Large chocolate and cocoa companies, including multinationals like Mars, Ferrero, Mondel?z, Hershey and Nestlé, as well as traders like Barry Callebaut and Cargill , are not paying prices that allow cocoa farmers to earn a living income. This is the conclusion of a new report published today by VOICE, a network of organisations working to end problems such as poverty, child labour and deforestation in the chocolate industry.  

Cocoa farmers still poor 

With the festive period fast approaching, chocolate and cocoa companies will see their sales and profits gain a seasonal boost, as they do every year. But evidence suggests that cocoa farmers in Ivory Coast and Ghana will not benefit equally from this. Research by Oxfam has shown that cocoa farmers in Ghana saw their net incomes decrease by over 16% between the 2019/2020 and 2021/2022 harvesting seasons. In that same period, the world's four largest public chocolate corporations, Hershey, Lindt, Mondel?z and Nestlé, have together made nearly $15 billion in profits from their confectionary divisions alone, up by an average 16 percent.

Dr Julian Oram, Senior Director at Mighty Earth, commented: "During a visit to Ghana in March, I spoke to cocoa farmers who expressed hope that cocoa prices would rise in 2023 compared to last year. But even if this happened, they believed it would likely not be enough to cover their costs of production. This dilemma entrenches poverty, as well as the social and environmental problems that come with it, and is a clear illustration of why cocoa traders and chocolate companies must now commit to paying a price that provides farmers with a living income."  

Current corporate approaches not effective

Current approaches by chocolate and cocoa companies to raise farmer income have had marginal impact at best. This is because most programmes aimed at improving livelihoods are focused on higher yields, farmer training, and income diversification, rather than reforming companies' own purchasing practices. A notable exception of this is Tony Chocolonely's Open Chain approach. But other than that no large chocolate or cocoa companies are paying higher prices at farm gate level. The report demonstrates that this needs to change.

Changing corporate purchasing practices is key

Bakary Traoré, IDEF, Ivory Coast: "Companies have made numerous commitments to improve producers' incomes, but the data keeps coming back, and everywhere, it's the same, implacable observation. Most companies are still stuck in purchasing practices from another era. It's time for the market to adopt fairer practices."

After twenty years of limited progress on cocoa, companies need to start addressing their core business, which is the buying and selling of cocoa products. The core of any good purchasing practices is a farm gate living income reference price (LIRP). Next to that transparency and long-term contracts are needed to reduce the risk to farmers.

Companies need to act. 

Antonie Fountain, director of VOICE network: "The core business of companies is the buying and selling of their products, not running sustainability programs. Companies are only sustainable if their core business is. And their core business is only sustainable if their purchasing practices are. This means to pay a fair price, take a fair share of the risk, and be accountable about it."