BDSI calls for measures ensuring living income payments reach cocoa farmers directly

The Federal Association of the German Confectionery Industry (BDSI) has made a plea for measures to ensure a new trading tariff to be paid on cocoa from Ivory Coast and Ghana directly reaches farmers. Neill Barston reports.

Under the Living Differential scheme proposed last year by the two West African nations’ governments, a figure of $400 per tonne of cocoa is added to export prices, in a bid to address significant levels of poverty for the majority of those working within the sector.

According to reports from Reuters, major confectionery groups including Olam, Nestle, Barry Callebaut and Cargill have already struck deals under the scheme last autumn ahead of the 2020/2021 harvest.

However, the BDSI said that it while the move was a positive one, it was ‘imperative that cocoa farmers and their families benefit’ from the move as part of wider transformations occurring across the cocoa sector.

The German organisation said that the scheme should be instituted from this October and noted that it was a political move to further a goal of creating higher and more stable prices for the industry – with cocoa prices having been notably hit during the coronavirus pandemic.

As part of the living differential, the target price of cocoa was posed at a figure of $2,600 a tonne, with farmers offered 70% from this target price. It was proposed that should the price go above $2,900 a tonne, then funding from the differential would be allocated to a stabilisation fund as a buffer if prices were to fall – which in recent years has presented a major challenge amid uncertain global markets.

However, trade observers within Ivory Coast and Ghana have expressed concerns over precisely what mechanism would be used within government to ensure that this funding formula would translate to direct financial payments to farming communities.

The BDSI said that the income of farmers needed to increase significantly, with presently earning less than $1 a day, below UN definitions of world poverty, which many within the industry believe could threaten the future sustainability of the sector. Furthermore, the trade body added that directly tackling such matters should also impact positively on major issues relating to the continuing widespread issue of child labour.

Aldo Cristiano, chairman of the chocolate division of the BDSI, said. “The BDSI carries out the objectives of the governments of the Ivory Coast and Ghana to improve farmers’ incomes with this special levy on cocoa. However, it is imperative to ensure that the markups actually arrive only directly with the cocoa farmers.

“This minimum price concept must not be view in isolation. In the long run, a holistic approach alone is useful, including following agricultural policies and good administrative practice in these growing countries. Otherwise, there is the threat of more overproduction on the world market that could lead to further falling cocoa prices.

Sector targets

The German confectionery industry has set itself the goal of a significant one of contributing to development and the life of those involved in cocoa production. As part of this, the organisation said that product certification is an important building block for the development of a more sustainable cocoa sector. In addition, it also welcomed the efforts of standards created by Fairtrade and Rainforest Alliance over prevention of child labour.

It added that small farmers who are members of such organisations had made notable progress. In 2019, the proportion of those certified according to sustainability standards stood at 72% of cocoa sold in Germany, compared to just 3% in the BDSI’s first survey back in 2011.

Furthermore, many German confectionery manufacturers also have their own projects and programmes to enable farmers and their communities to increase their income to become more productive and climate-resistant, protect the environment and to fight deforestation and human rights concerns in the supply chain.

The BDSI is also intensively involved in the “Sustainable Cocoa Forum”, a community initiative founded in 2012. In addition to members from the The chocolate and confectionery industry as well as the food trade are becoming more popular This organisation also includes the federal government, non-governmental bodies and standard-setting associations. 

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