News & Media

Chocolate giants reap huge profits as promises to improve farmers’ incomes “ring hollow”

May 11, 2023

Ghanaian cocoa farmers’ paltry incomes fell on average by 16 percent since the start of the pandemic —while the confectionary profits of the four biggest public chocolate corporations on average jumped by the exact same rate.
Chocolate corporations’ sustainability programs are failing to deliver on promises to raise farmers’ incomes.
Oxfam is urging chocolate giants to significantly raise farm-gate prices paid to cocoa farmers.

‘Big Chocolate’ is booking huge profits while failing to pay prices that support a living income for cocoa farmers in Ghana, reveals new analysis by Oxfam today ahead of World Fair Trade Day (13 May).

The world’s four largest public chocolate corporations, Hershey, Lindt, Mondelēz, and Nestlé, have together made nearly US$15 billion in profits from their confectionary divisions alone since the onset of the pandemic, up by an average 16 percent since 2020. They paid out on average more than their total net profits (113 percent) to shareholders between 2020 and 2022.

The combined fortunes of the Mars and Ferrero families, who own the two biggest private chocolate corporations, have risen by US$39 billion since 2020. They now have a combined net worth of around US$157 billion.

An Oxfam survey of more than 400 cocoa farmers supplying chocolate corporations across Ghana found that their net incomes have fallen on average by 16 percent since 2020, with women’s incomes falling by nearly 22 percent. Nine out of ten farmers said they are worse off since the pandemic.

Up to 90 percent of Ghanaian cocoa farmers do not earn a living income, meaning they cannot afford enough food or other basics such as clothing, housing, and medical care. Many of the 800,000 farmers in the country survive on just US$2 a day.

“There’s big money in chocolate —but definitely not for farmers,” said Oxfam International interim Executive Director Amitabh Behar. “Cocoa farmers work extremely hard, under grueling conditions, yet can’t always feed their families.”

Oxfam analyzed the sustainability programs of ten of the top chocolate manufacturers and traders operating in Ghana, all of which prioritize helping farmers produce more cocoa. However, Oxfam found that none of these programs achieved their stated goal of increasing cocoa production and, consequently, boosting farmer income. In fact, the crop yields of farmers in the corporations’ supply chains declined by 25 percent between 2020 and 2022.

Similarly, Oxfam found that none of the premiums —an extra sum paid directly to farmers on top of the selling price— paid by the corporations meaningfully increased farmers’ incomes.

Cocoa farmers surveyed by Oxfam said they are being paid a premium of US$35 to US$40 per ton of cocoa. The average cocoa farmer in Ghana produces about one ton of cocoa annually. They need to earn US$2,600 more per year to get a living income.

After decades of pledges to rid their supply chains of child labor, poverty and deforestation, chocolate corporations’ failure to pay prices that ensure a living income —let alone protect farmers’ incomes from free-falling— is another setback to global efforts to make chocolate more sustainable and ethical. More and more cocoa farmers are selling their land to illegal miners or turning to polluting ‘galamsey’ (artisanal mining) to supplement or replace their incomes.

“Chocolate giants need to put their money where their mouth is,” said Behar. “They must rid themselves of their colonial legacy of extracting raw materials and keeping farmers in poverty while making astronomical profits for their rich shareholders. Without fair pricing and living incomes there will never be such a thing as ‘sustainable’ or ‘exploitation-free’ chocolate.”

Ghana produces around 15 percent of the world’s cocoa beans but receives only about 1.5 percent (US$2 billion) of the chocolate industry’s estimated annual worth of US$130 billion. Around 60 percent of the world’s cocoa heads to Europe.

“Chocolate corporations need to close the living income gap for farmers. End of story,” said Behar. “They must significantly increase farm-gate prices paid to farmers and mitigate the impact of inflation on the rising costs of farming inputs and equipment. Transparency about their prices and premiums is also a bare minimum.”

Notes to editors

Download Oxfam’s report “Towards a Living Income for Cocoa Farmers in Ghana” and methodology note outlining how Oxfam calculated the statistics.

Hershey, Lindt, Mondelēz, and Nestlé have together made nearly US$15 billion in profits from their confectionary divisions alone since the onset of the pandemic, up by an average 16 percent since 2020. Of the four corporations, only one did not significantly increase its profits compared to 2020.

Figures on the fortunes of the Mars and Ferrero families comes from Forbes’ Real-Time Billionaire List.

In April 2023, the European Parliament approved a new law that will allow the sale of cocoa and other commodities in the EU only if the supplier has issued a “due diligence” statement confirming that the product does not come from deforested land or has led to forest degradation.

New Zealand clothing brands lag behind international transparency standards

May 9, 2023

A milestone report released today by Oxfam Aotearoa reveals that some popular New Zealand clothing brands are failing to provide basic information on where their clothes are made, despite this being increasingly standard in Australia and in Europe.

Part of the ‘What She Makes’ campaign, the report reveals supply chain transparency ratings for six of New Zealand’s top fashion brands based on public data available to consumers. While some brands performed extremely well, receiving a full five-star rating, popular brands Glassons and Hallenstein Bros received a disappointing two-star rating.

“Well-known fashion brands have really stepped up for this milestone,” said Shalomi Daniel, Oxfam Aotearoa’s Campaign Lead for Gender and Economic Justice.

“We’re thrilled to see New Zealand founded brands and household names Kathmandu and Macpac performing equally as well as large multinational brands H&M and Lululemon all of whom received a full five-star rating. All four brands’ transparency extends to full lists of their Tier 1 factories, where they are located, and data about the people who are working in them.

“It is disappointing that Glassons and Hallenstein Bros have chosen not to share the most updated transparency information with their customers. Through not meeting all our basic criteria, unfortunately they received only a two-star rating. We hope to see them improve this as soon as possible.

“More and more, customers are expecting their favourite brands to be upfront about where their clothes are made. Transparency is the foundation of an ethical supply chain – it allows workers, unions, and groups of people like us to scrutinise the working conditions of these factories and ensure that women who make our clothes are treated and paid fairly.

“If a brand doesn’t share this data, that doesn’t mean the working conditions in their factories are bad – but it does make it that much harder for anyone to find out.

“In some cases, brands themselves don’t even know where their garments are being made. After the Rana Plaza disaster in 2013, some top international fashion brands only learned their workers had been killed when their logos were found in the rubble.

“We’re calling for improved transparency across the fashion industry. It’s clear the basic standards have shifted – and they’ll only continue to. While we focused on Tier 1 suppliers in this report – the factories that directly supply the brands – some of the brands we looked at are already looking into reporting on their Tier 2 suppliers, the ones that supply their Tier 1 factories. This is commendable, and we see this sort of transparency being the future for the industry.”

This transparency milestone is the second in the What She Makes campaign, where Oxfam Aotearoa is working alongside brands on a journey to paying the women who make their clothes in countries like Bangladesh and China a living wage.

In late 2022, the first campaign milestone asked the brands to make a public commitment to paying workers in the supply chain a living wage. The campaign’s next milestone will be next year, when brands will be asked to separate labour costs in price setting and negotiation.

“The good news is this is not the end – we will continue this journey with the brands to ensure that they pay the women who make our clothes a living wage. We welcome anyone wanting to support the campaign to help us demand better for the women who make our clothes by pledging their commitment at oxfam.org.nz/what-she-makes.”

Full list of brand ratings from the What She Makes Brand Transparency Report:

Hallenstein Bros – 2 stars
Glassons – 2 stars
Kathmandu – 5 stars
Macpac – 5 stars
H&M – 5 stars
Lululemon – 5 stars

Notes:

The What She Makes campaign calls on clothing brands sold in Aotearoa New Zealand to pay a living wage to the women who make our clothes. Through the What She Makes campaign, Oxfam Aotearoa works directly with the brands to help them achieve each milestone. The ratings help keep brands on track as they go.

About the brand tracker – The brand tracker uses a star-rating system which provides a snapshot of how well each brand is doing in each milestone. The tracker includes five milestones which companies will be evaluated against:

1. Make a commitment (released November 2022)

As a first step, we want brands to make a credible, public commitment to pay a living wage to garment workers in their supply chain. This is a powerful demonstration that the brand is embarking upon their living wage journey.

2. Be transparent (May 2023)

Brands should be transparent and disclose their full supply chain and publish the following information on their website: factory names and addresses, parent companies, number of workers and breakdown by gender, sourcing channel, and date when the list is published or updated along with a statement that it is a complete list of the brand’s tier-one suppliers.

3. Separate labour costs (May 2024)

Separation of labour costs during price negotiations helps to quickly identify if the wages being paid to garment workers correspond to a living wage or not. It also allows the clothing brands and factories to negotiate a price without affecting the wages.

4. Publish a plan (November 2024)

Brands should develop and publish a step-by-step strategy outlining how and when a brand will achieve its commitment to pay workers a living wage and meet all requirements with clear milestones and targets.

5. Pay a living wage (TBC)

Within 4-6 years of making a commitment, brands should be paying a living wage within their supply chains. This requires collaboration, consultation, and public reports on their progress throughout the process.

Top CEOs got a real-term 9% pay rise in 2022 while workers worldwide took a 3% pay cut

May 2, 2023

Workers on average worked six days “for free” last year because their wages lagged behind inflation —while real pay for top executives in India, the UK, US and South Africa jumped 9 percent (16 percent if not adjusted for inflation).
Women and girls are putting in 4.6 trillion hours of unpaid care work every year.
Shareholders saw record payouts of US$1.56 trillion in 2022, a 10 percent real-term increase compared to 2021.
Oxfam is calling for a permanent increase in taxes on the richest 1 percent.

The top-paid CEOs across four countries enjoyed a 9 percent pay hike in 2022, while workers’ wages fell 3.19 percent during the same period, reveals new analysis from Oxfam ahead of International Workers’ Day (1 May).

The figures, adjusted for inflation, are based on the latest data from the International Labor Organisation (ILO) and government statistics agencies.

One billion workers in 50 countries took an average pay cut of US$685 in 2022, a collective loss of US$746 billion in real wages, compared to if wages had kept up with inflation.

Women and girls are putting in at least 380 billion hours of unpaid care work every month. Women workers often have to work reduced paid hours or drop out of the workforce altogether because of their unpaid care workload. They also continue to face gender-based discrimination, harassment, and less pay for work of equal value as men.

“While corporate bosses are telling us we need to keep wages down, they’re giving themselves and their shareholders massive payouts. Most people are working longer for less and can’t keep up with the cost of living. Years of austerity and attacks on trade unions have widened the gap between the richest and the rest of us. On a day meant to celebrate the working class, this glaring inequality is both shocking and sadly unsurprising,” said Oxfam International’s interim Executive Director Amitabh Behar.

“The only rise workers have seen is that of unpaid care work, with women shouldering the responsibility,” Behar said. “This incredibly hard and valuable work is done for free at home and in the community.”

Brazilian workers’ real wages fell 6.9 percent (equivalent to 15 unpaid working days) last year, while in the US and the UK, the average worker took a real terms pay cut of 3.2 percent (6.7 unpaid working days) and 2.5 percent (5 unpaid working days), respectively.

Big business chiefs, however, are thriving. Oxfam’s analysis of corporate and survey data for 2022 found that:

150 of the top-paid executives in India received US$1 million on average last year, a real-term pay rise of 2 percent since 2021. A single Indian executive makes in just four hours more than an average worker earns in a year.
100 of the highest-paid CEOs in the US made US$24 million on average in 2022, a real-term pay hike of 15 percent from the previous year. The average worker in the US would have to work for 413 years to match what a top-paid CEO makes in 12 months. 50 percent of women of color in the US make less than US$15 an hour.
The UK’s 100 best-paid CEOs were paid US$5 million on average in 2022 and received a 4.4 percent real-term pay hike. They earn 140 times more than the average worker in the UK.
Top-paid chief executives in South Africa made US$800,000 on average in 2022, 43 times the pay of the average worker. Their real term pay rose 13 percent last year.

Meanwhile, shareholder dividends hit a record US$1.56 trillion in 2022, a 10 percent real-term growth compared to 2021. US corporations paid out US$574 billon to their shareholders, more than double US workers’ total real wage pay cut. Brazilian shareholders received US$34 billion, just shy of what the country’s workers lost in real wages.

Exorbitant shareholder payouts benefit the richest in society, exacerbating already high levels of inequality. The wealthiest 1 percent of South Africans own more than 95 percent of bonds and corporate shares, while the richest 0.01 percent own 62.7 percent. In the US, the richest 1 percent hold 54 percent of shares held by US households.

However, taxes on income from dividends and shares, which help to fund public services like healthcare and education, have continued to fall, down from 61 percent in 1980 to just 42 percent today.

“Workers are tired of being treated like sacrificial lambs every time a crisis hits. Neoliberal logic blames inflation on everyone except profiteering corporations. Governments should stop relying only on interest rate hikes and austerity that we know hurts ordinary people, particularly those living in poverty. Instead, they should introduce top rates of tax of at least 75 percent on super-rich corporate bosses to discourage sky-high executive pay, and windfall taxes on excessive corporate profits. They must also ensure minimum wages keep up with inflation, and that everyone has the right to unionise, strike and bargain collectively,” said Behar.

Notes for editors

Download Oxfam’s methodology note and dataset.

May Day, celebrated by workers across the globe as International Workers’ Day, falls on May 1.

Download Oxfam’s report “Survival of the Richest” for more information about taxing the super-rich to fight inequality. Oxfam recommends introducing top rates of tax (marginal rates) of at least 75 percent on all personal income for the highest earners (e.g., for those making US$5 million a year, or the top 0.1%) to discourage sky-high executive pay.

According to Oxfam America’s report “The crisis of low wages in the US”, nearly a third of all workers in the US earn under US$15 an hour.

The Janus Henderson Global Dividend Index publishes data on annual dividends by country.

According to the United Nations University, the top 1 percent of South Africans own 95 percent of bonds and corporate shares, while the richest 0.01 percent own 62.7 percent. The US Federal Reserve publishes data on corporate equities and mutual fund shares by wealth percentile group.

Oxfam’s research shows that taxes on incomes from dividends and shares have fallen from 61 percent in 1980 to 42 percent.

Oxfam reaction: Tax report by Sapere Research commissioned by tax firm OliverShaw

April 19, 2023

This report does not paint the full picture of how income is made by New Zealanders. The report’s failure to consider GST and capital gains is a massive weakness. The research also ignores the failure of the New Zealand system to tax wealth, except as rates, unlike most other high-income countries. Without these essential pieces to the puzzle, we cannot fully understand what may be fair or unfair.

Instead, we get fed the same old tired story that the wealthy are paying their fair share – a story that is just not true. The truth is that the wealthiest only pay an effective income tax rate of 12 percent, as opposed to the majority of New Zealanders who pay a rate of up to 31 percent.

We – as organisations that fight for economic justice – are confident this research will be superseded by soon to be released findings from Inland Revenue research that will, for the first time, reveal statistics about actual tax paid by high wealth individuals.

Obscene amount of aid is going back into the pockets of rich countries

April 13, 2023

Today, the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD DAC) its preliminary figures on the amount of development aid for 2022.

In response, Marc Cohen, Oxfam aid expert, said:

“In 2022, rich countries pocketed an obscene 14.4 percent of aid. They robbed the world’s poorest people of a much-needed lifeline in a time of multiple crises.

“Donors have turned their aid pledges into a farce. Not only have they undelivered more than 193 billion dollars, but they also funneled nearly 30 billion dollars into their own pockets by mislabeling what counts as aid. They continue to inflate their aid budgets by including vaccine donations, the costs of hosting refugees, and by profiting off development aid loans. It is time for a system with teeth to hold them to account and make sure aid goes to the poorest people in the poorest countries.

“There is no room for excuses. We can’t allow rich countries to argue their pockets are empty. Donor governments could raise over a trillion dollars annually through a modest wealth tax alone. The only thing lacking is the political will to put the poorest before the rich.”

Notes to editors

Dollars are in USD.

The 2022 aid figures are available on the OECD website. The data shows that overall aid spending from 30 OECD members summed 204 billion US dollars in 2022. Rich countries only committed 0.36 percent of their gross national income (GNI) to development aid – up from 0.33 percent in 2021, but far below the 0.7 percent they promised in 1970. In 2022, just 5 countries – Luxembourg, Norway, Germany, Sweden, and Denmark – lived up to this promise.

The level of development assistance for the world’s poorest countries remains far below what is needed to end poverty by 2030 and meet the Sustainable Development Goals. The share remains far below the UN’s goal of 0.15 percent of rich countries’ GNI. This year it is less than 0.1 percent. Donor spending on hosting refugees (called “in-donor refugee costs”) accounts for 14.4 percent of ODA (29.3 billion).

While total Official Development Assistance (ODA) from the Development Assistance Committee (DAC) members rose by 13.6 percent in real terms, that increase falls to just 4.6 percent if in-donor refugee costs are excluded.

More than 50 years after rich countries agreed on the 0.7 percent target, only seven have ever met or exceeded it. Oxfam estimates that this has cost low and middle-income countries $6.5 trillion in undelivered aid between 1970 and 2021.

Donor countries mislabel the following as development aid (intended to fight poverty):

In donor-refugee costs: Sweden announced the redirection of nearly one-fifth of its aid budget to fund the reception of refugees from Ukraine. The government has since backtracked (though about 430m US dollars is still being redirected to refugee reception) because of strong public pressure from civil society and the fact that it overestimated the number of refugees. This is not development aid as it is spent in Sweden.
Vaccines: Vaccine donations made up a total of 0.8 percent of aid (1.54 billion USD). Virtually all of the donations (1.52 billion US dollars of 1.54 billion, or 99 percent) were domestic vaccines hoarded by rich countries. This move to include vaccine donations in aid budgets last year was labelled by Oxfam as throwing out the aid rulebook.
Profiting off development aid loans: Since 2018, DAC members have been using a new methodology to assess the concessionality of loans for development purposes. Previously, they had to use a cash flow approach. This meant that donor countries could count the full amount of their loans as development aid, but they had to subtract loan repayments from their aid total. The new method uses a fixed interest rate to judge the grant element in the loans. The fixed interest rate is high, so donors are getting more credit for their loans than they should, which, in turn, encourages them to offer more loans.

Oxfam calculates that a progressive net wealth tax of up to 5% in OECD DAC countries alone would add just under 1.1 trillion US dollars to their budgets each year. This is just one way to increase the spending power of rich countries to tackle poverty, inequality and the climate crisis, including meeting their aid commitments.

Oxfam Aotearoa welcomes landmark UN vote to seek ICJ Advisory Opinion on Climate Change

March 31, 2023

Oxfam Aotearoa congratulates Pacific Island Students Fighting Climate Change (PISFCC) on their successful campaign to put the world’s Governments’ responses to climate change before the International Court of Justice (ICJ). Oxfam Aotearoa’s climate justice lead Nick Henry said:

“Well done to the New Zealand Government for standing with the Pacific at the UN today on Vanuatu’s resolution. This is what we want to see from our government.

“To put this into perspective, the last comparable opinion was in 1996, when, after a long campaign from civil society, the ICJ issued an advisory opinion on nuclear weapons that was critical to nuclear disarmament and keeping the Pacific nuclear free.

“The world’s governments, especially in rich countries, must urgently take stronger action to reduce greenhouse gas emissions and stop the climate crisis getting worse. A strong opinion from the ICJ would help to hold governments to account on their obligations to act.”

Spokesperson for PISFCC Solomon Yeo said: “Today we celebrate four years of arduous work in convincing our leaders and raising global awareness on the initiative. We commend the undying support of our Pacific civil society organisations, communities, and youth who, without their support, we would not have ventured this far.

“The adopted Resolution is a testament that Pacific youth can play an instrumental role in advancing global climate action. This further solidifies why young people’s voices must remain an integral part of the process. Now the first stage is over, we look to join hand in hand with governments and partners in bringing the world’s biggest problem to the world’s highest court.”

Oxfam Aotearoa and NZ Centre for Environmental Law says it looks forward to engaging with the government on its written and oral submissions to the court to make sure the Advisory Opinion sets clear expectations for states to act with urgency to stop the climate crisis.

Notes:

The UN General Assembly has voted to request an advisory opinion from the International Court of Justice on ‘the obligations of States in respect of climate change’. The resolution asks the ICJ to clarify the obligations of states to take effective action on climate change, as well as the consequences under international law for states that fail to act.
Here is the UN resolution text.