In a powerfully written statement seen by this publication, it is calling on the governments of consumer countries, particularly the European Union, to address this situation, which it claims jeopardises the efforts made on cocoa sustainability so far and the commitment to better remuneration for producers. “The European Union must impose regulatory obligations on companies to require them to pay producers a price that is high enough to provide an adequate standard of living,” it said.
Created in July 2022 in Grand-Bassam, The African Platform for Sustainable Cocoa comprises the Ivorian Platform for Sustainable Cocoa (PICD) and the Ghana Cocoa Civil Society Platform (GCCP) and the two organisations have denounced this latest breach of the industry's commitment to the fight against poverty and the right of farmers to a decent income.
The Living Income Differential (LID) for cocoa farmers in the two African countries was introduced by the chocolate and cocoa industry in 2019 as a pricing mechanism to address the issue of low incomes for cocoa farmers in West Africa, where most of the world's cocoa is produced. The LID is an additional payment made to cocoa farmers to help them achieve a ‘living income,’ defined as the income necessary for a household to maintain a decent standard of living in their specific region.
The African Platform for Sustainable Cocoa said it has learned from local media of discussions between buyers of cocoa futures and the central cocoa-producing countries about the pricing disagreement.
In Côte d'Ivoire and Ghana, the market situation had raised hopes of a higher price for cocoa producers after years of low prices. But the farmgate price of cocoa for the 2023-2024 season announced in the two countries did not reflect the price rise on the world market: 1,000 FCFA in Côte d'Ivoire and 1,308.99 Cedi in Ghana, prices not much higher than last season when the world price of cocoa was lower. Moreover, these farmgate prices are still well below what is needed to enable farmers to earn a decent income, a commitment many companies have made, The African Platform for Sustainable Cocoa said in a statement.
As the PICD pointed out last month, this situation is also due to the cocoa market, which operates in such a way that all the risks fall on the shoulders of producers, who are already very severely off in sharing the profits generated by the sector. The statement in the media by a company representative that it will not be able to buy cocoa “at the moment” because "it creates too much risk for us if the market turns and prices fall" illustrates precisely this situation where the large multinationals have the power to pass on all the risks of price variations to the producers, many of whom are living in extreme poverty.
The African Platform for Sustainable Cocoa said: “This is not acceptable. The farmgate price for the 2024-2025 marketing year is currently at stake. There is no point in having high prices in 5-6 months if all the contracts are sold at a low price today. The farmgate price for next season will be set based on the contracts sold. We call on the industry to buy cocoa now, and end this practice of forcing prices down, which goes totally against their commitments to sustainability and the fight against extreme poverty among producers.”
It claimed that its actions to circumnavigate the LID, which as ConfectioneryNews has reported, companies have been accused of doing in the past, undermines the organisational efforts underway for a systemic and sustainable improvement in the living conditions of cocoa producers.
“We cannot fundamentally change the situation unless both the origin governments and the companies provide transparency,” it said, “and it is absolutely necessary to open discussions on the management of the stabilisation fund financed by the LID.”
More to follow.
