Ivory Coast Cocoa traders suffer amidst chocolate price wars

Ivory Coast cocoa traders are experiencing considerable hardships as a result of intensified price wars among chocolate manufacturers, who seem to prioritize their profits above the need for fair compensation for the hardworking farmers who supply cocoa.

These traders, who play a critical role in the economy of the region, are feeling the pinch as the margins for cocoa sales continue to dwindle, leaving them in a precarious financial situation. This ongoing and troubling struggle brings to light the complex and often inequitable dynamics that characterize the global cocoa supply chain.

Within this system, the majority of the revenue generated from cocoa sales tends to bypass the very producers—the farmers—who dedicate their time, effort, and resources to cultivating this essential and sought-after ingredient.

The Unsweetened Reality For Cocoa Farmers

Despite the booming global chocolate industry, which is valued at approximately $140 billion annually, less than 7% of the total revenue reaches the farmers.

This disparity has led to widespread poverty among cocoa farmers, particularly in Ivory Coast, the world’s largest cocoa producer.

• More than half of Ivorian cocoa farmers earn below the national poverty line of about $3 per day.
• A 2021 Fairtrade International survey revealed that 88% of certified farmers in Ivory Coast still did not earn a “living income.”
• Oxfam reported a 16% average decline in net incomes for Ghanaian cocoa farmers since 2020.

This economic hardship is exacerbated by soaring costs for agricultural inputs like fertilizer, which have increased by approximately 30% in the past year due to global disruptions.

The dire financial situation also perpetuates the chronic problem of child labor, as many farmers cannot afford adult workers.

The Living Income Differential: A Flawed Solution

Cocoa farmers extract cocoa beans at a plantation in Ivory Coast [File: Sia Kambou/AFP]

In an effort to combat these issues, Ivory Coast and Ghana, which together account for 65% of global cocoa production, introduced the Living Income Differential (LID) in 2019. This $400 per tonne premium was intended to directly benefit farmers.

• The LID aimed to increase farmer incomes by 20-30%, though this was still insufficient to escape poverty.
• Chocolate manufacturers found loopholes, such as temporarily reducing other price components, effectively negating the LID’s impact.
• Some companies reportedly refused to pay the official price, and others allegedly bought cocoa through futures exchanges to avoid the premium.

Ivorian officials, including Economy Minister Adama Coulibaly, have expressed strong dissatisfaction with the lack of adherence to the LID, emphasizing that farmers receiving only 6% of the revenue is unacceptable.

West African Nations Fight Back

Frustrated by the industry’s resistance, Ivory Coast and Ghana have adopted more assertive tactics.

• In October, the two nations boycotted a key cocoa industry meeting in Belgium, sending a clear message to major companies.
• They have threatened to ban companies from visiting cocoa farms for harvest data and to withdraw from corporate sustainability schemes if fair prices are not met.
• The goal is to increase the share of global cocoa revenue reaching producing countries to 13% from the current less than 7%.

This pressure has led to ongoing dialogues and the formation of a task force with governments to discuss improved prices.

The potential expansion of this coalition to include Nigeria and Cameroon, which would control 75% of global cocoa production, further strengthens the West African nations’ bargaining position.

The Illusion of “Sustainable” Chocolate

Many chocolate products carry labels boasting “100-percent sustainably sourced cocoa,” yet West African officials argue these labels are misleading.

Sustainability programs often provide minimal income boosts, and transparency regarding payment calculations is lacking.

• A 2021 Fairtrade International report showed that the fair trade premium provided less than a 2% income boost for most Ivorian farmers in the program.
• Many farmers did not even receive the promised payments from these schemes.
• Academic studies indicate that a significant portion of Ivory Coast’s cocoa exports remain untraced.

Industry insiders and officials, like Alex Assanvo of the Ivory Coast-Ghana Cocoa Initiative, contend that these sustainability claims are largely marketing ploys, designed to reassure consumers without genuinely addressing the systemic poverty faced by farmers. The true situation, they argue, is far from the ethical image portrayed by chocolate companies.