As the cocoa harvest season begins in West Africa, Fairtrade welcomes the higher price farmers receive in Côte d’Ivoire and Ghana as of 1 October.
The Ivorian and Ghanaian governments are putting into effect a commitment they announced last year, to raise the farm gate price for cocoa farmers.
Fairtrade supports implementation of the measure to boost farmers’ incomes, which is enabled by a sum to be paid on top of the cocoa price. This Living Income Differential is set at $400 per tonne on top of the price of cocoa bought from the countries. Fairtrade last year updated our cocoa standards to confirm that we recognize the Living Income Differential (LID) as effectively part of the market price paid by buyers. All traders and companies buying cocoa pay the LID.
For the harvest starting October 2020, the Ivorian reference price and the LID is above the above the Fairtrade Minimum Price. In Ghana no public reference is published so each contract is reviewed. This increase in income through higher farm gate prices is good news for all farmers.
We welcome this positive step for all cocoa farmers in West Africa, who produce two-thirds of the world’s cocoa but in many cases still struggle to earn above the poverty line.
It is exactly the kind of progress that Fairtrade has been working towards since 2017, when we began publicly calling for action across the chocolate sector to ensure cocoa farmers can earn a living income. A living income is what farmers and their families deserve as a basic human right that underpins so many others.
The recently announced Multi Stakeholder Dialogue on Sustainable Cocoa initiated by the European Union holds the potential for further progress for farmers and their families to a living income if it unlocks the power of all stakeholders through Human and Environmental Rights Due Diligence regulation in countries of consumption and co-created partnership agreements with stakeholders in Ghana and Côte d’Ivoire. A living income is a human right.
Fairtrade remains committed to the safety net of our Fairtrade Minimum Price, and the transformative value of the Premium, both of which were increased in 2019. The Fairtrade Premium is a mandatory additional $240 per tonne that must be paid to cooperatives. Fairtrade cocoa cooperatives globally earned more than €44 million in 2019. Fairtrade Africa, the producer network in the region, provides training and support to more than 230 certified cooperatives through its West Africa Cocoa Programme. Through our standards and support, Fairtrade contributes to the empowerment of farmer cooperatives, building strong and viable organizations that are responsive to their members’ and business partners’ needs.
We are also working with commercial partners to pilot our holistic living income approach. For cocoa farmers to earn a living income the price of cocoa will need to increase further in combination with other measures. We are hopeful the combination of the increased government pricing and these living income projects result in significant increase in household incomes for the participating cocoa farmers.
We look forward to continued dialogue with farmers, governments, partners and civil society, so that we continue to share information and hold ourselves accountable to making real progress for cocoa farmers and their families.