Key World Fair trade Day highlights cocoa farmer earnings drop by 16%, impacting industry sustainability
A fresh market report from Oxfam has expressed concern at Ghana cocoa farmers’ earnings falling 16% during the pandemic, placing further pressure on their ability to earn a sustainable living, amid a period of notable profits for major confectionery companies, writes Neill Barston.
The charity made its latest assessment of the sector to mark World Fair trade Day on 13 May, noting that four of the largest businesses in the sector Hershey, Lindt, Hershey, Lindt, Mondelēz and Nestlé, have together made nearly $15 billion in profits from their confectionary divisions alone since 2020 – on average increasing by the same level to which agricultural workers pay has in fact fallen.
In addition, according to Oxfam, the combined revenues of the Mars and Ferrero families, who own the two biggest private chocolate corporations, have risen by $39 billion since 2020, which it claimed now meant they have a combined net worth in the region of $157 billion.
As has previously been reported, the respective major confectionery companies have all introduced engagement programmes for the cocoa sector over the past decade aimed at supporting cocoa growing communities, in terms of helping raise farmer pay (through the recently introduced Living Income Differential (payment of of $400 per tonne), as well as many businesses supporting the payment of Fair Trade premiums. However, despite such measures, significant wider levels of poverty are continuing to impact the sector and broader community.
Consequently, a study from the global charity examining conditions for more than 400 cocoa farmers supplying chocolate corporations across Ghana found that their net incomes have fallen on average by 16 percent since 2020, with women’s incomes falling by nearly 22 percent. Nine out of ten farmers said they are worse off since the pandemic.
Of particular concern, Oxfam noted that its studies revealed 90 percent of Ghanaian cocoa farmers do not earn a living income, meaning they cannot afford enough food or other basics such as clothing, housing and medical care. Underlining the situation, it reported that many of the 800,000 farmers in the country survive on just $2 a day.
Confectionery Production reported that Mondelez was the first major snacking and confectionery group to identify the income gap within West Africa- according to its studies released in 2020, challenging conditions in Ghana and Ivory Coast meant agricultural communities in those nations would need to earn an additional $10billion gain the equivalent of a living wage.
“There’s big money in chocolate —but definitely not for farmers,” said Oxfam International interim Executive Director Amitabh Behar. “Cocoa farmers work extremely hard, under gruelling conditions, yet can’t always feed their families.”
Furthermore, Oxfam added that it has analysed the sustainability programmes of ten of the top chocolate manufacturers and traders operating in Ghana, all of which prioritise helping farmers produce more cocoa. Notably, t claimed that there were no such schemes that had achieved an increase in cocoa production to boost farmer income – with crop yields in fact reportedly declining by 25 per cent between 2020 and 2022. In addition – the charity also claimed that none of the premium systems paid direct to farmers, paid by the corporations, positively impacted on farmers’ real-term incomes.
Cocoa farmers surveyed by Oxfam said they are being paid a premium of $35 to $40 per ton of cocoa. The average cocoa farmer in Ghana produces about one ton of cocoa annually. They need to earn $2,600 more per year to get a living income.
In addition, the charity added that following child labour pledges and deforestation initiatives promised by the industry, the inability to raise cocoa payment prices sufficient was ‘another setback to global efforts to make chocolate more sustainable and ethical. Underlining this, it noted that many cocoa farmers were in fact selling their land to illegal miners or turning to polluting ‘galamsey’ (artisanal mining) to supplement or replace their incomes.
“Chocolate giants need to put their money where their mouth is,” said Behar. “They must rid themselves of their colonial legacy of extracting raw materials and keeping farmers in poverty while making astronomical profits for their rich shareholders. Without fair pricing and living incomes there will never be such a thing as ‘sustainable’ or ‘exploitation-free’ chocolate.”
Ghana produces around 15 percent of the world’s cocoa beans, but receives only about 1.5 percent ($2 billion) of the chocolate industry’s estimated annual worth of $130 billion. Around 60 percent of the world’s cocoa heads to Europe.
“Chocolate corporations need to close the living income gap for farmers. said Behar. “They must significantly increase farm-gate prices paid to farmers, and mitigate the impact of inflation on the rising costs of farming inputs and equipment. Transparency about their prices and premiums is also a bare minimum.”