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Abidjan (AFP)
The world’s two largest cocoa suppliers, Côte d’Ivoire and Ghana, have faced multinational chocolate companies on the battlefield of public opinion.
In an unprecedented move, the cocoa boards of the two West African countries publicly accused US chocolate giants Mars and Hershey of circumventing a deal designed to prop up the incomes of poor farmers.
Both companies deny the charges.
At stake is a 2019 deal called the Living Income Differential, or LID, under which multinationals pay a premium of $ 400 above market price for every ton of cocoa, the raw material for chocolate.
In a joint letter Monday, the Ivory Coast Coffee Cocoa Council (CCC) and the Ghana Cocoa Board (Cocobod) accused Hershey of allegedly making a large purchase of cocoa on the futures market.
The measure, they charged, “clearly indicates their intention to avoid paying the income differential to live.”
The two boards said that “they had no choice but to cancel all sustainability programs in which their company participates.”
These schemes certify that chocolate is produced ethically, allowing companies to beautify their image to consumers. Production must avoid deforestation and be free of child labor.
In a separate statement, the CCC and Cocobod accused Mars of modifying its cocoa butter procurement processes to avoid paying the LID, a scheme supported by the Fairtrade campaign group.
The CCC and Cocobod condemned what they called Hershey and Mars’ “clear lack of faith” in the LID scheme.
In a statement to AFP, Hershey’s said it was “regrettable” that the countries decided to “distribute a misleading statement … and jeopardize such critical programs that directly benefit cocoa producers.”
Mars Wrigley said it “categorically disagrees” with any suggestion that it changed cocoa purchasing practices to avoid paying the LID, and said it had long supported the initiative.
– Public relations battle? –
Analysts said the joint public attack was notable.
Until now, the CCC and Cocobod have been virtually invisible to the general public, and their accusations about the trade have shed light on a cocoa market that is notoriously opaque.
To increase the pressure, cocoa farmers will hold simultaneous protest marches in both African countries on Thursday.
“The strategy … is based on public relations, and that is new,” said a cocoa trader.
“They are going to make noise, the press is going to get involved and the balance of power may swing in their favor, because ethical issues have become important to Western consumers” of chocolate.
The approach clearly has political traction.
Ivory Coast President Alassane Ouattara has just been re-elected, while Ghanaian President Nana Akufo-Addo is up for re-election on Monday.
The global chocolate market is estimated to be worth more than $ 100 billion, concentrated in a small number of multinational corporations.
But only six percent of the bonanza reaches farmers in tropical countries who grow the raw material.
Côte d’Ivoire accounts for more than 40 percent of world production, and Ghana for at least 20 percent. More than half of its producers live below the poverty line, according to estimates.
– ‘Dangerous game’ –
It’s unclear how the PR offensive will play out, market insiders say.
Tensions between cocoa growers and chocolate giants have put upward pressure on cocoa markets in London and New York, but at the same time, global consumption is below average due to the coronavirus pandemic.
“The point is that the Ivory Coast and Ghana are right to put pressure on multinationals to assume their responsibilities,” said one expert, who asked not to be named.
“But his aggressive language is taking things pretty far … it’s unclear if this is the smartest strategy.”
“Last year,” added the trader, “Côte d’Ivoire and Ghana imposed the LID on the industry but gave nothing in return, such as efforts to improve traceability, for example.
“If the tug of war continues, who will be the winner? It’s a dangerous game.”
© 2020 AFP
