It is a rainy day here in our HQ in Southern California as El Nino has come out "swinging" today. We wanted to begin the new week in #Outsiders with this very perceptive analysis from the Fortune's Geoff Colvin which we view as vital which we will work to explore further in the #Outsider Vision Property over the ensuing weeks and months:
|Sometimes – oftentimes – leaders face no good alternatives. An excellent example of how they cope is Brian O’Keefe’s extraordinary portrait of the world cocoa trade, which I urge you to read. It’s more than just a revealing look at a business you may not have known you cared about; it’s also a case study of leaders who want to do some good in the world and learn how extremely difficult that can be.|
Imagine that you’re Mars chief Grant Reid or Mondelez CEO Irene Rosenfeld or Nestlé CEO Paul Bulcke. Your company sold between $12.5 billion and $14.7 billion of chocolate candy last year, and most of the cocoa you need comes from West Africa. Some 2.1 million children there do the exhausting, dangerous, machete-wielding work of harvesting it. Some of them – no one knows how many, but thousands – are “forced labor,” meaning slaves. You obviously don’t want your company to be supporting any of this. But how do you stop it?
As Brian reports, the big chocolate makers long ago agreed, after some prodding, to eradicate the worst forms of child labor by mid-2005. They missed that deadline, which got pushed back to 2008, then 2010. They missed those too. Now the industry has pledged to reduce child labor in Ivory Coast and Ghana, the world’s largest cocoa producers, by 70% by 2020.
Why on earth can’t the leaders of the world’s biggest cocoa-buying firms influence their suppliers? Because cocoa isn’t produced by big agri-business companies with which the major buyers could negotiate. It’s produced by nearly two million cocoa-growing households in Ivory Coast and Ghana on tiny farms (average size: less than ten acres). Those farmers are desperately poor; the average cocoa farmer in Ghana made 84¢ a day in the 2013-14 growing season, and in Ivory Coast 50¢. Which means that while many children in the industry are forced labor, far more are not. As Brian explains, “Hundreds of thousands of children are used as free labor by their own families and often asked to take on dangerous tasks like harvesting with machetes or hauling 100-pound bags of beans.” If those farmers didn’t employ their children, their families would be even poorer.
Ivory Coast has laws forbidding forced labor and last year enacted a law requiring all children age 6 to 16 to go to school. But if you’re President Alassane Ouattara, a Ph.D. economist from the University of Pennsylvania and a former senior official at the IMF, how can you defy your constituents’ unforgiving financial reality?
The big cocoa buyers have realized they can reduce child labor only by changing the basic economics of cocoa farming, which they’re trying to do by helping the farmers be more productive. That’s a very long-term project. For now, those unfortunate children are surrounded by at least some leaders who want to do the right thing. But each can manage only part of the solution. Sona Ebai, former chief of the Alliance of Cocoa Producing Countries, observes that the problem will be solved only when all sectors of the society work on it together. “And there,” he tells Brian, “you really need leadership.”
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