Conscious cocoa: Mondelēz and WUR raise awareness of farmer income challenges

18 Nov 2021 --- Nearly 75% of small cocoa farmers in Ghana and the Ivory Coast currently earn too little to lead a decent life. Shining a light on this, Dutch institution Wageningen University & Research (WUR) and Mondelēz International have pooled their data and resources to contribute to a broader awareness of the nature and magnitude of the living income challenges the farmers face.

The insights resulting from their report can be used for vision and policy development and intervention design.

Escaping the poverty trap
It is expected that a third of these cocoa farmers will not escape the poverty trap on their own. This urgently needs to be addressed because having a decent living income is a human right.

Other essential needs such as education, transport, clothing and medical care should also be within financial means.

More than a million small cocoa farmers in Ghana and the Ivory Coast have no living income. Their current income is US$1.42 and US$1.23 per person each day, respectively, while the living income measure is US$2.08 and US$2.55, respectively. 

Nearly 75% of small cocoa farmers in Ghana and the Ivory Coast currently earn too little to lead a decent life.On average, Ghanaian cocoa farmers, therefore, have to earn US$0.66 more per person every day to achieve a living income (46% more), while cocoa farmers in Côte d’Ivoire should earn US$1.32 more per person per day (more than double their income). 

Approximately US$10 billion a year in additional income is needed to provide all farmers with a living income, the partnership outlines. This amount is almost triple the total income from cocoa exports in 2018 for Ghana and the Ivory Coast.

Cocoa industry welcomes change 
Because the gap between real and living income is wide for many people, all stakeholders in the cocoa sector must do their part to change this. Local governments, companies, NGOs, farmers’ organizations and financial institutions need to take responsibility and work together more to ensure a living income and reform the cocoa sector responsibly.

Diversification into other agricultural products is also hampered by the size of the farms and the ability to invest. For the majority of farmers, diversification is therefore not an option to substantially increase their income. 

Cocoa cultivation is usually the best option for farmers to earn money.

In addition, farmers have a poor bargaining position and are generally price takers; prices are volatile and show a downward trend throughout history. 

There are limited opportunities to sell cocoa in niche markets with higher prices, but scaling this up is difficult; cocoa from West Africa is generally sold in bulk without a quality premium, while sustainability premiums are often low. 

Markets dynamics 
According to WUR and Mondelēz, several governments are failing to create the conditions that would enable cocoa farming families to thrive. 

The agricultural areas decrease in size because the plots of land are divided among the children after the death of the farmer and therefore shrink over time. At the same time, social security systems are lacking, and if they exist, few farming families benefit from them. 

Market dynamics are not counterbalanced by cocoa supply management, leading to unstable and often low prices. This can also affect government budgets if the government sets the prices farmers receive, and prices on the world market are lower than the prices farmers receive.

Farmers unable to earn a living income can best be supported in the short term through measures to increase resilience, WUR and Mondelēz underscore. They state that raising prices and reducing price volatility is essential for all farmers. Market dynamics are not counterbalanced by cocoa supply management, leading to unstable and often low prices.

“An important opportunity we see for increasing revenues and protecting the environment are fees for ecosystem services. Governments must improve conditions for farmers so that they can earn a living income, for example, through cocoa supply management, land use, policies that promote job creation and social security,” they urge. 

Making strides in the cocoa sector
In other moves to push forward momentum for conscious cocoa, Cargill recently entered a research agreement with vertical farming pioneer AeroFarms to identify the optimal conditions for cocoa tree growth for a more resilient sector.

Meanwhile, Barry Callebaut revealed it is scaling up the capacity of its nursery production facilities in Côte d’Ivoire, Ghana, Cameroon, Brazil, Ecuador and Indonesia. These nurseries are stocked with cocoa and non-cocoa seedlings, as highly biodiverse cocoa farms are drought-, disease- and pest-resilient while producing higher yields. 

In April, Mondelēz and olam food ingredients began collaborating in Indonesia to create the world’s single largest sustainable commercial cocoa farm. 

Edited by Elizabeth Green