Top cocoa producers Ivory Coast and Ghana said on Thursday they will re-examine the industry's sustainability schemes as chocolate makers have been slow to pay the two nations a living income differential (LID) for their beans.
In a bid to ease pervasive farmer poverty, the West African neighbours, which together produce more than 60% of the world's cocoa, introduced the $400 LID in July on all cocoa sales for the 2020/21 season.
The move was a major overhaul in how global cocoa is priced.
"The (chocolate) brands are focusing on their sustainability programmes at the expense of the LID. The two countries (are) therefore re-examining all sustainability and certification programmes for the 2019/20 season," Ivory Coast and Ghana said in a joint statement.
Sustainability Schemes
Under pressure from western consumers for ethically sourced products, chocolate makers like Mars Wrigley, Mondelez, Barry Callebaut, Hershey's and Nestlé have spent millions in recent years on sustainability schemes.
The schemes, which certify cocoa ingredients as ethically sourced, are key to chocolate makers' branding. They have had little success, however, in tackling widespread child labour and deforestation in West Africa's cocoa sector.
Chocolate makers have publicly expressed support for the LID, and their brands could take a hit if they are seen as reluctant to pay it, or if they are no longer able to certify their products as ethically sourced.
Ivory Coast and Ghana plan to use funds raised from the LID to guarantee farmers get 70% of a $2,600 a tonne (FOB) target price. If global prices rise above $2,900, proceeds from the LID will be placed in a stabilisation fund that would be used to ensure farmers get the target price when market prices fall.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
