Top cocoa producers have vowed to defend the $400 per-ton premium secured by Ghana and Ivory Coast to boost the livelihood of West African Farmers. The world’s top cocoa growers have categorically stated that they will insist that the $100 billion chocolate industry pays the premium put in place.
The West African cocoa producing giants secured a pay rise for farmers by charging companies such as Cargill Inc. and Nestle SA a premium of $400 per ton, starting from the beginning of the current farming season. These two countries account for nearly 70% of global cocoa production.
However, months after the new pricing rules were initiated, West African regulators– Ivory Coast-Ghana Cocoa Initiative, have accused some companies of reneging on that commitment.
Alex Assanvo, former Mars Wrigley Director, now Executive Secretary of the initiative, who takes on the mantle of an organization that formalizes the top producers’ collaboration to influence cocoa prices and standards said at his swearing-in ceremony in the Ivorian commercial hub, Abidjan that “we need to lift cocoa farmers out of poverty, this is not negotiable and we will be uncompromising”.
“The health crisis has caused an economic slowdown, a drop in consumption, and it has also made the market more hesitant. Still, we will continue to work hand-in-hand to reach our objectives”.
On his part, Ghana Cocoa Board’s Chief Executive Officer, Joseph Boahen Aidoo told reporters after the ceremony that these companies are undermining the Living Income Differential (LID).
“While they are paying (the LID) with the right hand, they are taking the money with the left hand by not paying the country premium”.
Meanwhile, Mr. Aidoo repeated last week’s threat by the Ivorian regulator to start calling out companies that engage in the practice.
Also, Yves Kone, the Managing Director of Ivory Coast’s regulator, Le Conseil du Cafe-Cacao, reiterated that the companies have deliberately refused to honour the living wage.
“We have recently learned that one of the biggest chocolate makers decided to buy cocoa from the exchange in a move that marks its opposition to the LID. Our takeaway is that there is a conspiracy to undermine the concept of a floor price, and by extension, to deny our countries’ cocoa growers a living wage”.
Meanwhile, in a sharp rebuttal, Jeff Beckman, a spokesman for Hershey, in a telephone call described the claims by Yves Kone as “inaccurate”.
“To say that our long time practice of buying cocoa from a variety of global sources is undermining the LID is simply not accurate. We have always bought cocoa from a variety of sources and that will continue to be the case as the American company needs a blend of cocoa from various countries to achieve the taste and quality consumers expect of its products”.
The comments represent the latest escalation in a spat between the largest producers and some companies which want to pay less for cocoa after the pandemic hurt demand.
However, West African authorities say the stance of the companies show they lack commitment to improving farmers’ livelihood.
The so-called Living Income Differential came into effect on October 1, 2020, just after the pandemic locked down cities around the world, hurting demand. That in turn, reduced the bargaining power of producing nations, which also charged a separate country premium.
