COCOBOD has threatened to suspend the sustainability schemes used by major cocoa and chocolate companies to assure consumers that cocoa beans they use are sustainably and ethically sourced.
In a statement prepared for the latest World Cocoa Foundation Conference, Joseph Aidoo, Chief Executive Officer of COCOBOD Ghana said cocoa and chocolate companies in West Africa were thwarting government attempts to combat farmer poverty by trying to evade paying the Living Income Differential agreed by the two countries and global cocoa buyers.
“The (cocoa/chocolate) brands have openly announced their commitment to the LID but our intelligence indicates there is a ploy by some to derail it,” Mr. Aidoo said.
“Any brand that is seen not to be serious in accepting the LID by mid-December 2020 must consider all its cocoa beans from Ghana and Cote d’Ivoire as conventional. We are prepared to name and shame these brands,” he added.
Due to this, the Chief Executive Officer pointed out that the sustainability schemes, which allow companies such as Nestle to charge consumers a premium for chocolate certified as sustainably sourced, could be suspended.
Ghana and Ivory Coast, which together produce two-thirds of the world’s cocoa, introduced a living income differential (LID) or premium last year of US$400 per tonne on all 2020/21 cocoa sales, to raise the income of cocoa farmers in the form of a 28 percent increase on the amount each country’s government pays cocoa farmers per tonne of the commodity purchased at the farm gate.
Ivory Coast and Ghana have struggled to sell their 2020/21 Cocoa output on the forward market since introducing the LID because the coronavirus-induced recession slashed demand for non-staple foods like chocolate. However, there are suspicions in Ghana that the reluctance of buyers to purchase on the forward market is a subtle attempt by the country and Cote d’Ivoire as well to stop insisting on adding the LID to the normal market price accepted by other smaller cocoa exporting countries.
Ghana has traditionally sold its produce on the forward market which enables it to secure between US$1.3 billion and US$1.8 from a consortium of international commercial banks billion in short term financing. The largest annual agricultural financing facility in sub-Saharan Africa is secured by cocoa sales proceeds from the international markets. The inability to sell on forward markets could jeopardize Ghana’s ability to raise this financing which it uses to fund its cocoa purchases from local farmers.
