Recent years have seen important developments on the topic of living income for cocoa farmers, and yet, poverty is still a daily reality for virtually all cocoa farmer families in West Africa.
If we want to tackle child labor, deforestation and other social and environmental harms associated with the production of cocoa, we must first ensure cocoa farmers are earning a living income. Because as Antonie C. Fountain writes:
When farmers must choose between feeding their family, and not cutting down old growth trees, it is not a choice. When they must choose between feeding their family or sending them to school, it is not a choice. Without a living income for cocoa farmers, cocoa will never be sustainable.
The Cocoa Barometer Consortium, of which Freedom United is part, recently released a Living Income Compendium which debunks the myths often raised in discussions about living incomes in cocoa farming, and outlines the path toward real, sustainable change for farmers and their families.
What myths are holding us back from true progress?
When we deconstruct debates around living income in cocoa, we find a series of false beliefs that are holding us back. Here are a few that the Living Income Compendium calls into question:
Most farmers are destined to be poor. Most sustainability initiatives frame living income as an aspirational goal, unlikely to be reached any time soon. But a living income is the bare minimum for a decent standard of living. As Fountain writes, “living income is the starting point of a conversation on farmer livelihood, not a finish line.”
Higher yields close the income gap. Cocoa companies have mostly focussed on trying to increase farm productivity as a means of lifting farmer income. But this approach is not enough. Reports have shown that these programs are failing to improve the net income of cocoa farmers.
Diversification raises farmer income. Having alternative income sources is important for farmer income resilience – it means that they’ll be less affected by events like price collapses or crop diseases. Moreover, increasing farm diversity through agroforestry can provide positive social and environmental benefits. But diversification alone is not the solution. As Fountain explains, “diversification requires a healthy market for diversified products. But farmers of many other cash crops, like coffee, rubber, banana, are also generally poor.
Pilot projects lead to living income. Companies have focussed mainly on investing in small-scale projects. But as Fountain argues, “setting up pilots raises the impressions that we don’t know how to raise incomes, whereas a lot of knowledge by now is available.” Moreover, what works in a small-scale project may not always work on a larger scale.
Bigger farms lead to living income. It is often argued that some cocoa farms are too small to be economically viable. But the bigger the farm is, the more labor it requires. If the farm is too large for one household to manage, they will have to hire laborers. Those laborers should also be earning a living income.
There is too much attention on higher prices. No, there is not enough attention on higher prices. Very few company programs experiment with paying higher prices for cocoa. One attempt that has been made is to pay premiums through certification systems and company sustainability programs. But these premiums are generally not high enough to make a living income possible.
There isn’t enough money. Companies often say they must follow the world market price to remain competitive and that they cannot afford to pay higher prices unilaterally. Fountain uses examples from several major chocolate companies to show that money isn’t short in the industry. For example, in early 2020, the Ferrero family paid itself an annual dividend of €642 million. Had they taken €192 million, they could have used the remainder to pay a living income to every cocoa farming family they source from.
Higher prices for cocoa lead to higher prices for chocolate. Cocoa farmers receive an average of 11% of the final retail price of a dark chocolate bar, according to a recent study by Le Basic and FAO. Brands and retailers pocket 70% of the total value and 90% of the total margins. It would therefore be theoretically possible to double the price farmers receive without any significant impact on shelf prices.
These are just a few of the myths that the Living Income Compendium dismantles. Check out the full report for other false beliefs that are muddling conversations on living income.
Towards a living incomes for cocoa farmers
For living income to become a reality for cocoa farmers, the industry and governments will have to make serious changes. Business as usual will not cut it.
The Living Income Compendium argues that companies and governments must act on three different dimensions at the same time: good agricultural practices, good governance policies, and good purchasing practices.
However, good agricultural practices will only be an effective strategy to invest in if cocoa farmers can earn a living income from cocoa. Until now, increases in gains have not helped cocoa farmers lift themselves out of poverty, because we need systemic change to make a living income the norm.
We need corporations to get serious on pursuing better purchasing practices, and we need governments to take major steps toward better governance. As Fountain states:
Only when both the responsibilities of corporations and governments are properly being met does it become fair to ask farmers to invest effort and money in improving their productivity. The burden to first move lies squarely with the companies and the governments in the cocoa sector. We cannot ask the poorest and most vulnerable link to take the biggest risks, with the least guarantee for reward.