Shiploads of cocoa move from Côte d’Ivoire and Ghana to Europe every year, giving life to a global $130 billion chocolate industry. But the west African farmers at the heart of this value chain have remained extremely poor over time. Some lawmakers in the European Union are now joining presidents of Côte d’Ivoire and Ghana in trying to change that imbalance.
“We urge the Commission to rapidly engage in formal negotiations with the governments of Côte d’Ivoire and Ghana with the aim of reaching an Economic Pact for Sustainable Cocoa,” a group of EU lawmakers said in an April letter, Reuters reported.
At the European Union-Africa Union summit in February, the presidents of both countries had called on the EU to join such a pact. A key element of the pact is that sustainability should be based on improving farmers’ incomes, saying, “The price obtained by producers is the key variable in the sustainability equation.”
Cocoa products like chocolate are luxury goods (by the International Cocoa Organization’s definition) consumed by mostly wealthy nations. On a per capita basis, 8 of the top 10 chocolate consuming countries are in Europe. Switzerland and Austria are the top consumers at more than 8 kg (0.001 ton) per capita.
These countries depend on Côte d’Ivoire and Ghana which produce 60% of the world’s cocoa beans and are consistently the world’s top exporters.
But poverty remains an unsolved problem for west African households that live on cocoa earnings.
One study last year said that between 30 and 58% of cocoa producing households in Côte d’Ivoire and Ghana earn a gross income below the World Bank’s extreme poverty line of $1.90 a day. More than 70% do not earn a living income. Between 2008 and 2013, child laborers (pdf) in the Ivorian cocoa industry were said to increase by almost 400,000.
One living income push has not taken off
Cocoa prices in both countries are set by the government in each case, and both have cooperated to ensure a living income for their cocoa farmers.
In 2019, they set $2,600 per ton as the minimum export price and $400 per ton as a premium on all cocoa sales for the 2020/2021 crop season. The premium was known as a “living income differential.” Cocoa farmers in Nigeria want to join the scheme.
But it appears that policy has not worked as planned, the first sign of trouble being the 2020 pandemic causing falling demand and a 15-month low price of $2,150 per ton. Chocolate traders were not paying the premium in Côte d’Ivoire last year. One analysis blamed a lack of transparency in the administration of the policy, specifically how the collected money is paid to farmers.
Still, the reported push by EU lawmakers expresses optimism that a solution can be found to achieve a living income. The EU pledged €25 million ($26 million) for Environmental, social, and governance (ESG) schemes relating to cocoa production in Côte d’Ivoire, Ghana, and Cameroon last year. Chocolate giants such as Nestlé, and Mondelez, the Cadbury maker, have also floated so-called sustainability programs.
But those have been called “a new form of colonization” in Africa—making it harder for farmers to diversify away from cocoa production—demanding new ideas from all concerned.