Nana Bruce-Amanquah, Researcher, Foreign Policy & Diaspora Studies Lab¹I’d like to thank my fellow lab members —Saliho, Pandit, Jordan, Allen, and Jerry—for their support and feedback throughout the writing process. I’d especially like to thank our lab director, Jared, and editorial team member Bonita for their help in the drafting and editing stages.
nbamanquah@africacfsp.org

Despite the billions of dollars in revenue generated by multinationals in the chocolate industry, many cocoa farmers in Côte d’Ivoire and Ghana live below the poverty line. The Ivorian and Ghanaian governments’ joint program to implement a new premium, called the Living Income Differential (LID), to cocoa prices is intended as poverty relief. Although LID has not produced as many benefits as expected, the collective action in its applications and enforcement along with its potential to push chocolate companies to properly contribute to increased incomes for cocoa farmers make it an initiative worth keeping and improving.

Cocoa is the raw ingredient at the heart of the $130 billion per year chocolate industry.²Govind Bhutada, Cocoa’s bittersweet supply chain in one visualization, World Economic Forum, 4 Nov 2020. https://www.weforum.org/agenda/2020/11/cocoa-chocolate-supply-chain-business-bar-africa-exports/, Accessed 24 Sept 2021 Although over 60% of the world’s cocoa is produced in Côte d’Ivoire and Ghana,³Baudelaire Mieu, Ghana and Côte d’Ivoire taste success in raising price of cocoa, The Africa Report, Sept 8 2020. https://www.theafricareport.com/40945/ghana-and-cote-divoire-taste-success-in-raising-price-of-cocoa/, Accessed Aug 19, 2021 the world’s respective number one and number two exporters of the crop, the cocoa farmers responsible for those yields make shockingly low amounts of money. Compared to the poverty line at $1.90 a day, cocoa farmers make $1.00 in Ghana and a meager $0.78⁴Bhutada, 2020. in Côte d’Ivoire, according to the World Economic Forum.⁵Bhutada, 2020. In July 2019, however, the two cocoa-producing countries paused their competition and made a joint announcement about implementing the Living Income Differential (LID)⁶Ange Aboa and Maytaal Angel, Ivory Coast, Ghana add ‘living income’ cocoa premium to fight poverty, Reuters, July 10, 2019. https://www.reuters.com/article/westafrica-cocoa-idUSL8N24B55M, Accessed Sept 25, 2021., a premium that would be added to the price of cocoa in the hopes of increasing farmers’ earnings. At first, “Big Chocolate,” a term assigned to major chocolate brands worth millions of dollars, supported the initiative⁷A lesson in the high politics of cocoa – How a united front by exporting countries resulted in an ag [sic], The Living Income Community of Practice, 12 Nov 2019. https://www.living-income.com/single-post/2019/11/12/a-lesson-in-the-high-politics-of-cocoa-how-a-united-front-by-exporting-countries-result, Accessed Sept 25, 2021. and agreed to pay an extra $400 per ton of cocoa (which costs about $2,600).⁸Aboa and Angel, 2019. Fast forward to 2021, and unfortunately the LID has not reaped as many benefits for Ivorian and Ghanaian cocoa farmers as it promised. While examining the process behind creating and implementing the premium, this paper will argue that its origin as a collaborative joint-state effort and its potential to deliver fair earnings still make this initiative a worthy endeavor.

Farmers are at the very beginning of the chocolate value chain, which starts with the laborious task of cultivating cocoa. Cocoa trees, grown in tropical climates like the ones in Côte d’Ivoire and Ghana, take around five years to mature and produce around 30 cocoa pods. In that time, the trees need to be continuously monitored for signs of disease or weeds. During harvest, each pod is carefully chopped off by hand and the 30-40 beans in each pod are separated from the pulp, fermented, and dried over several days before getting packaged and sold. About 400 beans go into making one pound of chocolate.⁹Cocoa Growing, Cocoa Life, https://www.cocoalife.org/in-the-cocoa-origins. Accessed Nov 20 2021. Other players in the value chain ensure that the beans are stored, checked for quality, processed into semi-finished products like cocoa butter, manufactured into chocolate, and finally sold to consumers.¹⁰Ghana’s Cocoa Value Chain. AsokoInsight, 9 July 2021, https://www.asokoinsight.com/content/market-insights/ghana-cocoa-value-chain. Accessed Sept 25, 2021. In Ghana and Côte d’Ivoire, government bodies – the Ghana Cocoa Board (COCOBOD) and its Ivorian counterpart Conseil du Café-Cacao/ Coffee-Cocoa Board (CCC) – regulate domestic prices and quality control. However, most of the processing, manufacturing, and consumption of cocoa products occurs outside of the African continent. Together, these largely international chocolate manufacturers and retailers get just under 80% of the value from one ton of sold cocoa. West African farmers, in comparison, get 6.6% of that value.¹¹Bhutada, 2020.

Poverty hinders the sustainability of this industry by exacerbating issues such as child labor, environmental degradation,¹²Kassandra Sundt, Ghana, Ivory Coast grow bitter with Hershey’s, Mars, Deutsche Welle, 04 Jan 2021. https://www.dw.com/en/ghana-ivory-coast-grow-bitter-with-hersheys-mars/av-56128213 , Accessed Aug 20, 2021 and cross-border smuggling of cocoa beans.¹³Tamasin Ford (presenter), British Broadcasting (BBC), Cocoa smuggling: ‘We have no choice’ , 26 Jan 2018, https://www.bbc.com/news/av/business-42833908, Accessed Nov 9, 2021 These obstacles persist because too many farmers do not make enough money to justify switching to more sustainable methods or refraining from illicit trading practices. The reality of these issues and the state of impoverished cocoa farmers is not new. Both the Ghanaian and Ivorian governments have tried subsidizing cocoa agriculture, putting pressure on their own fiscal expenditures, and incurring debt as a result.¹⁴Michael E Odijie, Why efforts by Côte d’Ivoire and Ghana to help cocoa farmers haven’t worked, The Conversation, June 29 2021. https://theconversation.com/why-efforts-by-cote-divoire-and-ghana-to-help-cocoa-farmers-havent-worked-162845. Accessed Aug 20, 2021. On the other hand, Big Chocolate companies like Mars, Hershey, and Mondelez have been publicly criticized for years¹⁵Anthony Myers, ”Cocoa giants face fresh US lawsuit over child labour claims in Cote d’Ivoire“, Confectionery News, Feb 15, 2021, https://www.confectionerynews.com/Article/2021/02/15/Cocoa-giants-face-fresh-US-lawsuit-over-child-labour-claims-in-Cote-d-Ivoire. Accessed Dec 20, 2021. and even recently sued¹⁶Brittany Chang, A lawsuit is accusing 7 chocolate makers of complicity in child labor and trafficking in the cocoa trade, Business Insider Africa, Feb 12, 2021. https://africa.businessinsider.com/retail/a-lawsuit-is-accusing-7-chocolate-makers-of-complicity-in-child-labor-and-trafficking/q5hr78x. Accessed Dec 20, 2021. for directly benefitting from cocoa prices that remain low, partially due to human rights abuses¹⁷Chang, 2021 and insufficient wages for cocoa farmers.¹⁸Morgan Forde, Major chocolate brands fail to address child labor, sustainability in their supply chains: report, Supply Chain Dive, Oct 31, 2019, https://www.supplychaindive.com/news/Mondelez-Ferrero-Godiva-fail-to-address-cocoa-labor-sustainability/566075/. Accessed Dec 20, 2021

In response to this criticism, many chocolate multinationals started sustainability programs.¹⁹Oliver Nieburg, Cocoa economy in ‘critical state’, says Mars sustainability chief, Confectionery News, 21 Jan 2013, https://www.confectionerynews.com/Article/2013/01/21/Mars-sustainable-cocoa-supply-worries. Accessed Nov 20 2021. Companies would commit millions of dollars over several years to help cocoa communities and promise to eventually use 100% of fair-trade certified cocoa to source their products. Pledging transparency and accountability, these programs allow individual brands to portray themselves as ethical business advocates. Over time, problems with these programs have arisen.²⁰Nieburg, Jan 2013. For one thing, fair trade certification is a respectable but imperfect process that can miss significant violations.²¹Kait Bolongaro, Selase Kove-Seyram, Brandy Miller and Maurice Oniang’o, Unfair Trade: The Broken Promise of Fairtrade Farming in Africa, Journalists for Transparency, https://j4t.org/stories/unfair-trade-the-broken-promise-of-fairtrade-farming-in-africa/. Accessed Nov 20 2021. It does not guarantee any legal accountability for non-compliant multinationals operating in countries like Côte d’Ivoire and Ghana that do not have fair trade legislation. Additionally, Big Chocolate companies have postponed²²Steven Mufson and Salwan Georges, The trouble with chocolate, The Washington Post, Oct 29 2019, https://www.washingtonpost.com/graphics/2019/national/climate-environment/mars-chocolate-deforestation-climate-change-west-africa/. Accessed Nov 20 2021. or dismissed the idea²³Oliver Nieburg, Mondelēz: Deadlines on sustainable cocoa are not realistic, Confectionery News, 10 Feb 2015, https://www.confectionerynews.com/Article/2015/02/10/Mondelez-Cocoa-Life-program-update. Accessed Nov 20 2021. of target deadlines for their sustainable cocoa commitments, as their initiatives have been criticized for not doing enough to increase cocoa farmers’ incomes.²⁴Oliver Nieburg, Hershey defends commitment on sustainable cocoa, Confectionery News, 20 Mar 2013, https://www.confectionerynews.com/Article/2013/03/20/Hershey-sustainable-cocoa-The-defense. Accessed Nov 20 2021. While Big Chocolate defends continued investments into sustainability programs, it is still unclear how Ivorian and Ghanaian farmers should make ends meet in the meantime.

To address this inequality and other persistent issues in the cocoa industry, Ghana and Côte d’Ivoire signed the Abidjan Declaration in March 2018. The declaration covered key topics ranging from coordinating production levels and sales policies to increasing local consumption and the presence of cocoa processing centers.²⁵Amira Daoui, Ways to Cap, The Abidjan Declaration: Ghana and Ivory Coast’s International Cocoa Agreement, https://www.waystocap.com/blog/the-abidjan-declaration-ghana-and-ivory-coasts-international-cocoa-agreement-aims-to-increase-market-share/, Accessed Sept 25, 2021. That same year, the Living Income Community of Practice, a collaboration between German, British, and American primary commodity research bodies, calculated a premium of $400 per ton of cocoa.²⁶An Introduction to the Newly Implemented Living Income Differential (LID) in Ghana & Cote d’Ivoire, Uncommon Cacao, Oct 20, 2020. https://www.uncommoncacao.com/blog/2020/10/20/the-lid-in-ghana-and-cote-divoire, Accessed Aug 20, 2021. This premium would bridge the gap between how much farmers currently earn (around $1 or less per day) and what was determined to be a living income – $312 per month per household (adjusted for inflation and currency devaluation),²⁷Richard Anker and Martha Anker, Living Income March 2020 Update, The Living Income Community of Practice, 5 May 2020. https://c69aa8ac-6965-42b2-abb7-0f0b86c23d2e.filesusr.com/ugd/0c5ab3_8b6a7e26d7c04908a7738f1c97376a78.pdf, Accessed Sept 25, 2021. which is approximately $2.05 per person per day.²⁸Uncommon Cacao, 2020. In mid-2019, Côte d’Ivoire and Ghana announced that for the 2020/2021 cocoa season, buyers would be charged a floor price of $2600 per ton of cocoa with an additional $400 premium, the agreed upon LID.²⁹A lesson in the high politics of cocoa – How a united front by exporting countries resulted in an ag [sic], The Living Income Community of Practice, 12 Nov 2019. https://www.living-income.com/single-post/2019/11/12/a-lesson-in-the-high-politics-of-cocoa-how-a-united-front-by-exporting-countries-result, Accessed Sept 25, 2021. This collaboration was not just an attempt to provide farmers with a living wage, but to also challenge the power dynamic between these countries and Big Chocolate as a united front.

The implementation of the LID as well as the partnership between Côte d’Ivoire and Ghana on cocoa-related trade caused quite a stir from the start. On the one hand, Big Chocolate companies like Mars, for example, applauded the move.³⁰The Living Income Community of Practice, 2019. Others were not as optimistic. In one Financial Times article, commodities bankers and financial analysts expressed concern about higher chocolate prices and questioned whether this cocoa OPEC or COPEC arrangement was just a political move for the sake of elections.³¹Emiko Terazono, Choc tactics: Ghana and Ivory Coast plot ‘Opec for cocoa’, Financial Times, July 19 2019, https://www.ft.com/content/0b45b450-a961-11e9-984c-fac8325aaa04. Accessed Nov 16 2021. The announcement also brought on fears that while introducing a premium and driving up cocoa prices might lead to higher earnings in the short term, it would also encourage oversupply of cocoa³²The Living Income Community of Practice, 2019. and decrease chocolate companies’ demand, leading to lower prices overall.³³Terazono, 2019. Several of these predictions came true. The 2020/2021 season saw record-breaking cocoa yields in both Ghana³⁴Emannuel Bruce, Cocoa production hits record high – yields 1,033 tonnes, The Daily Graphic, August 2021, https://www.graphic.com.gh/news/general-news/cocoa-production-hits-record-high-yields-1-033-tonnes.html. Accessed Nov 16 2020. and Côte d’Ivoire.³⁵

Ange Aboa, Ivory Coast on track for record cocoa harvest, Nasdaq, July 14 2021,

https://www.nasdaq.com/articles/ivory-coast-on-track-for-record-cocoa-harvest-2021-07-14. Accessed Nov 20 2021 When COVID-19 hit, overall international demand for cocoa products went down.³⁶Odijie, 2021. Big Chocolate support quickly turned into indirect resistance as companies like Mondelez and Hershey bought cocoa from other sources or purchased futures exchanges to avoid the premium.³⁷Odijie, 2021. In response, Côte d’Ivoire and Ghana have gone through months of back-and-forth threats to ban chocolate companies’ sustainability programs³⁸Ange Aboa and Maytaal Angel, Ivory Coast, Ghana cancel cocoa sustainability schemes run by Hershey, Reuters, 30 Nov 2020. https://www.reuters.com/article/us-cocoa-poverty-dispute-idUSKBN28A227, Accessed Aug 20, 2021. as well as to name and shame non-compliant brands.³⁹Anthony Myers, Ghana and Cote d’Ivoire launch new threats to cocoa companies over LID payments, Confectionery News, 24 June 2021. https://www.confectionerynews.com/Article/2021/06/24/Ghana-and-Cote-d-Ivoire-launch-new-threats-to-cocoa-companies-over-LID-payments, Accessed Aug 20, 2021.⁴⁰Michael E Odijie, Here are three reasons why Ghana’s cocoa farmers are trapped by the chocolate industry, CNBC Africa, 11 Oct 2019. https://www.cnbcafrica.com/2019/here-are-three-reasons-why-ghanas-cocoa-farmers-are-trapped-by-the-chocolate-industry/ , Accessed Sept 24, 2021.

The process of using the LID has been an uphill battle. However, this premium and the collaboration between Ghana and Côte d’Ivoire have led to significant positive outcomes. Fellow West African nations Nigeria and Cameroon have since requested higher prices for their cocoa and started bilateral talks over their respective industries. Other non-African cocoa-producing countries like Peru have also been inspired to elevate their cocoa prices.⁴¹Africanews, Nigeria inspired by Ghana, Ivory Coast cocoa premium deal, AfricaNews, 10 Nov 2019.   https://www.africanews.com/2019/10/11/nigeria-inspired-by-ghana-ivory-coast-cocoa-premium-deal/, Accessed Sept 25, 2021. Ghana and Côte d’Ivoire have shown that by coming together, it is possible for competing countries in the cocoa industry to successfully go head-to-head with multinationals and demand more for their citizens. Additionally, both countries’ willingness to push back against Big Chocolate’s attempts to bypass the premium, and to cut the sustainability programs that claim to increase farmers’ incomes far in the future at best instead of now, makes a statement. It sends a clear message that not only are civil society, nonprofits, and people on Twitter watching out for the farmers’ interests and expecting accountability, these governments are too. While there are clear challenges with using this premium, there are opportunities to improve it and increase its uptake with the following recommendations.

Stay united and bring on more allies: The unity between Ghana and Côte d’Ivoire has been crucial when negotiating with Big Chocolate. Maintaining that unity is difficult but necessary to show that cocoa-producing countries will not crack easily under pressure. The biggest issue with the premium has been dealing with chocolate companies’ efforts to not pay it. To make it harder for any individual brand to seek cocoa elsewhere, Ghana and Côte d’Ivoire can create an even larger alliance by partnering with more African countries, notably Nigeria and Cameroon who each add an extra 10% to West Africa’s high cocoa production.⁴²David Whitehouse, Akufo-Addo says Nigeria, Cameroon membership of cocoa pricing floor needed, The Africa Report, 12 Nov 2019. https://www.theafricareport.com/19966/akufo-addo-says-nigeria-cameroon-membership-of-cocoa-pricing-floor-needed/, Accessed Aug 20, 2021. Considering what is at stake, cementing COPEC could be useful. Expanding the alliance on and off the continent, to include Peru for example, may be a more productive way to allocate resources and be bold while negotiating with Big Chocolate. This joint effort has already shown other African countries that, together, it is possible to bargain with large and influential multinationals. This cocoa example could contribute to building a framework for finding collaborative African solutions to other problems impacting their citizens that are influenced by international actors.

Continue to name and shame while there is attention on the issue: This method is effective, particularly while the topic of cocoa farmers’ incomes is newsworthy. In a market where consumers continue to show interest in the ethics behind powerful brands, chocolate multinationals profit from their products being labelled (but not necessarily guaranteed to be) fair trade certified. Therefore, they diminish their reputations and can lose customers if their actions suggest that they are not as interested in building sustainable value chains as they claim to be. The attention naming and shaming brings can also keep things moving so that the matter of increasing farmers’ livelihoods does not fall through the cracks.

Take concrete action steps on the Abidjan Declaration: In addition to negotiating with Big Chocolate, Ghana and Côte d’Ivoire can keep momentum going by upholding their agreement to continue to meet under their joint Abidjan Declaration. The cocoa industry brings billions of dollars to both the Ivorian⁴³Cocoa Beans in Côte d’Ivoire, The Observatory of Economic Complexity, 2019. https://oec.world/en/profile/bilateral-product/cocoa-beans/reporter/civ , Accessed Sept 25, 2021. and Ghanaian⁴⁴Cocoa Beans in Ghana, The Observatory of Economic Complexity, 2019. https://oec.world/en/profile/bilateral-product/cocoa-beans/reporter/gha?redirect=true, Accessed Sept 25, 2021. economies so it is in both countries’ interest to sustain and expand cocoa production on a domestic and regional level. They can design and create storehouses for harvested cocoa to deal with overproduction. Although this was not specified in the declaration, they can make sure to close any leaks that prevent the premium from being paid such as finding ways to implement the LID to their own cocoa futures exchanges if possible. Following through with policies to support a profitable domestic chocolate industry in each country will also give farmers more income opportunities and a larger platform to use while working towards sustainable cocoa agriculture with their respective governments.

Encourage and maintain transparency for legitimacy: Considering how new the implementation of the LID is, it makes sense that there are and will continue to be questions and concerns about its efficacy. Therefore, it is crucial to ensure transparency so that this initiative maintains its legitimacy. This can be done by continuing to regularly re-calculate the premium to match inflation and farmers’ needs, making it clear when and how farmers receive their premiums, and reporting on the extent to which the money improves their standard of living. As of August 2021, some farmers still have not received LID payments,⁴⁵Emma Blackmore and Thierry Berger, Civil society perspectives on the living income differential for cocoa producers, IIED, 23 Aug 2021. https://www.iied.org/civil-society-perspectives-living-income-differential-for-cocoa-producers, Accessed Sept 24, 2021. and as a collective, farmers seem to have been largely left out of the LID discussion.⁴⁶Thierry Berger, “Cocoa producer agency and the living income differential: lessons from civil society organisations”, IIED (International Institute for Environment and Development), 23 Aug 2021.   https://www.iied.org/cocoa-producer-agency-living-income-differential-lessons-civil-society-organisations, Aug 20, 2021. Big Chocolate aside, the Ghanaian and Ivorian governments need to be transparent about their budgeting and distribution of the premium. They can make sure through COCOBOD and the CCC that there is nothing on the domestic state level preventing farmers from getting what they are due. It is also each state’s responsibility to seek out and encourage the inclusion of cocoa farmers – their own citizens – throughout the process of calculating and implementing the LID so that the premium accurately reflects how farmers’ concerns have been heard and addressed.

While there is power in getting large multinational corporations to pay attention, the governments of Ghana, Côte d’Ivoire, and any cocoa-producing country need to remember that using the farmers as bargaining chips only works if these initiatives directly benefit those same farmers. Implementing the LID is a good first step but the journey cannot end there. If it does, these governments will be susceptible to the same naming and shaming that they have used to hold Big Chocolate accountable. Sustainably raising the income of cocoa farmers so they can all afford a decent standard of living is challenging. Nevertheless, finding solutions to this problem is necessary. For an industry that determines the livelihood of approximately 600,000 cocoa farmers in Côte d’Ivoire⁴⁷Erica Yock, Cocoa Industry in the Côte d’Ivoire, ArcGIS Online, https://www.arcgis.com/apps/Cascade/index.html?appid=dd19d4b6444e492da5b069d62d2c3ecb , Accessed Sept 24, 2021. and 865,000 in Ghana,⁴⁸Kuapa Kokoo, Ghana, Fairtrade Foundation, https://www.fairtrade.org.uk/farmers-and-workers/cocoa/kuapa-kokoo-ghana/, Accessed Sept 24, 2021. almost 1.5 million people altogether, there is no room to just give up on an idea like the LID without a serious and timely alternative. Furthermore, these farmers need to be continuously consulted by state, business, and research actors alike to determine whether any of these ideas to increase their incomes work long-term. The implementation and enforcement of the LID has been shaky, but it has also encouraged the collaboration of African states and more importantly, prioritized the wellbeing of the people at the core of the chocolate-making process. This initiative must be strengthened for the sake of cocoa farmers in the West African region. Their lives, the health of these country’s economies, and the sustainability of the entire chocolate industry depend on it.