Two of the world’s largest producers of cocoa, Ghana and Ivory Coast, have accused U.S. confectionary giants of avoiding paying a bonus that will help improve the economic fortunes of poor farmers.
The Coffee Cocoa Council (CCC) and the Ghana Cocoa Board (Cocobod) in a letter on Monday accused Hershey’s and Mars, two of the world’s top chocolate sellers, of not paying the living income differential (LID), according to AFP.
The letter also accused Fuji Oil Holdings’ Blommer subsidiary of aiding Hershey.
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The LID gives cocoa farmers a bonus of $400 per tonne in addition to the market price and envisioned to cushion many farmers who live in poverty. The $400 a tonne LID on cocoa sales for the 2020/2021 season was introduced by the West African nations last year.
According to the CCC and Cocobod, a large purchase of cocoa on the U.S. futures market by Hershey recently clearly indicates the company’s “intention to avoid paying the living differential income.” The producers added that they had been “been left with no choice but to cancel all sustainability programs with which your company is involved”.
The joint letter also denounced Hershey’s and Mars’ “breach of confidence” in the scheme intended to help millions of African farmers. The schemes certify that the chocolate is ethically sourced, that is, production must be free of child labor and avoid environmental destruction. This allows companies to sell their chocolate at a higher price.
In a statement to Reuters, Hershey, producers of Hershey chocolate bars, Hershey’s Kisses and Kit Kat, said it is fully participating in the LID. “Our concern is that by cutting off industry sustainability programs, cocoa farmers will no longer receive the benefits provided by our programs… (like) the price premium for certified cocoa,” the company said in a statement.
It was “unfortunate” that the countries had decided to “distribute a misleading statement this morning and jeopardise such critical programmes that directly benefit cocoa farmers,” AFP also quoted Hershey as saying.
Ghana and Ivory Coast are the world-leading producers of cocoa. Jointly, the two West African nations produce two-thirds of the world’s cocoa. However, cocoa farmers from the two countries continue to wallow in poverty even though their produce sustain the economies of the two nations.
In 2018, Bloomberg reported that these farmers make “only about 5.5 per cent of a global supply chain worth more than $100 billion”. This is even less than 15% of governments take as the value-added tax on the sale of chocolate products in Western countries where chocolate is most consumed.