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West African Cocoa Farmers
A product of cocoa, “chocolate is one of the most consumed food products” on Earth. According to Make Chocolate Fair, about “70% of the world’s cocoa comes from West Africa.” Despite chocolate’s rising global popularity, there exists an ongoing conflict that casts light on the dark side of cocoa and the plight of West African cocoa farmers.

Rising Prices of Cocoa

Market researchers forecast that the global chocolate market would grow from its $137 billion market size in 2019 to $182 billion by 2025. Cocoa prices also rose on New York’s Intercontinental Exchange (ICE) by 10% between October 2020 and October 2021.

Despite such massive growth, West African farmers may receive lower prices for their cocoa harvest in the upcoming year. In October 2020, chocolate companies were paying West African cocoa producers a price of 1,000 West African francs for a kilogram of cocoa. Today, the per kilogram “minimum guaranteed producer price” equates to 825 West African francs, amounting to just $1.45. The drop in prices could sink farmers into poverty, costing them as much as 20% of their income. The cocoa farmers, however, are taking a stand to protect their livelihoods and avoid the grips of poverty. Nations, groups and individuals are taking action to keep West African cocoa farmers out of poverty.

West African Cocoa Farmers Fight for Change

  1. Introducing a Living Income Differential (LID). In 2019, the Ivory Coast and Ghana, both of which produce more than 50% of the global cocoa output, introduced a $400 premium to the price per ton of cocoa, known as the Living Income Differential (LID). The LID aims to ensure farmers earn “a living income” by increasing payments to farmers from purchasers.
  2. Standing Up Against Exploitation with Boycotts and Strikes. In December 2020, more than 500 farming industry leaders gathered in the Ivory Coast to address chocolate giants Hershey and Mars’ alleged attempts at avoiding the $400 LID premium. Farmers are considering moving to cassava farming “if their demands are not met.” In October 2021, the National Association of Ivorian Producers (ANAPROCI), which represents more than half a million cocoa industry members in the Ivory Coast, launched a strike to demand “payment of a 17 billion CFA francs ($29.8 million) premium promised by the government to help farmers to deal with the effects of the COVID-19 pandemic.” In addition, ANAPROCI urges the government to create a formal apparatus to discuss issues impacting farmers. ANAPROCI President Koffi Kanga threatened, “If the government or the [Ivory Coast Cocoa and Coffee Council regulator]does not listen to us, we will block the entire sector in the next few days. We are going to prevent cocoa from reaching the ports by all means.”
  3. Pursuing Legal Avenues Against Exploitation. West African farmers are pursuing legal avenues against exploitation. A group of six men from the West African nation of Mali filed suit against Nestlé U.S.A. and Cargill, alleging that they were trafficking victims as children, working on cocoa farms in the Ivory Coast. Their complaint alleges that the chocolate companies were complicit in the slave trade in order to “keep cocoa prices low.” Though the Supreme Court found in favor of the chocolate giants in an 8-1 decision, International Rights Advocates intends to file a new lawsuit, “alleging that many decisions made by Nestlé and Cargill in the U.S. helped to pave the way for the use of child slaves in Ivory Coast.”
  4. Sierra Leone opens “its first cocoa processing factory” in October 2021. The factory will account for a quarter of the country’s yearly production of cocoa — roughly 4,000 tons of cocoa beans annually. The factory will produce a semi-finished product as opposed to the raw materials that Sierra Leone typically produces, which has the potential to increase earnings by 20%. The new facility represents an opportunity for change in the dynamics of the supply chain as critics often emphasize that raw materials sold to industrialized nations tend to reap less profit than finished products.

Looking Forward

West African cocoa farmers are continuing to take action against exploitation within the cocoa industry. Public opinion is also shifting, with a growing demand for chocolate that companies produce with social and environmental sustainability in mind. However, regardless of public opinion or the stance of industry giants, the cocoa farmers of West Africa continue to fight their way out of poverty.

– Richard J. Vieira
Photo: Flickr

Cocoa prices
From cocoa comes chocolate, a confection that needs no introduction. Approximately “70% of the world’s cocoa comes from” West African countries, namely,  the “Ivory Coast, Ghana, Nigeria and Cameroon.” Of these countries, Ghana and the Ivory Coast produce the most cocoa, together accounting for more than 50% of the global cocoa output. However, projections indicate that an unstable cocoa market can cause a loss of roughly 20% of income for these West African farmers. These impacts of fluctuating cocoa prices require prompt action from companies within the cocoa industry to prevent farmers from falling into poverty.

Reasons for Unstable Cocoa Prices

According to a report by the International Cocoa Organization (ICCO) in February 2021, “anticipations of a production surplus compounded with low levels of demand” drove down cocoa prices “on the London and New York futures markets.” To take New York’s statistics, predictions determined that cocoa purchases in the form of future contracts would close at $2,438 per ton by the end of 2021 in comparison to the $2,587 price tag per ton on February 5, 2021.

The COVID-19 pandemic has a role in this outcome, with waning demand a byproduct of sudden ruptures in the hospitality sector. This, along with the decline in “out-of-home consumption” that arose from COVID-19 restrictions and the closure of businesses, led to a 10% decrease in cocoa output compared to the previous year. Even as the economy saw some restimulation, excess cocoa stocks due to the economic stall brought on by COVID-19 are not reducing dramatically, according to 12 experts that Reuters polled. Supply continues to exceed demand, impacting cocoa prices, and therefore, the income of West African farmers.

Attempting to Offset Decreases in Cocoa Prices

Lower cocoa prices exacerbate poverty, perpetuate illegal child labor and encourage a lack of proper compensation for labor that hinges on modern slavery. Deforestation also plays a hand, where a bid to sell more cocoa produce drives people to expand their land. To avoid these sorts of conditions, the Ivory Coast and Ghana introduced a $400 per ton Living Income Differential (LID) in 2019 to protect farmers from price decreases and secure a higher income for farmers. As a result, consumers became “more conservative in their buying, helping to boost stocks at origins.”

Companies such as Hershey’s and Mondelez International are accused of attempting to circumnavigate the LID, the former through as many futures exchanges as possible before contract expiration. The latter denied the allegations entirely. Mondelez International, to its credit, however, told CNBC about its commitment to investing “$400 million in sustainable cocoa sourcing program Cocoa Life.”

Other companies such as Tony’s Chocolonely notes that it pays a premium in addition to “farmgate price” when buying cocoa. To continue alleviating the impacts of fluctuating cocoa prices on farmers, in November 2021, the company vowed to increase its cocoa premium payment even further from the initial “$462 per metric ton” (26% higher than farmgate price) “to $793 per metric ton” —  a staggering 54% higher than farmgate price for the 2021-2022 period.

Head of impact at Tony’s Chocolonely, Paul Schoenmakers, accuses major chocolate companies of “turning a blind eye” to the circumstances of cocoa farmers in developing countries. Because the sector derives massive amounts of wealth from cocoa, “they’d still make massive profits every year,” Schoenmakers told CNBC, elaborating on the insignificance of the sum of premium payments in comparison to the massive profit generation.

Putting Cocoa Farmers First

Chocolate giant Mars Wrigley, the parent company of household chocolate delights such as Snickers and Twix, established the Cocoa for Generations program. The initiative actively works toward sustainability by focusing on the well-being of individuals across its entire supply chain, especially those at the grassroots, while alleviating environmental burden.

Launched in 2018, Cocoa for Generations has the support of $1 billion worth of funding from its start year of 2018 to its close in 2028. Highlights of the initiative, according to a 2020 report, include a $5 million collaborative donation with the CARE organization to help farmers facing the impacts of COVID-19.

Cocoa for Generations also helped more than 153,000 farms map their boundaries to prevent land ownership conflicts. Mars also sourced more than 50% of its cocoa from farmer groups that have Child Labor Monitoring and Remediation Systems in place within at-risk regions in Ghana and Ivory Coast. Furthermore, the program distributed about 2.4 million cocoa seeds to cocoa “farmers in 2019.”

Looking Ahead

The forces of supply and demand will reign supreme in determining cocoa prices, however, chocolate companies can show their support for impoverished West African cocoa farmers by adhering to the LID and opting to pay higher premiums in exchange for cocoa, as is this case with Tony’s Chocolonely. With more companies stepping up to support cocoa farmers amid a fluctuating market, cocoa farmers can remain out of the grips of poverty.

– Mohamed Makalou
Photo: Flickr