"Ghana and Ivory Coast take on global chocolate companies"

" \n Last week, global commodity markets were shaken to their very foundations by the collaborative actions of Ghana and Cote d\u2019Ivoire in pursuance of their price setting agenda for cocoa beans \n \n\n \n The two countries backed up their earlier threat to withdraw from Hershey\u2019s cocoa sustainability scheme in response to that company\u2019s efforts to evade paying a living income differential (LID) or premium, introduced last year of US$400 per tonne on all 2020\/21 cocoa sales the proceeds of which are being used to raise the income of cocoa farmers in the form of a 28 percent increase on the amount each country\u2019s government pays cocoa farmers per tonne of the commodity purchased at the farm gate. \n \n\n \n Both countries cancelled all their cocoa sustainability schemes with the United States headquartered Hershey. \n \n\n \n In a letter addressed to Hershey, the Ghanaian and Ivorian cocoa regulators accused the chocolate products maker of sourcing unusually large volumes of physical cocoa on the ICE Futures Exchange in order to avoid paying the LID \u2013 negotiated last year but effective from the recently commenced 2020\/2021 crop season. \n \n\n \n Between the two of them they account for two-thirds of global coca production but until now have acted as docile price takers. Both countries warned they are also barring third party companies from running sustainability schemes in their respective countries. Indeed Fuji Oil Holdings, a Bloomer subsidiary of Hershey was accused of aiding Hershey. \n \n\n \n \u201cAny brand that is seen not to be serious in accepting the LID by mid-December 2020 must consider all its cocoa beans from Ghana and Cote d\u2019Ivoire as conventional. We are prepared to name and shame these brands,\u201d he added. \n \n\n \n Ivory Coast and Ghana have struggled to sell forward their 2020\/21 cocoa crop since introducing the LID, in large part because the coronavirus-induced recession slashed demand for non-staple foods like chocolate. \n \n\n \n However there are suspicions in Ghana that the reluctance of buyers to purchase on the forward market is a subtle attempt on the country \u2013 and Cote d\u2019Ivoire as well \u2013 to stop insisting on adding the LID to the normal market price accepted by other, smaller cocoa exporting countries. \n \n\n \n Ghana has traditionally sold its produce on the forward market which enables it to secure between US$1.3 billion and US$1.8 billion in short term financing from a consortium of international commercial banks. \n \n\n \n The facility \u2013 the largest annual agricultural financing facility in sub-Saharan Africa \u2013 is secured by cocoa sales proceeds from the international markets. An inability to sell on forward markets could jeopardize Ghana\u2019s ability to raise this financing which it uses to fund its cocoa purchases from local farmers. \n \n\n \n If Ghana goes ahead with its threat, then major changes are coming. Just hours after announcing that they had withdrawn from the sustainability scheme they had with Herheys, Ghana and Cote d\u2019Ivoire are now turning their attention to another leading global chocolate manufacturer, Mars Wrigley. \n \n\n \n In a joint letter Ivory Coast\u2019s Coffee Cocoa Council (CCC) and the Ghana Cocoa Board (Cocobod) have accused Mars of modifying its cocoa butter procurement processes to avoid paying the LID, a scheme supported by the campaign group Fairtrade. \n \n\n \n Just hours after announcing that they had withdrawn from the sustainability scheme they had with Herheys, Ghana and Cote d\u2019Ivoire are now turning their attention to another leading global chocolate manufacturer, Mars Wrigley. \n \n\n \n Cocobod is threatening to suspend the sustainability schemes used by major cocoa and chocolate companies to assure consumers that the cocoa beans they use are sustainably and ethically sourced. \n \n\n \n In comments prepared for the latest World Cocoa Foundation conference on behalf of Ghana and its west African neighbour Ivory Coast, Joseph Aidoo, chief executive of Ghanaian regulator Cocobod said cocoa and chocolate companies in West Africa were thwarting government attempts to combat farmer poverty by trying to evade paying the Living Income Differential agreed by the two countries and global cocoa buyers. \n \n\n \n As a result, their sustainability schemes, which allow companies such as Barry Callebaut and Nestle to charge consumers a premium for chocolate certified as sustainably sourced, could be suspended. \n \n\n \n \u201cThe (cocoa\/chocolate) brands (have) openly announced their commitment to the LID (but) our intelligence indicates there is a ploy by some to derail (it),\u201d Aidoo said. \n \n\n \n In a joint letter on Monday, Ivory Coast\u2019s Coffee Cocoa Council (CCC) and the Ghana Cocoa Board (Cocobod) had accused Hershey of reportedly making a large purchase of cocoa on the futures market. \n \n\n \n The move, they charged, \u201cclearly indicates your intention to avoid paying the living income differential.\u201d \n \n\n \n The two boards said they had \u201cbeen left with no choice but to cancel all sustainability programmes with which your company is involved\u201d. \n \n\n \n These schemes certify that the chocolate is ethically produced, which lets the firms to embellish their image with consumers. Production must avoid deforestation and be free of child labour. \n \n\n \n The global chocolate market is estimated at $100 billion, but only six percent of that trickles down to farmers \n \n\n \n Taking a stance identical to that of Hershey, Mars Wrigley has responded to the allegations saying it \u201ccategorically disagrees\u201d with any suggestion that it had switched cocoa buying practices to avoid paying the LID, and said it had long supported the initiative. \n \n\n \n Analysts say the joint public attack is remarkable. \n \n\n \n Until now, the CCC and Cocobod have been virtually invisible to the general public, and their allegations about trades have shed light on a cocoa market that is notoriously opaque. \n \n\n \n To add to the pressure, cocoa farmers are going to stage simultaneous protest marches in both African countries imminently. \n \n\n \n \u201cThe strategy\u2026 is based on public relations, and that\u2019s new,\u201d a cocoa trader said. \n \n\n \n \u201cThey are going to make a noise, the press are going to get involved, and the balance of power may swing in their favour, because ethical questions have become important for western consumers\u201d of chocolate. \n \n\n \n The approach clearly has political traction. \n \n\n \n Ivory Coast President Alassane Ouattara was just re-elected, while Ghana\u2019s President Nana Akufo-Addo is running for re-election on Monday. \n \n\n \n Ivory Coast accounts for more than 40 percent of global output, and Ghana at least 20 percent of it. More than half of their growers live below the poverty line, according to estimates. \n \n\n \n Chocolate makers who are the main buyers of Ghanaian cocoa would no longer be able to charge premiums on their products made from Ghanaian cocoa. \n "

"Ghana and Ivory Coast take on global chocolate companies"

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