Soubre, Ivory Coast — On a small cocoa plantation in southwestern Ivory Coast, a group of men chop the yellow and red fruits used to make chocolate.
Farmers race against time and work tirelessly on individual plots of land to collect as many cocoa beans as possible during the main harvest season in the West African country, between October and March.
A smaller harvest starts in April. However, the erratic rains caused by climate change have dampened the group’s mood, as some fear they will harvest less than expected.
“I have to feed a family of eight and will only earn around 1,200 to 1,500 US dollars from this year’s harvest,” said Eugene Kouassi, who oversees a two-hectare plot of land in Soubre, a town in the heart of Ivory Coast’s cocoa country. For most small farmers like him, growing cocoa is their only source of income. “This money must last most of the year,” he said.
According to Siriki Diakite, director of the Rainforest Alliance for West Africa, cocoa farmers in the region are on the “front line of the climate crisis.” And when their crops suffer, so does their livelihood.
Add to that how little they receive per kilogram for their crops, something the Ivorian government is trying to combat as it fails to force the world’s multi-billion dollar chocolate industry to pay farmers fairer cocoa prices.
Ivory Coast produces around 45 percent of the world’s cocoa beans, but only receives around four percent of the estimated annual value of the chocolate industry of 100 billion US dollars.
According to the World Economic Forum, millions of cocoa farmers in the country survive on average just $0.78 per day.
By comparison, for 1 kg of Leonidas chocolate, a popular luxury brand in Europe, Kouassi would need around 45 working days to be able to buy it at a price of around $32.
“Companies want maximum profit”
Since 2020, several attempts by the Ivorian government to get chocolatiers to pay premiums on the price of cocoa have failed, as big companies push back on anything that reduces their margins.
In October, the Ivory Coast and Ghana — which supply 65 percent of the world’s cocoa — boycotted an industry meeting in Brussels, a sign that they will no longer sell the raw material at unfavorable prices.
“The chocolate companies want to make the maximum profit,” Ivory Coast Minister of Agriculture Kobenan Adjoumani Kouassi told CNN Breaking News. “And when they put profit first, it is the poor people who suffer. They must understand that it is exploitation and that it must stop.”
In 2020, both West African countries introduced the Living Income Differential (LID) — a $400 premium charged on every ton of cocoa that is transferred directly to small farmers. The chocolate companies pay the premiums to retailers who buy the beans from large collectives across the country. The collectives collect the harvest from local farmers and add the bonus to the price.
Although some chocolate companies were willing to pay the levy, they quickly found ways to avoid it. According to media reports, the American chocolate giant The Hershey Company bought 30,000 tons of cocoa via the US futures exchange ICE to avoid paying the LID. However, this could not be independently verified.
Chocolate companies generally buy cocoa directly from the source. However, if they buy the commodity on the secondary market through a stock exchange, they don’t have to pay the associated premiums.
Two years after the bonus came into effect, Yves Ibrahima Kone, director general of Le Conseil du Café-Cacao, the national regulatory body that introduced LID, said that in reality “nobody [the chocolate companies] want to implement it.”
“They won’t have a choice”
In the cocoa region of Ivory Coast, knowledge about the premium varies depending on who you talk to.
“We’ve never heard of LID,” said Lobou Doudou Honore, the boss of a small cocoa-growing village called Gripzao north of Soubre. The boss is the spokesperson for around 60 cocoa farmers, each of whom cultivates plots of various sizes around the village. He says that every single person in the village depends on cocoa as their main source of income.
About 50 km (31 miles) south of Soubre, the director of a collective of more than 2,000 cocoa farmers said that he had received the LID in the last two years.
“Our buyers are Tony’s Chocoloney, Mondelez and Ferrero,” said Doumbia Assata Kone, director of the Meagui cooperative. The future-oriented director is trying to encourage farmers to dedicate themselves to other income-generating activities, such as producing honey.
According to the authorities, companies’ latest strategy to avoid paying the LID is not to pay another fee, the so-called origin difference — a premium determined depending on the country of origin.
If retailers don’t pay the original difference, they can claim to pay the LID, but in reality the price is the same as if no premium was added. The LID was set by Ghana and Ivory Coast, but the origin difference is a premium set by the market based on the quality and origin of the beans.
“That is what chocolate companies are currently playing with,” said supervisory authority Kone, which traveled to Rome in September to tell manufacturers that for the first time in three years, Ivory Coast would no longer sell cocoa with a negative origin difference. There has not yet been an official response from the industry.
According to early reports, global commodities trader Cargill, which processes and sells grains, oil and vegetables, among other things, has bought 25,000 tons of cocoa, which represents a positive income gap for the 2023/2024 season, and it is hoped that more will follow. This should have a positive effect on the money that farmers receive at the end of the supply chain.
However, industry experts expect that Ivory Coast will continue to face fierce opposition from chocolate companies, which can generate more annual sales than the entire African country.
However, Ivory Coast Minister of Agriculture Kouassi believes that the West African country finally has chocolate companies in a difficult position. “They will have no choice but to pay the prices we ask for at some point,” he said. “We produce the most cocoa in the world.”
“Reduce supply, increase demand”
Paul Schoenmakers, head of impact at Dutch chocolatier Tony’s Chocolonely, said most chocolate companies have plenty of leeway to redistribute wealth further down the supply chain.
“The larger players in the chocolate and cocoa sector could easily pay farmers more, dilute some of their margins and still make decent profits,” he said. “In the end, it’s a question of choice whether you want to maximize your gains at the expense of extreme poverty.”
In fact, Tony’s Chocolonely pays 82 percent more than what the government is charging in order to fairly compensate farmers in Ivory Coast — and still makes a profit. Schoenmakers said that the chocolatier “pays a lot more” than the LID when you factor in recent rises in the cost of living and agriculture.
For farmers to earn a decent living, cocoa must be sold for at least $2,600 per ton, according to Le Conseil du Café-Cacao. This would give farmers a 13 percent margin to cover costs and make a small profit.
However, cocoa is currently traded for around $2,300, meaning that farmers will only earn a fair wage even with the introduction of the LID. Analysts believe that the price of cocoa has fallen over the course of the pandemic due to lower demand for chocolate, which has put further pressure on farmers’ incomes.
In response, Kouassi said Ivory Coast was artificially restricting its cocoa supply to keep prices high.
“We have taken vigorous steps to prevent the construction of new plantations,” he said. “The aim is to reduce supply and increase demand.”
The drastic measure reflects the growing opinion of the Ivorian and Ghanaian authorities that heavy cocoa producers will no longer be forced to sell the raw material from foreign companies at unfavourable prices.
African producers were encouraged by the recent opportunity that Nigeria and Cameroon — which together account for around 15 percent of global cocoa production — will join the Côte d’Ivoire-Ghana Cocoa Initiative (CIGCI), a formal partnership to represent the interests of both countries.
In this case, chocolatiers will have even less leeway, as the four African countries will account for 75 percent of global cocoa production. The remaining 25 percent come primarily from Indonesia, Brazil and Ecuador.
“Two thirds is not nothing,” said the minister, referring to the quantity of cocoa beans that Ivory Coast supplies to the world market. “If you refuse to pay the LID, we’ll refuse to sell.”