MEPs call on EU Commission to deliver pact on sustainable cocoa sourcing to create a living wage
A concerned group of European MEPs have grouped together calling upon the EU Commission to negotiate with Ghana and Ivory Coast in the wake of proposals from the two West African nations to establish an Economic Pact for Sustainable Cocoa aiming deliver a living income for farmers, reports Neill Barston.
Confectionery Production has previously covered the plight of agricultural workers in the sector, with some earning less than $1 a day, which is well below UN-defined poverty levels, with many in the sector still unable to make-up sufficient funds from other activities including alternative crops.
Consequently, the RBC working group of MEPs has asserted that delivering on such a pact would enable the objectives of the upcoming EU legislation on Deforestation-free products and Corporate Sustainability Due Diligence.
As the collective of eight members of parliament noted, its core aims of eradicating child labor and deforestation require integrated efforts across policy sectors, give that a total of 1.5 million minors remain exposed to hazardous labour activity across Ghana and Ivory Coast. This was worsened further by the pandemic of the past two years, which has impacting additionally on supply chains and cocoa prices.
The group urged the EU to try and assist on what will be done to resolve the low price of cocoa, which is presently trading notably below previous peaks. It also sought the Commission’s support in how to help with the management of the supply chain to prevent further shocks and promote sustainability.
Letter to EU commission
In a letter to the EU Commission, the group said: “Dear Executive Vice-Presidents Timmermans and Dombrovskis, Commissioners Sinkevičius and Urpilainen,
“We write to you in the context of the EU Cocoa Talks, to urge you to take up the offer of the governments of Ghana and Cote d’Ivoire for an Economic Pact for Sustainable Cocoa, as the “next step” in the EU Cocoa Talks. The RBC working group MEPs have followed and championed the Cocoa Talks since their inception. We were encouraged by seeing a diverse group of actors from producer and consumer countries come around the table to discuss sustainability issues in the cocoa sector. However, for now, it remains somewhat unclear as to what is or will be the outcome of these talks.
“We have noted the Economic Pact for Sustainable Cocoa proposed by the governments of Cote d’Ivoire and Ghana during their visit to Brussels in February this year. During their visit, the Ivorian and Ghanaian governments rightly called attention to the low cocoa price as a fundamental missing element of the EU’s regulatory proposals on deforestation-free products and corporate sustainability due diligence.
“The proposal of an Economic Pact provides an opportunity to reach an agreement with the producer countries on a way forward on the key issue of price, as well as on other sustainability issues, and to obtain a concrete outcome of the Cocoa Talks. We therefore call on the Commission to open negotiations with Cote d’Ivoire & Ghana to reach an Economic Pact for Sustainable Cocoa.
“”The low and unstable price West African countries and their farmers receive for their cocoa in Ghana and Ivory Coast is not only a human rights issue in itself, it is also a key driver of child labour and deforestation, both of which the Commission aims to address in its above mentioned recent legislative proposals.
‘The vast majority of farmers in these two, leading cocoa-producing countries live in extreme poverty, earning well under $1 USD per day. Despite back-breaking labour, farmers receive a pittance for the cocoa they produce: only around 6% of the final sale price of a chocolate bar. This situation cannot be said to be inevitable: in 1980, farmers received 16% of the final sale price, almost three times what they earn today. ”
The letter went on to acknowledge that the situation was driven by a growing oversupply of cocoa on the world market, which has forced prices downwards over the years, causing considerable price fluctuation. Notably, it said that businesses can hedge against these risks and protect themselves, but small farmers cannot, and have no government subsidies or insurance to protect them. The reality, they say, is that a cocoa price collapse leaves hundreds of thousands of people in West Africa hungry.
According to the group, that despite the governments of Ghana and Ivory Coast bringing in the Living Income Differential price mechanism (paying $400 to each farmer per tonne of cocoa being introduced in 2019, the scheme had encountered difficulties. This included further price drops, that prompted both Ghana and Ivory Coast to lower farmgate prices further.
Crucially, the MEP group, that includes Maria Arena, Saskia Bricmont, Anna Cavazzini, Ignazio Corrao, Pascal Durand, Heidi Hautala,Helmut Scholz and Michal Wiezik, said that any negotiations should not simply be between the EU, and governments of Ivory Coast and Ghana. In their view – all stakeholders in the community should have a voice in the proceedings.
The group’s letter added: “Despite Covid– companies have made record profits: in the past decade, Nestlé has bought back around $46 billion USD in stockholder shares. In early 2020, the Ferrero family paid itself an annual dividend of €642 million. In 2021, major cocoa trader Barry Callebaut surpassed its pre-COVID growth levels, with 6.5% volume growth, and was able to increase its dividends, while the price paid to West African farmers remained as low or lower than before. Companies’ recent growth in profits outpaced their growth in sales volumes: the low price of cocoa is allowing companies to get richer while farmers in the Global South get poorer.”
“The Commission’s proposals on deforestation-free products and corporate sustainability due diligence are welcome and long overdue. If sufficiently robust they can provide a game-changing effect on sustainability and human rights issues in the cocoa sector. But they must be accompanied by measures to address the low prices that farmers receive for their cocoa. We wish to recall that the right to an adequate standard of living is a human right under the United Nations Declaration on Human Rights.”