Ghana threatens to suspend sustainability plans of cocoa companies

Business News for Friday, November 20, 2020

Source: Goldstree business

2020-11-20

COCOBOD threatens to suspend the sustainability schemes used by the main cocoa and chocolate companies to assure consumers that the cocoa beans they use are of sustainable and ethical origin.

In remarks prepared for the latest World Cocoa Foundation conference on behalf of Ghana and its West African neighbor Ivory Coast, Joseph Aidoo, executive director of Ghana’s regulator COCOBOD said that cocoa and chocolate companies in West Africa were thwarting the government’s attempts to combat poverty among farmers by attempting to evade the payment of the Digital Income Differential agreed to by the two countries and global cocoa buyers.

As a result, its sustainability schemes, which allow companies like Barry Callebaut and Nestlé to charge consumers a premium for certified sustainably sourced chocolate, could be suspended.

Ghana and Côte d’Ivoire, which together produce two-thirds of the world’s cocoa, introduced a vital income differential (LID) or premium last year of US $ 400 per tonne on all 2020/21 cocoa sales, whose earnings They are being used to increase the income of cocoa producers in the form of a 28 percent increase over the amount that each country’s government pays cocoa producers per ton of product purchased at the farm gate.

“The (cocoa / chocolate) brands (have) openly announced their commitment to the LID (but) our intelligence indicates that there is a ploy by some to derail it,” Aidoo said.

“Any brand that is not considered serious by accepting the LID in mid-December 2020 should consider all of their Ghanaian and Cote d’Ivoire cocoa beans as conventional. We are prepared to name and shame these brands, ”he added.

Ivory Coast and Ghana have struggled to sell their 2020/21 cocoa crop since they introduced the LID, in large part because the coronavirus-induced recession drastically reduced demand for non-staples like chocolate. However, there are suspicions in Ghana that buyers’ reluctance to buy from the forward market is a subtle attempt by the country, and also by Côte d’Ivoire, to stop insisting on adding the LID to the normal market price. accepted by other smaller countries. cocoa exporting countries.

Ghana has traditionally sold its products on the forward market, allowing it to obtain between US $ 1.3 and 1.8 billion in short-term financing from a consortium of international commercial banks. The facility, the largest annual farm finance facility in sub-Saharan Africa, is secured by proceeds from cocoa sales from international markets. The inability to sell in forward markets could jeopardize Ghana’s ability to obtain this financing which it uses to finance its cocoa purchases from local farmers.

If Ghana goes ahead with its threat, the major chocolate manufacturers, which are Ghana’s main buyers of cocoa, will no longer be able to charge premiums for their products made from Ghanaian cocoa.