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November 23, 2020

Ghana hits out at chocolate companies over farmers’ prices

Ghana has reportedly accused some in the chocolate industry of a "ploy to derail" government attempts to improve income for farmers.

By Dean Best

Ghana has reportedly accused some in the chocolate industry of a “ploy to derail” government attempts to improve income for farmers.

In July, Ghana and its west African neighbour Côte d’Ivoire, which produce the majority of the world’s cocoa, introduced a “living income differential” (LID) on all cocoa sales for the 2020/21 season.

On Friday (20 November), Reuters reported Ghana’s cocoa regulator has threatened to suspend schemes used by some cocoa and chocolate companies to assure consumers the beans they use in their products are ethically sourced.

According to the news agency, Joseph Aidoo, chief executive of Ghanaian regulator Cocobod claimed some, unnamed, companies operating in west Africa were holding back the countries’ bid to improve farmers incomes

“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],” Aidoo was quoted as saying at a conference convened by the World Cocoa Foundation.

“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.”

A spokesperson for Barry Callebaut, one of the world’s largest business-to-business suppliers to the consumer-facing chocolate industry, told just-food: “Barry Callebaut supports the implementation of the LID, which enables the Ivorian and Ghanaian government to support a minimum cocoa price to their cocoa farmers and the LID is included for all shipments and local deliveries to Barry Callebaut in both Côte d’Ivoire and Ghana. In addition, Barry Callebaut is implementing projects on the ground to support farmer livelihoods.”

just-food asked the world’s largest consumer-facing chocolate companies what they made of Aidoo’s comments, what actions they were taking to pay the LID, whether they paid the premium on all beans sourced from Cote d’Ivoire and Ghana and if they were aware of companies not paying the higher price.

Cadbury owner Mondelez International said: “We have fully embraced the living income differential for all the cocoa we source from Ghana and Cote d’Ivoire, paying the full increase of US$400 per tonne. In addition, we continue to invest in our own programme, Cocoa Life, which aims to holistically address the root causes of the socio, economic and environmental challenges that cocoa farming faces. Our conclusions show a significant annual income gap for cocoa farmers in Ghana and Cote d’Ivoire that will require collaboration across the sector and beyond to address.”

A spokesperson for KitKat maker Nestlé added: “We strongly believe cocoa farmers should earn an income that allows them to maintain a decent and adequate standard of living for them and their families. We encourage and support all efforts by Côte d’Ivoire and Ghana’s governments to improve the standards of living for cocoa farmers.

The living income differential will help improve farmers’ living income and complement our work to improving the lives of farmers and their communities through our Nestlé Cocoa Plan. Every year, we invest about CHF40m (US$43.8m), including a premium payment to farmers, training on best agricultural practices, access to quality education, and women financial support.

“The LID is positive for the sustainability of the cocoa sector and for our business. That is why we were one of the first companies to pay the LID when it was introduced last year. We are making our normal volume of cocoa purchases from both countries, including payment of the LID.”

Mars said it, too, “supports the living income differential” and the Snickers supplier said it was “one of the first companies to purchase the 2020/2021 crop under the LID”.

The US giant added: “While some in the industry are accelerating progress toward a modern, sustainable cocoa supply chain, others are not doing enough and must go further and faster. Mars believes cocoa farmers should earn sufficient income to maintain a decent standard of living and we support moves by governments to achieve that, provided a transparent process that ensures additional income reaches farmers and appropriate governance is in place to ensure there is no improper expansion of land use to grow cocoa.”

Mars’ US peer Hershey said it had “long supported initiatives that improve the incomes and livelihoods of farmers”. The company said: “This includes supporting and participating this year in the Ivorian and Ghanaian living income differential as we buy 2020/2021 season cocoa based on the needs of our business.  All 2020/2021 cocoa purchased within our supply chain since the implementation of the LID in west African countries includes this price premium. Beans sold prior to the implementation of the LID would not include the premium.

“While we do not discuss details of our specific buying and hedging activities, we buy cocoa from a variety of suppliers and sources to meet our ongoing business needs. Our commodity purchases and strategies ebb and flow with our business needs and demand for our products. However, we do not discuss specific details for competitive reasons. Sometimes our purchases are based on hedging pricing fluctuations in the market and sometimes our purchases are based on ensuring sufficient supply to meet our needs well into the future, especially in times of uncertainty.”

Reuters also reported on Friday, citing unnamed sources, that Hershey had moved to up to 30,000 tonnes of cocoa from the ICE futures exchange at a price lower than the LID.

Asked by to just-food to respond to that report, a Hershey spokesperson said: “These accounts and guesses about volumes are speculation and not accurate. The cocoa at the NY exchange is older and pre-dates the implementation of the LID. Also, most of the cocoa at the NY Exchange is not west African cocoa. As we have long said, we buy from many sources around the world.”

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