The Price Of Chocolate
Published at August 31, 2023
The Question: What would happen if we paid cocoa plantation workers in the Ivory Coast the British minimum wage?
The background to this post is that yesterday I was making brownies, and happened to be using a brand called “Tony’s Chocaloney”. This brand says it is trying to end slavery in chocolate production. At that moment, a strange confluence of thoughts hit me, meeting between Joel Haver’s new video, Jori Lewis’ new book (Slaves for Peanuts) and Silvia Federici’s book (Re-enchanting the world). Those thoughts mingled for a bit and the above question occurred to me.
Rather than calculating everything myself to begin with, I asked chat GPT to determine a few of the assumptions for this question, so here goes…
Caveat: as with all back-of-the-envelope calculations, a little bit of error and things not exactly lining up with reality is fine.
The average plantation worker in the Ivory Coast (West Africa’s largest exporter of cocoa) earns £1.50 per day.
If we paid them British minimum wage, they might earn about £70 for an 8-hour day.
In comes Chat GPT: if a chocolate bar costs £1 to make and the additional price of labour is around £1.46 per bar based on the new wage, then assuming a 40% and a 30% manufacturer and retailer profit margin, respectively, the price of our chocolate bar would increase by £1.46 / (1 - 0.40 - 0.30) ≈ £3.77. This mean’s a £2 bar would now cost £5.77. This assumes all additional labour costs are passed directly on to the consumer.
Let’s check in with that increase in labour cost assumption.
If a plantation and factory picks enough cocoa for 1000 chocolate bars per day, and charges £1 per bar’s worth, they make a revenue of £1000. Currently, they have 10 workers, who each earn a generous £1.50 per day. So their profit is £985. We’ve assumed there’s no other costs for rent, machinery, taxes etc… but these could just be added to the price of the bar anyway so are irrelevant in this example.
So what if each of the workers earns £70 per day now? Suddenly company’s labour costs have sky-rocketed to £700, meaning that they need to make ~£1700 revenue for their profit margin to stay the same! That amounts to charging £1700/1000 = £1.70 per bar’s worth of chocolate. Or, a 70p increase in labour costs per bar. Chat GPT had this figure at £1.40 ish, so it made that assumption that there are 20 workers for each 1000 chocolate bars, or each worker picks and processes enough cocoa for 50 chocolate bars per day in our imaginary company. This seems fairly reasonable to me, especially if they have access to machinery.
So all in all, it starts to look like the workers of a plantation could earn £70/day, which is over 45 times what they earn now. And all we would have to do as consumers is pay £6 for our bar of chocolate, as opposed to £2. I would happily do that…
But one of my astute friends pointed out that not everyone else would, and suddenly demand would plummet for some chocolates! Some producers would have to close as demand and sales shrink (perhaps our 1000 bars/day becomes 200/day) and less chocolate is sold.
It’s a 3x increase in price, so lets assume a 3x decrease in demand (I doubt this would actually be the case). We now only need 300 bars/day, so rather than hiring 20 workers, the plantation only hires 6. Fourteen people just lost their jobs!
But here comes my point… Collectively, before the wage increase, those workers were earning 20 * £1.5 = £30 per day between them…
Afterwards, those 6 workers who remain collectively earn £360 per day, a 12x increase. And with that money, their children, wives and relatives don’t have to join them on the plantation. They are freed up to continue getting an education, or doing something else productive, rather than being stuck as a wage-slave on the plantation. Indeed, collectively, those 6 could support their friends who lost their jobs with donations amounting to 14 * £1.5 = £21 / day and still have ~£67 of their £70 left over.
Let’s say the plantations only hire the one worker now! The bar minimum, because demand is so horribly low after the price of chocolate goes to £6 per bar. That one worker, on British minimum wage, is still earning over double what all 20 workers were previously earning all-together! They could pay everyone (including themself) double what they were earning beforehand per day and still have £10 left over- a week’s wages!
To me this shows just how utterly corrupt the current system is. Who cares if demand drops and profits decrease? I’m happy to pay £6 for my chocolate. That’s what it’s worth. I do really wonder if I’m missing anything? How can blatant, unjustifiable greed stand in the way of simple fairness so easily? Why is the work of a person in Africa worth any less than someone labouring here? People say the cost of living our there is less, but that doesn’t change the value of the work put in. It’s fundamentally the same, and local people there would yes, get ‘rich’ because their food and housing costs are less, but that doesn’t change what they should earn per hour spent working. If somebody is rich in the UK, we don’t pay them less to even things out, so why do we apply that logic to what we pay people in less wealthy economies for their work? It’s injustice, plain and simple. Would you pay £6 for your chocolate bar? If not, you’re a part of the problem.