Daily Management Review

Agreement To Help Cocoa Farmers In Africa To Attain Living Wage Hit By Cvoid-19


Agreement To Help Cocoa Farmers In Africa To Attain Living Wage Hit By Cvoid-19
A plan that had been drawn up by the top producers of cocoa in Ivory Coast and Ghana to guarantee a living wage to about 2 million farmers have been thrown into jeopardy because of a sharpest drop in cocoa demand in a decade, said reports quoting sources within the regulators of the two countries.
A proposal was prepared and presented by the African countries to the leading chocolate-makers last year in order to increase the cost of purchasing of the industry for cocoa beans and guaranteeing a minimum income to farmers, who earn just $1 a day. This proposal was agreed to by the companies.  
However the basis of the agreement, that was to come into effect from October this year, was that the international cocoa prices would be steady average ranges. However there has been a severe downturn in demand for chocolates internationally because of the novel coronavirus pandemic and the prices are not the lowest in almost two years. And according to industry sources, the prices are expected to remain at this level for at least another year.  
“It is not certain we will be able to guarantee farmers the amount originally expected,” said a recent Reuters report quoting a source at Ivory Coast’s cocoa regulator the Coffee and Cocoa Council (CCC) which is responsible for setting the official farmer price every season for cocoa.
The report claimed that the country expects its cocoa sales for the next season to be depressed by about 30 per cent compared to the average sale volumes and prices at this time of the year.
No official comments on this were available from the CCC.
The process of the setting of prices for cocoa farmers is still being carried out, said a spokesman for the Ghana Cocoa Board (Cocobod) said in a statement to the media.
Depressed demand for chocolate could be good news for chocolate lovers because it could mean more price offers, but for cocoa farmers it means low income and possible hunger.  
Demand had already been significantly impacted because of stifled impulse buying as retail outlets all across the world have been forced to close down temporarily due to lockdown imposed to try and stop the spread of the novel coronavirus pandemic.
And now, even as countries slowly reopen, and at a time when the chocolate industry is anticipating a rebound in production with the advent of the new cocoa season, sales are being expected to remain muted because of widespread economic hardship caused by the pandemic. That would create a large global surplus of coca and chocolates.
An additional price of $400 a tonne for all sales for the upcoming 2020-21 season was agreed to between representatives of the cocoa industry, Ivory Coast and Ghana last year after a series of meetings. That premium pricing also included any sale made prior to the opening of the season in October.
But with the pandemic hitting the global economy and the consequent drop in demand for chocolate, there has been a sustained drop in prices of cocoa in the market, now at below $2000 a tonne. Therefore even with the addition of the premium or added price of buying of cocoa from the farmers, the actual earnings for the farmers of Ivory Coast and Ghana will be much lower than the guaranteed minimum wage.