Good news for Ghanaian cocoa farmers as Nestle plans to pay $1.41 billion to cocoa farmers to stop using children on their farms.
According to Nestle, the move is to enable cocoa farmers to send their children to school rather than to send them out to tend the crops. Nestle therefore, resolved to purchase all of its cocoa through a fully traceable, directly sourced supply chain by 2025.
Chocolate makers are coming under mounting pressure from investors, consumers and governments to make sure the cocoa beans they source are not produced using child labour or an illegal cocoa plantations in protected forests, both of which are common in Ghana and other West African countries.
The food group behind KitKat chocolate bars and Smarties confectionery said it will triple its current annual spending on sustainable cocoa to give a total investment of 1.3 billion Swiss francs ($1.41 billion) by 2030.
Nestle’s Head of Operations, Magdi Batato, indicated that doing so is the surest way to go because money is the reason farmers keep using children on their farms.
“Only by tackling the root causes, we will have an impact.”
Magdi Batato
Child Labour Prevalence in West Africa
A recent survey by the University of Chicago found that among children in agricultural households in Ivory Coast and Ghana cocoa growing areas, 45% were engaged in child labour. As a result, Mr. Badito disclosed the guidelines
“To qualify for the payments, farmers have to send their children to school, prune cocoa trees, plant shade trees and diversify their income with other crops or livestock.”
Magdi Batato
To check that children are really attending school and farmers are following the rules, Nestle noted that IDH, The Sustainable Trade Initiative, will monitor the programme with other third parties.
Children casually helping on family farms outside of school time do not fall under the International Labour Organization’s definition of child labour.
The sustainability schemes chocolate makers have had limited success in tackling human rights and environmental issues in cocoa and Western governments are now looking to legislate.
Mr. Batato disclosed that 51% of the cocoa used in 2021 by Nestle was directly sourced and traceable, versus 46% in 2020. By 2025, it wants to be able to trace 100% of its cocoa back to specific farms under its in-house sustainability scheme, the Nestle Cocoa Plan.
“We’re very confident this will be a game changer on the road to reducing the risk of child labour”.
Magdi Batato
Under the new programme, farmers will receive direct cash payments via mobile transfer of up to 500 Swiss francs ($543) a year, which Batato said represent 20-25% of a farmer’s average annual income. The incentive will then be levelled at 250 francs after two years and progressively extended to all of Nestle’s 160,000 cocoa farmers by 2030.
Farmers to Be Paid Independent of Volumes
Unlike current premiums that are paid per tonne and can encourage overproduction, Nestle, which used over 436,000 tonnes of cocoa in total in 2020, said it would pay farmers and their spouses directly, independently of volumes produced.
Head of Confectionery, Alexander von Maillot, also stated that “An incentive to the household is much more inclusive of the smaller farmers, really making sure that nobody gets left out”.
Nestle is going to launch KitKat products next year made with cocoa from farms that received cash incentives and Von Maillot said the company’s efforts might ultimately lead to higher prices for consumers.
Alexander von Maillot however, added that cash transfers are not a substitute for a commitment to paying a fair overall price for the bean and farmers are still vulnerable to low world market prices.
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