In a bold move, Ghana and Ivory Coast, the world’s top cocoa producers, have boycotted key meetings of the World Cocoa Foundation (WCF) held in Brussels on October 26 and 27, 2024. The two West African nations, which account for about two-thirds of global cocoa production, have long expressed frustrations over the global pricing system that leaves their farmers in poverty.
READ EVERYTHING ABOUT GHANA EXPORT NEWS
Their boycott is a direct protest against the multinational chocolate companies and traders they accuse of blocking attempts to improve the incomes of millions of cocoa farmers. The center of their grievances is the Living Income Differential (LID) and the widespread perception that the current system heavily favors multinational corporations while marginalizing farmers.
The Living Income Differential (LID) – A Critical Issue
Introduced in 2019, the LID was intended to improve the livelihoods of cocoa farmers in Ghana and Ivory Coast. The two nations set the LID at $400 per tonne, which was to be added to the world price of cocoa. The rationale behind this move was simple: most cocoa farmers in these countries live on less than $1 a day, far below international poverty lines. In contrast, the global chocolate industry, which generates over $100 billion annually, has seen immense profits, particularly among European and American companies. This vast inequality was precisely what the LID sought to address by ensuring that a more substantial portion of the revenue trickled down to the farmers.
[READ ALSO]
However, despite the introduction of the LID, multinational companies and traders have reportedly undercut this effort by setting a negative country differential of $260 per tonne, effectively reducing the price that farmers receive. This tactic has rendered the LID ineffective, perpetuating the cycle of poverty among cocoa farmers.
In July 2022, Ghana and Ivory Coast took a firm stance, announcing they would no longer sell their cocoa with negative country differentials. The current boycott of the WCF meetings is an escalation of this standoff, underscoring the gravity of the situation and the frustrations of the two nations.
A Disparity of Wealth: Cocoa Farmers Versus the Global Chocolate Industry
The global chocolate industry is a behemoth, with estimated revenues exceeding $130 billion as of 2022. However, despite being the backbone of this industry, cocoa farmers in Ghana and Ivory Coast earn less than 6% of the total value of chocolate products sold. This stark disparity highlights the inequities in the supply chain. While global chocolate companies such as Mars, Nestlé, and Hershey’s rake in billions in profits, the farmers who produce the cocoa beans continue to live in abject poverty.
The LID was seen as a necessary intervention to rectify this imbalance. Unfortunately, the resistance by traders and corporations to fully implement the LID underscores the larger systemic issues at play. The negative country differential imposed by commodity traders effectively cancels out the benefits of the LID, forcing Ghanaian and Ivorian farmers to accept prices far below the global average.
The Boycott: A Turning Point for Cocoa Sustainability?
The decision by Ghana and Ivory Coast to boycott the Brussels meetings is a significant moment in the ongoing battle for fair compensation for cocoa farmers. The World Cocoa Foundation represents 80% of the global cocoa market and plays a crucial role in setting industry standards on sustainability, farmer pay, and issues such as child labor and deforestation. By refusing to participate in these discussions, Ghana and Ivory Coast are sending a clear message: the status quo is unacceptable.
Civil society organizations in both countries have rallied behind the governments’ decision to boycott the meetings. Four prominent organizations from Ghana and Ivory Coast have voiced their support, arguing that cocoa farmers have been shortchanged for far too long. For these groups, the boycott is not just about pay; it’s about securing a future for cocoa farming as a sustainable livelihood for millions of people.
The Role of Multinational Companies and Their Responsibility
The global chocolate industry is dominated by a few multinational giants that control the bulk of cocoa purchases. Companies like Barry Callebaut, Cargill, and Olam are major buyers of cocoa beans and have significant influence over pricing mechanisms. At the same time, large chocolate manufacturers like Mars, Hershey’s, and Ferrero rely on these supply chains to produce their products. These companies have long claimed to support sustainable farming practices and initiatives aimed at improving farmer incomes, yet the practical results remain limited.
According to data from the International Cocoa Organization (ICCO), in 2021, the global cocoa market produced approximately 5 million tonnes of cocoa, with Ghana and Ivory Coast together producing more than 3 million tonnes. Despite these impressive figures, most cocoa farmers continue to earn below poverty-level incomes. This disconnect between the wealth generated by the cocoa industry and the earnings of those who actually produce the raw material is at the heart of the current crisis.
[READ ALSO]
The question now is whether these multinational corporations will take meaningful action to address the concerns raised by Ghana and Ivory Coast. So far, the companies have resisted significant changes to the pricing structure, opting instead for small-scale initiatives that have had limited impact. However, with the boycott gaining international attention, the pressure is mounting for these companies to engage in more substantive reforms.
The Impact of the Boycott on Global Cocoa Supply
The boycott by Ghana and Ivory Coast could have significant ramifications for the global cocoa supply. As the largest producers, any disruption in the flow of cocoa from these countries could lead to price hikes and supply chain disruptions for chocolate manufacturers. In the short term, chocolate companies may attempt to source cocoa from other countries, but given the dominance of Ghana and Ivory Coast in the market, this is unlikely to be a viable long-term solution.
Moreover, the boycott highlights a broader issue within the global agricultural supply chain: the growing power of producer countries to push back against exploitative practices. In recent years, we have seen similar movements in other sectors, such as coffee and palm oil, where producers have begun to demand fairer compensation and better working conditions. The cocoa boycott could be the beginning of a broader trend in which commodity-producing nations assert greater control over the pricing and distribution of their resources.
The Path Forward: What’s Next for Cocoa Farmers?
The current standoff between Ghana, Ivory Coast, and the global chocolate industry is unlikely to be resolved overnight. However, the boycott of the World Cocoa Foundation meetings has brought much-needed attention to the plight of cocoa farmers. For the LID to be effective, multinational corporations must commit to paying the full premium without imposing negative differentials that undermine its impact.
The future of cocoa farming depends on creating a more equitable system where farmers are compensated fairly for their labor. Without such reforms, cocoa production in West Africa could decline, as more farmers abandon the crop in search of better opportunities elsewhere. The success of the chocolate industry is built on the hard work of these farmers, and it is time for the industry to recognize their contributions and pay them accordingly.
The world is watching to see how the situation unfolds, but one thing is clear: Ghana and Ivory Coast are no longer willing to accept the status quo, and their boycott signals a turning point in the fight for fair compensation in the global cocoa market.
Facebook Comments