The Real Cocoa Problem Is That Folk Are Getting Richer

It's that servant problem all over again

As you might have noticed, cocoa is getting very much more expensive. Futures prices (no, futures are not a good guide to actual market prices but still) have gone from $3,000 a tonne or so (-ish, you understand ) to $12,000 and back to $8,000 or so. According to the usual suspects this is climate change. According to those a little more informed there’s El Nino, there have been a few rusts and plant plagues to deal with. Low prices led to not much planting in recent years - all sorts of little problems that led to that burst of higher prices.

Real prices have changed, the sort of Cadbury’s bar that my wife likes a piece of with her afternoon coffee has gone up by a € a bar in recent weeks (I know, I know, “Send Munnies! Quick!”) and so something must be done.

But there’s a much larger and more significant problem here and one to which there may or may not be a solution. The servant problem.

One of those things you learn when living in foreign is that the poorer a country is the easier it is to get a servant and the cheaper a servant is when you get one. This doesn’t wholly make sense to folk until it’s explained. A poor place is one where wages are low - where wages are low is a poor place. They’re the same statement. So, wages for a servant are low in poor countries.

We can up that a little as well. Poor people spend - truly poor people that is - some 80% of their income on food and shelter. So, when you’re in one of those truly poor places you can gain access to a servant - their fulltime, undivided services - for $2 a day plus a bowl of boiled rice and being allowed to sleep in the barn. Because, if they were out there in the cash economy they’d be paid $2 a day (800 million still live at that level out there) and they’d have to buy their own bowl of rice and a tarpaulin to shelter under out of that.

Servants are cheap in poor places because human labour is cheap in poor places because a place with cheap labour is a poor place. QED.

As places become richer human labour costs more. Which is why the letters pages of The Lady started to fill up with complaints about the uppityness and demands of servants from about the 1880s onwards - about the time that British wages at that low and untrained end first started to substantially rise above mere subsistence. This is also one of our major political problems now that middle class women have the vote. They’re using the franchise to insist that government do something about that servant problem. That’s what all that insistence upon child care subsidies and freebies is about. Those middle class women going off to their terribly important power skirt jobs can no longer afford to hire some working class popsie to look after their kids - so government must be forced to do so instead. The correct answer being look after your own damn kids, obviously.

But cheap labour in poor places:

Britain is at risk of olive oil shortages as the industry is wracked by a production crisis.

Fears are growing over the risk of empty shelves as growers across Europe battle a combination of extreme weather, inflation and high interest rates.

Interest rates matter because you plant, wait some number of years, only then do you gain olives. You will then gain them for many decades even centuries, but that wait without income is more painful the higher interest rates get.

There are rusts, plant plagues, afflicting the crop across much of Europe. Of course we’ve those blaming everything on climate change but that’s just the usual bollocks.

However, low wages in poor places. I live in the middle of an oil producing area. Vast waving acres of olive trees in fact. I’ve also lived, until recently, in an historically poorer area of the same country. Where much of the land - little 2 and 4 acre farms (if they were lucky) which might raise a few goats, a sheep (cheese more than anything) and have a couple or four olive trees - has been simply abandoned. The place is getting richer, no one wants to scrape a living on 4 acres of land these days. Rightly so. 4 acres is an adventurous garden, not a living. The absence of those goats is also why the wildfires are getting so much worse - there’s more scrub to burn.

I can take you to places where there are hundreds of acres of such land. Plenty of olive trees in there too, all fruiting and none of them being picked. Because picking olives from the occasional tree is hard bloody work. Spread a net beneath it, hit the tree hard, a lot. Collect up the net with all the olives. Then sort them. By hand. Each single one needs to be checked (for worms and rot) and then nicked. Then you can take them down to the oil mill (every village has at least one) and you hand over the olives and get back the oil, minus a percentage for the mill owner.

Fun fact, since we started by talking about futures. The first known instance of a futures market squeeze is 5th or 6th century BC. Bloke named Thales thought the upcoming crop was going to be very good (others didn’t) so he booked all the space at all the olive mills. Everyone with their bounteous crop had to pay him for access before it all rotted. Possibly the last time a market squeeze worked too.

But back to poor places, low wages. That hand method of harvesting olives just doesn’t work any more. Wages doin’ summat else are too high to attract anyone. Well, other than gramps doin’ the one tree with the kiddies just to remind of cultural practices. Those widely dispersed trees just don’t cut it any more:

Mr Henschel said that farmers across Europe are also finding it difficult to persuade a younger generation to take up olive cultivation as a career, raising questions over the long term prospects of the industry as a whole.

He said: “They are doing the best that they can at the moment, but they don’t see a future for the next generation.

“The older generation who revere the trees and pass them on to them from one generation to the next, are finding their children are saying ‘you know what, I can’t be a***d, I really don’t want to do that hard work, why should I?”

No, this isn’t the end, for olive production can, in fact, be mechanised. Which it is across those vast multi-acre plantations I occasionally cycle through around here.

OK, but servants, wages and olives, what’s this got to do with cocoa? This:

Ivory Coast and Ghana provide the bulk of the world’s cocoa crop. They’re getting richer, substantially so. Cocoa is a crop usually farmed by an old bloke and his machete, the plants spread through a few acres of forest. It’s labour intensive - which means that as the countries get richer they hit that servants/peasant problem. If it’s possible to make much more than being a cocoa farmer then why would people be cocoa farmers?

The answer, obviously, is as with everything else - mechanise it. Ah, but no one’s really worked out how to grow cocoa at scale, in the sort of plantations that are suitable for that sort of large scale mechanisation. As far as technology is concerned it’s still, really, a peasant crop. A peasant crop in places rapidly getting much richer.

In the long run choccies are going to get very much more expensive unless someone does work out that mechanised farming method. For the joyous and lovely reason that people are getting too rich to want to live like peasants any more. Whatever the birds reading The Lady have to say about it. Or my wife and my wallet come to that.