind internationally recognized principles on these matters. The article adds: “Furthermore, Members agree that labour standards shall not be used for protectionist trade purposes.”

It is difficult to understand the inclusion of such elements like ‘sustainable cocoa economy’ and obliquely worded references to labour standards (pushed by the EC)  in an international agreement of this type, without any real economy content, whether by way of provisions for guaranteed prices, or stabilizing the market or export earnings.

The only explanation seems to be that the EC and others can use these as precedents for trade agreements - bilateral, plurilateral and at some point, multilateral.

Kouame explained that generally the cocoa farmers now adopt shifting cultivation, and this has deleterious effects on forests and sustainability. The new agreement and the organization hopes to educate and enable farmers to shift to more sustainable methods of cultivation, and also improve yields by using better cocoa varieties and inputs like fertilizers etc.

But no clear answers were forthcoming at a press briefing (before the conference met for its final session to adopt the agreement) on how all this will be achieved and whether the corporations, now provided a greater role, would also provide funding or contribute to these activities to be undertaken through projects

The agreement has provisions for promoting consumption of chocolate and cocoa-based products, and the negative effects on the cocoa economy by the use of substitutes.

But it was not clear, from the answers provided at the press briefing by Kouame or Streichart, how the actions of the European Union, in allowing the sale of chocolates and other cocoa-products having a large percentage of vegetable fats along with cocoa-butter, would be countered.-SUNS4848

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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