Large chocolate and cocoa multinationals urged to publish living income policy for farmers

The Cocoa Barometer Consortium, published by the Voice Network and a biennial ‘State of Sustainability’ overview of the cocoa sector, has called for every chocolate and cocoa company, and every sustainability standard, to develop and publish a living income policy, including a clear statement on what the minimum farmgate price should be.

In a position paper​ on living income farmgate prices, it states that “currently almost no cocoa farmers in the main cocoa production countries in West Africa are earning a living income​.

“Without a living income for cocoa farmers, cocoa will never be sustainable. If a farmer must choose between feeding his family and not cutting down his old growth trees, it isn’t a choice. Other challenges facing the sector – such as deforestation and child labour – will be impossible to tackle if farmers still live in poverty​.”

Living Income Reference Prices

The Consortium goes on to say that Living Income Reference Prices (LIRP) should be based on the current reality of average cocoa farmers and calculations so far have erred significantly on the low side, not on the hypothetical future yield scenarios for outlier farmers, and that certification premiums should not be considered as a part of a Living Income Reference Price.

To really change the system and make an impact, paying a higher price is not enough. ​You need all five sourcing principles: traceable beans, a higher price, strong farmers, long term commitments and investing in productivity & quality. No cherry-picking! - Paul Schoenmakers, head of impact, Tony’s Chocolonely​

The paper cites Dutch chocolate brand Tony’s Chocolonely, which has aligned its price with Fairtrade and pays the same per metric ton. The main difference is that Tony’s calculates the Fairtrade premium as part of the Living Income Reference Price. Moreover, premiums are part of a communal fund, are not fully paid to the farmer, and the paper says they should not be considered part of the farmgate price. Dutch retailer Albert Heijn is also purchasing according to the Tony’s Chocolonely model.

“It should be abundantly clear that living income is the starting point of a conversation on farmer income, not a finish line. Those people reading this paper would not be satisfied with earning just a living income. Why should a cocoa farmer? Every farmer should be able to earn at least a living income, but preferably a lot more​,” said Antonie C Fountain, one of the paper’s authors.

Paul Schoenmakers, head of impact at Tony’s Chocolonely, told ConfectioneryNews: “To really change the system and make an impact, paying a higher price is not enough. ​You need all five sourcing principles: traceable beans, a higher price, strong farmers, long term commitments and investing in productivity & quality. No cherry-picking!​”

He also said the company agrees with the Voice paper, even if its approach differs to the Dutch brand.

“Where Voice uses the current average productivity to calculate, Tony’s makes use of a realistically achievable yield target. Why? We realise it’s above the national averages, but in our supply chain, we see farmers professionalising and achieving or exceeding this yield. It is an essential part of professional cocoa farming.​

“Paying the LIRP based on this target creates an incentive to improve: price is the best fertiliser. And in addition, we work with the cooperatives to organise the right support. ​

“According to Voice, Tony’s does not pay enough for a living income. But, if we apply this yield target to the Voice calculation model, our payments exceed their reference. The LIRP should be an industry standard adopted by all companies to enable farmers to earn a living income.”​

Desired cocoa price

The Consortium said: “Several initiatives in the past year have started to communicate about desired cocoa price levels for farmers in Cote d’Ivoire and Ghana. The situation is not transparent, as each approach has a different methodology to calculate a living income and a different way to transfer additional money​.”

The Consortium also called on the Ivorian government to immediately cease its ban on rejuvenation and distribution of seedlings, and put in place supply management solutions that do not forbid farmers to improve their production practices.