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Blood Chocolate

March 26, 2011
Cocoa Beans

Cocoa Beans

According to a report in the Financial Times, cocoa traders appear to be preparing to pay the regime of Laurent Gbagbo an estimated $300 million in taxes in exchange for the release of some $1.3 billion worth of confiscated cocoa stocks. The dispute stems from the Ivory Coast’s disputed elections last November, when both Gbagbo and his rival, opposition leader Alassane Ouattara, claimed victory. The international community recognized Ouattara as the legitimate winner of the election, but Gbagbo refused to step down and maintains control of the government and military.

In January, Ouattara called on traders to stop exporting cocoa from the Ivory Coast. The Ivory Coast is the world’s largest cocoa exporter, accounting for approximately 40 percent of global production. Taxes on cocoa exports are the single largest source of government revenue, and the international ban was intended to deny Gbagbo the revenue necessary to finance his government. International observers believe that Gbagbo needs about $150 million per month to maintain his military forces. The ban also contributed to a spike in the global price of cocoa, reaching its highest level in more than 30 years.

So far, most international cocoa traders, including Barry Callebaut, Archer Daniels Midland, Cargill, Olam, Noble, Touton, Ecom Agroindustrial and Armajaro, have abided by the export ban. But one, the Hong Kong-based Noble Group, now appears to be breaking ranks, indicating in an official statement that it would be willing to pay the taxes.

Like all luxury commodities, the ability to sell chocolate depends on a strong positive association with the experience of consumption. A chocolate bar likely does not taste as sweet if the eater knows that their purchase helped fund the murder of 30 people in a mortar attack in an Abiidjan market last week. The “blood diamonds” discourse effectively helped to shape consumer behavior and resulted in the creation of diamonds certified (however imperfectly) to be sourced from non-conflict sources. Similarly, concerns over the killing of dolphins during tuna harvesting led to changes in tuna harvesting practices. Is blood chocolate next?

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