In 2000, a series of media accounts reported that children were being trafficked and forciblyused in the West African cocoa sector. Shortly thereafter, the House passed H.Amdt.142 to P.L.107-76 , FY2002 Agriculture, Rural Development and Food and Drug Administration (FDA)Appropriations , which would have provided $250,000 to the Food and Drug Administration to beused to develop a label for chocolate products indicating that no child slave labor had been used inthe growing and harvesting of cocoa in a product so labeled. A Senate companion bill was neverintroduced, in part because after House passage of the bill, representatives of the cocoa industry, theInternational Labor Organization (ILO), several private labor rights groups, and Members ofCongress, negotiated "a comprehensive, six-point problem-solving" protocol aimed at ending the"use of abusive child labor in cocoa growing." (1) The protocol, known colloquially as the as the Harkin-EngelProtocol (discussed below) after Senator Tom Harkin and Representative Eliot Engel, outlines sixsteps that the industry formally agreed to undertake in order to end abusive and forced child laboron cocoa farms by July 2005. (2) To date, the first five steps of the Protocol have been completed. There are differences of opinion on whether the final step, the development of a certification system,has been completed. (3) Itis possible that if Senator Harkin and Representative Engel, after consulting with the industrysignatories and witnesses to the Protocol, find that the signatories have not met their commitmentsunder the Protocol, they may initiate renewed legislative efforts to address the problem of child laborin cocoa production. This report provides background on the production of cocoa and discusses the issue of childlabor in the industry, efforts by Congress, including the Harkin-Engel Protocol, and those of othergovernments, international organizations, and non-governmental groups to address the problem. Italso discusses potential policy options that might accomplish that end. Cocoa, used in chocolate products, is obtained from the processed beans of fruit podsproduced by the tropical evergreen cacao tree ( Theobroma cacao ), a plant of New World origins. There are three main varieties of cacao tree: Criollo , Trinitario , and Forastero ; the latterpredominates in West Africa. Each pod contains 20 to 40 large, fat-rich seeds. Cacao trees aregrown in rainy, tropical equatorial zones, within 20 degrees of the Equator, primarily in West Africa,Southeast Asia, and South and Central America. West Africa produced about 72% of the total global supply in 2003/04, a year which yieldeda rapid, nearly 10% production increase, a record harvest, according to the International CocoaOrganization (ICCO). During the last three production years, CÃ´te d'Ivoire and Ghana producedabout 43% and 16% of world output, respectively, and about 62% and 22% of total African cocoaproduction. Other key producers are Indonesia, with about 14% of global production, followed byNigeria, Cameroon, and Brazil, each producing about 5% of world output. Recent global andAfrica-specific production trends are shown in tables 1 and 2. Table 1. World Cocoa Production (1000s of metric tonnes and percentshare of worldproduction) Source: Bill Guyton, "Figure 1: World Production Forecast," Commodities -- Cocoa Review, WorldCocoa Foundation, N.D. and CRS calculations. Table 2. Cocoa Production in West Africa (1000s of tonnes and percent share of Africanproduction) Source: Bill Guyton, "Figure 1: World Production Forecast," Commodities -- Cocoa Review, WorldCocoa Foundation, N.D. and CRS calculations. In general, world cocoa production is expected to gradually increase in the medium term. TheFood and Agricultural Organization (FAO) has projected a growth rate of about 2.2% annuallyduring the present decade, compared to a growth rate of about 1.7% per year during in the 1990s, andexpects production to reach about 3.7 million tonnes by 2010. Opinions are mixed over the extentto which Africa will contribute to this expected growth. In 2003, the ICCO projected that Africawould continue to provide the bulk of cocoa production, and that Africa, along with the Americas,would produce the largest proportional increases in production in the near future. The FAO, bycontrast, projects that Africa's share of world production will drop by about a 1% in the period upto 2010. Despite expectations of generally rising cocoa production trends, a slight drop in productionis forecast for 2004/2005 due to lower harvest levels. (5) Cocoa prices experienced a moderate rise after slumps in the early 1990s and 1999-2001, buthave recently been flat or have slightly declined. Historical price trends are shown in Figure 1. Figure 1. Cocoa Prices, 1960-2004 U.S. Imports. Most U.S. imports of unprocessedcocoa beans come from CÃ´te d'Ivoire, Indonesia, and the Dominican Republic. Ghana, the secondlargest global producer is the fifth largest source of U.S. cocoa beans, but only supplied 4.20% ofsuch imports from 2000-2004. The leading sources of U.S. cocoa bean imports are shown in Table3. CÃ´te d'Ivoire exports more than 75% of its annual cocoa bean production although an increasingproportion of its cocoa is exported in the form of higher value products such as cocoa cake, cocoapaste, cocoa butter, cocoa powder and chocolate. European Union countries are the leading exportdestinations for CÃ´te d'Ivoire cocoa, accounting for about 65% of the country's total exports. AmongEU countries, the Netherlands is the largest importer. The United States gets about 20% of totalIvorian cocoa exports. Other cocoa importing countries, e.g., Canada and a number of Europeancountries, however, are the major suppliers to the United States of products processed from cocoabeans (paste, cake, powder, butter, chocolate, chocolate containing products). Cocoa beans enter theU.S. market duty free, but higher tariffs are applied to processed cocoa products. Table 3. Sources of U.S. Unground Cocoa Bean Imports byValue and Share, 2000-2004 ($ millions and country percentage share by quantity andvalue) Data Source: International Trade Commission Trade DataWeb reports of U.S. annual generalimports of cocoa by volume and value. After harvest, cocoa beans are fermented, which kills the bean and helps develop the distincttaste of cocoa; dried; and then roasted. They are then typically used to produce semi-processed cocoapaste (also known as cocoa liquor or mass), further refined products, such as cocoa butter and cocoacake (paste with most cocoa butter removed), cocoa powder, and chocolate. Prior to processing, the farm-based work of cultivating and harvesting cocoa islabor-intensive. In West Africa, cocoa farming typically begins with the thinning or partial clearingby hand of primary or mature tropical forest growth, which is used to shelter the cocoa trees. Although some varieties of cacao trees can thrive in sun if sufficient nutrients and water are present,shade also helps to reduce damage by certain types of tree pests and diseases, and helps retainadequate moisture. Such forest areas are also used because they provide a ready-made source ofshade that does not require planting of cover plants, and because forest areas are rich in nutrientsresulting from the decomposition of organic forest detritus. The tropical soils in many areas of WestAfrica where cocoa is grown are thin and easily leached of their nutrients. Mature forest is alsocleared because a widespread local traditional agricultural technique is to open new or long-disusedland to farming, use it until the soil is exhausted, and then leave it in regenerative fallow for lengthyperiods, sometimes many years. Such practices are changing in many areas; the application ofchemical fertilizers and, alternatively, the use of organic growing methods, are becoming morecommon, increasingly allowing more intensive farming to take place. Traditional land use methods,however, remain widespread, and in many areas cocoa farming continues to be undertaken byclearing mature forest areas. Planting of seedlings, which are usually transplanted after propagation and take three to fiveyears to reach productive fertility, also takes place by hand, as does weeding -- which is especiallyintensive in the year or so after forests are cleared for planting -- and the application of fertilizers andpesticides. Harvesting, which is usually on-going during several months of the year, is alsolabor-intensive. Cocoa pods must be cut carefully from the cacao tree branches, known as brooms,so as not to damage the flower "cushion" from which the fruit grows. Pods are then usually split andemptied by hand to remove the seeds and pulp for purposes of fermentation and drying, which aretypically undertaken at the farm level. It is in the harvesting process that child labor has beenreportedly most commonly found. Reports of children being trafficked to work on cocoa farms, and stories of children workingunder abusive conditions began to emerge in 2000. Following these reports, some began calling forboycotts and other punitive actions against the cocoa and chocolate industries.