Cocoa prices: A bitter taste in a vast supply chain

Chocolate companies are avoiding paying minimum prices to cocoa farmers.
In Ghana and Ivory Coast, farmers are forced to engage in child labour to maintain optimum cocoa production amid meagre returns.
Cocoa prices peaked at $12,072 per tonne in February 2024.

Cocoa prices peaked at $12,072 per tonne in February of this year, only to drop to $7,960 per tonne this September, leaving farmers seeking solutions on how to cushion against such adverse price swings.

“Market reports say the world market price of cocoa has witnessed the highest levels of volatility over the past 12 months,” reported the Ghana Food and Agriculture Minister, Dr. Bryan Acheampong.

Ghana is one of the world’s largest producers and exporters of cocoa, one of the highest-priced agricultural food products in the world. To protect her farmers, Ghana has increased the producer price of cocoa by over 129 per cent, the minister announced.

“The cocoa farmers are guaranteed this amount for the entire Season, safeguarding them against the volatility of cocoa prices on the international market. This will ensure that they are less affected by any declines in cocoa prices on the international market that may occur,” he reassured stakeholders.

According to the minister, “The increased producer price will stimulate the local economies of the cocoa-producing areas. Farmers and their families will spend their additional income on goods and services in their local communities, which will have multiplier effect on the local economy,”

The Food and Agriculture Minister said, “To ensure that our cherished cocoa farmers receive the full benefits of the price increase, the government will continue to support initiatives such as the fertilizer application programme and the Cocoa Rehabilitation Programme to keep cocoa farming profitable.”

As of 2022, chocolate companies worldwide are said to have earned more than $206 billion, and the industry is projected to generate as much as $263 billion by 2030. While the chocolate companies are enjoying record high income, cocoa farmers in Ghana earn far less than the World Bank’s poverty threshold, now $2.15 per day.

Sector activists argue that these companies pay so little for cocoa that “farmers often cannot hire adult workers and instead must rely on their children or, in some cases, trafficked children, for help doing the work that cocoa cultivation requires.”

Also, while there is an agreed Living Income Differential (LID), a government-mandated price increase designed to ensure farmers receive a higher price for their cocoa, the unscrupulous companies are not living up to their bargain.

“This failure by companies to pay a fair price for cocoa contributes directly to the human rights and environmental harms that characterize the West African cocoa sector,” reports the Global Corporate Accountability Lab (CAL) that conducted a 2024 survey on the condition of cocoa farmers in West Africa.

Chocolate companies circumnavigating set cocoa prices

The plight of cocoa farmers is hardest felt and exhibited in Côte d’Ivoire and Ghana, the two nations that produce over two-thirds of the world’s cocoa. To get a clear picture of the problem, the Corporate Accountability Lab (CAL) surveyed nine cocoa-growing villages across the two countries, and the results were woeful.

“In each village visited, farmers and workers spoke about the unsustainably low prices companies pay for cocoa … among more than 300 farmers, we found that a fair price for cocoa is at least triple the current price,”

In many villages, CAL found that cocoa farmers and their families are in abject poverty, suffer hard work, and corruption abound across the supply chain.

According to CAL, there is a farmgate price, the lowest legal price companies can pay for cocoa, set by the governments of Côte d’Ivoire and Ghana. “This price floor remains far too low and despite decades of discussion, little has changed. Farmers continue to earn poverty income, often below the World Bank’s poverty line,” CAL reported.

It also reported that although cocoa farmers are generally portrayed as men, women and girls work on cocoa farms and do much of the same work as men.

“Children also carry out significant work on cocoa farms in Côte d’Ivoire and Ghana. Child labour, including hazardous child labour, is a direct result of the poverty prices companies pay cocoa farmers for their cocoa,” it was found.

According to the CAL, “Most analysis of human rights abuses in the West African cocoa sector focuses on adult farmers and child labourers. Little research has been done on hired workers, including who they are, from where they travel, and how much they earn. What is clear, however, is that these individuals are often among the most vulnerable workers.”

“From conversations with farmers in both Ivorian and Ghanaian villages, hired workers seem to earn just over $1 a day,” reads the report in part.

While the rich companies circumnavigate the set prices due to corruption in the sector, the farmers also deal with other natural calamities like plant diseases.

For instance, plant diseases make farming cocoa even more expensive and much less profitable for the farmers. However, it has also been found that the plant diseases may not entirely be a natural occurrence, in most cases it is instigated by illegal gold mining.

Known as galamsey in Ghana, illegal gold mining harms and destroys cocoa farms due to poisonous chemicals that sift into the soil and affect the cocoa plants. CAL report says the Ghana Cocoa Board, COCOBOD, and the General Agricultural Workers Union (GAWU) describe galamsey as the largest threat to cocoa farming.

Farmers, especially in Ghana, said that they are worried they will lose their land to galamsey.

Challenges and threats to livelihoods

“Cocoa farmers face a litany of challenges and threats to their livelihoods. While they are being underpaid, they are bearing the risk of bad harvests or impacts from swollen shoot disease or nearby gold mines, cocoa and chocolate companies continue to earn record profits,” the report reveals.

“It is time, far past time, for this to change. Companies must pay farmers a fair living income, compensating them for the hard work that they do.”

The authors maintain that the cocoa and chocolate companies rake in massive profits that do not represent the industry’s true production costs.

“Farmers perform the labour that makes the main ingredient in chocolate and are owed a proportionate share of the billions of dollars in revenue companies earn from this labour,” states CAL.

According to CAL, companies must immediately pay the full Living Income Differential (LID) and the premiums for Ivorian and Ghanaian countries.

“Companies must also go beyond the government mandated price floor to ensure farmers are paid an actual living income and make sure that this full amount reaches farmers,” plead the activists.

They recommend farmers to be paid $3,166 per metric tonne in Côte d’Ivoire and $3,116 per metric tonne in Ghana. “These prices are aligned with recent calculations of a living income in each country and come close to triple the rate farmers reported receiving in 2022,” reads the report in part.

Leaving farmers to bear the burden of market volatility causes economic precarity and indebtedness, which CAL says contributes to creating conditions of forced labour.

Companies must publicly release information about cooperatives and farms from which they source their cocoa, including their indirect supply chains and CAL demands.

Further, “If companies do not currently have this information, they must take immediate steps to trace their supply chains down to the farm level and make this information publicly available.”

CAL also suggests that the Ivorian and Ghanaian governments must work with the Nigerian and Cameroonian governments to ensure that companies pay a fair price to all cocoa producers in West Africa.

So the next time you wish to indulge your sweet tooth cravings, check the chocolate label; where are the ingredients sourced from?