As the European Union develops new rules to hold companies accountable for social and environmental harms, such as deforestation and child and forced labor, the spotlight is on the chocolate industry.
Cocoa production is notorious for causing adverse impacts on farming communities and the land. Companies and governments claim to be working to make cocoa more sustainable, but experts warn that chocolate cannot be truly sustainable until cocoa farmers are earning a living income.
Farmer are getting poorer while companies are getting richer
Ghanaian and Ivorian farmers have plunged deeper into poverty in the last three years as costs of living and production soared, according to new research from Oxfam. Incomes have dropped almost 20% since 2019, according to Uwe Gneiting, senior researcher at Oxfam.
Without enough money to live on, farmers are unable to implement more sustainable cocoa practices or pay adult laborers a living income, leading to systematic labor rights violations and environmental degradation.
Simultaneously, chocolate companies have made “windfall gains,” according to Isaac Gyamfi, director of Solidaridad West Africa, profiting from cheaper raw materials and unchanged chocolate prices.
Pressure from West Africa for higher prices
To address farmer poverty, Ghana and Côte d’Ivoire, the world’s leaders in cocoa production, are demanding companies pay more for cocoa. The two countries formed an export cartel in 2019 and introduced a $400 per ton Living Income Differential to increase the floor price.
In public, big chocolate manufacturers and traders, including Barry Callebaut, Cargill, Ferrero, Hershey, Lindt, Mars, Mondelez and Nestlé, welcomed the initiative.
Yet behind the scenes many of the firms — which between them account for about 90 percent of the industry’s $130 billion in annual profits — have done everything possible to avoid paying the premium and to drive prices back down, according to the Ivorian Coffee-Cocoa Council (CCC), the Ghana Cocoa Board (Cocobod) and their joint Initiative Cacao Ivory Coast-Ghana (ICCIG).
The companies that responded to requests for comment from POLITICO said that they have paid the Living Income Differential (LID) since its introduction. The Ghanian and Ivorian trade boards and the ICCIG claim, however, that they have negated the LID’s value by forcing down a different premium, the origin differential.
Voluntary initiatives have failed
Since child labor in cocoa first gained the attention of mainstream media in the early 2000s, companies have fought against regulation, claiming to tackle challenges to sustainability through voluntary initiatives instead.
Companies rolled out corporate social responsibility (CSR) initiatives worth millions of dollars. But two decades later, the problems persist. According to a 2020 report, 790,000 children in Côte d’Ivoire and 770,000 in Ghana are still in child labor in cocoa, with 95% of them exposed to the worst forms of child labor. Deforestation has begun to worsen again in recent years too.
New Oxfam research finds that CSR initiatives have failed to increase farmers’ productivity and incomes. Instead, farmers are being expected to cover the costs of more sustainable practices themselves.
Experts believe that the reason for this failure is clear: companies are still not paying enough for cocoa farmers to earn a living income.
Antonie Fountain, managing director of NGO coalition VOICE Network, highlights that the level of funding these companies are dedicating to CSR initiatives pales in comparison to the profits they are making.
A living income price is long overdue
As producing country governments ramp up calls for higher prices and the E.U. develops new rules for corporations, all eyes are on the chocolate industry.
Join us in calling for companies buying cocoa to deliver on their sustainability commitments by paying a living income price. Sign the petition today.