- Nestle said it is investing more than $1.4 billion over the next decade in a new program, aimed at helping cocoa farming families close the gap to a living income.
- As part of this plan, farmers and their spouses will receive cash incentives for activities that help women and children, increase crop productivity, ensure sustainable agricultural practices and secure additional sources of income.
- Individually, these payments incentivize practices that have been effective in reducing the risk of child labor, according to Nestle CEO Mark Schneider.
- Past efforts have often rewarded volume, and had other unintended consequences.
The cocoa industry faces urgent challenges. Its long-term sustainability is threatened by numerous factors, including, intolerably, the risk of child labor on cocoa farms. This problem won't be solved unless we address the underlying factors that contribute to it. As we know from our work in this area, there is no quick fix, but we are optimistic about a new approach.
To start, we acknowledge that this challenge has proven far more complex and deeply rooted than any of us initially realized. Private sector, local governments and nongovernmental organizations in West Africa have worked to address child labor risks by monitoring farms, educating communities and building schools to offer alternatives to families. These efforts have been successful in providing much-needed relief to thousands of children and families, but a close assessment reveals they have fallen short of bringing about the extent of systemic change that was intended. The persistence of child labor risk in the global cocoa supply chain, and the growing consumer demand for sustainably sourced products, require a new approach that addresses the root causes that have proven most entrenched, including rural poverty.
Some efforts and much debate have focused on increasing the price of cocoa. Unfortunately, this hasn't generated broad-based benefits for the majority of cocoa farmers. Higher prices tend to benefit larger farms proportionately more than smaller ones. And such a system rewards volume, which could incentivize clearing forest to plant more cocoa.
In contrast, a true solution should benefit producers of all sizes while offering social and financial services that build durable economic stability over time. And it would encourage, and share the costs of, regenerative agricultural practices that benefit the environment, local communities and generations to come.
To that end, Nestle is investing 1.3 billion swiss francs (US$1.4 billion) over the next decade in a new program that aims to help close the gap to a living income for thousands of cocoa farming families. As part of this plan, farmers and their spouses will receive cash incentives for activities that help women and children, increase crop productivity, ensure sustainable agricultural practices and secure additional sources of income.
For example, under the new initiative, farmers and their families would receive payments if all children aged 6-16 are enrolled in school. If they perform certain agricultural activities to increase yields, like pruning, they receive additional compensation. The same goes for good agroforestry practices, such as planting shade trees, which increases output without converting new forestland. Diversifying their household income by planting other crops or raising livestock is also incentivized. If farmers do all four, they receive an additional bonus payment.
Individually, these payments incentivize practices that have been effective in reducing the risk of child labor in cocoa-farming communities. Alongside the longstanding support provided by the government, the premiums Nestle pays for certified cocoa, and ongoing industry efforts, the incentives reflect a novel and cumulative approach to the problem.
We are clear-eyed about both the promise and the potential hurdles of this new undertaking. It will help address the key economic, social, and infrastructure challenges that contribute to child labor risk. But we also know we cannot offer a simple or guaranteed solution, and our best plans on paper may look different on the ground. Just as important as being bold and innovative is being adaptable and nimble. Critical to the success of this program will be honest and constructive feedback — from the governments of Cote d'Ivoire and Ghana and NGOs that serve on our advisory committee as well as from the farmers and cooperatives who participate.
We are committed to the ongoing journey and hope to encourage others to join us by sharing publicly not only our progress and approach, but also the adaptations we make to navigate around inevitable roadblocks. The destination — the chance for children to learn and grow in the safe and healthy environment they deserve — is non-negotiable.
—Mark Schneider is the chief executive officer at Nestle.