VOICE Network welcomes historic move to raise cocoa prices,questions remain on implementation
The announcement that the Ivorian andGhanaian governments will raise the floor
price for cocoa farmers, as well as levy an extra
fee to cocoa buyers, is an important andnecessary step in order to make the cocoa
sector more sustainable and should be
supported by the cocoa industry. The VOICE
network i very much welcomes this historic
initiative by the governments of Ghana andCôte d'Ivoire to improve the income situationfor farmers.
As of 2020-2021, the Ivorian Conseil du CafeCacao (CCC) and the Ghana Cocoa Board(Cocobod) will charge an extra fee of USD 400
per ton of cocoa on top of the FOB-price, which
they call a living income differential (LID). This
would allow both states to set up a stabilization
fund and guarantee a fixed price of USD
1820/MT to farmers. That is about USD 675
higher than the price that Ivorian farmers
received during the 2018-2019 harvest, andabout the same price level they received prior
to the 2016 cocoa price crash, when prices
collapsed by almost 40%. Higher prices forfarmers are an essential – and often overlooked– aspect of every sustainability strategy. Apartfrom the obvious role that companies have,governments must set the stage for asustainable cocoa sector by creating pricestability at an acceptable level. Therefore, thisinitiative by the two biggest cocoa producing
countries is an extremely welcome building
block to make the cocoa sector truly
sustainable in terms of respecting farmers’
human rights.
However, the VOICE network has concerns
which origin governments must address forthe proposed measure to be effective:1) Need for a coherent overall strategy
beyond price interventions only:
These price interventions should be part ofa coherent strategy to respect the humanrights of farmers, to protect forests, and totransform
West-Africanagriculture.
Intervening on price without looking at
supply measures and enabling policies todevelop a healthy cocoa sector may nothave the desired positive impact. Thisrequires careful policy management, which
CCC and Cocobod must undertake.
2) Need for a higher floor price:
These efforts by Ghana and Côte d’Ivoire toincrease prices is a necessary first step, butit is simply not enough. USD 1820/MT ismuch lower than the price farmers need inorder to make a living income. Fairtrade
estimated that the Living Income Reference
Price should be USD 2668/MT at farm gate
for Côte d’Ivoire, and USD 2301/MT for
Ghana. We think it might even have to behigher. As such we believe the name ‘Living
Income Differential’ to be misleading. Thiscan only be a starting point towards
achieving a living income.
3) Need to ensure the money goes tofarmers:
There are concerns around the extra
moneys gained through the USD 400differential charged to the cocoa buyers.
There must be transparency about whatpart of this windfall will go to the origin
governments, and all parties – but
especially producer governments – mustensure these higher prices benefit cocoa
farming families directly.
4) Need for financial transparency from CCC
and Cocobod:
If stabilization funds are to be set up, thegovernance of these funds will requiresignificantly improved transparency andaccountability
comparedwith
theirpredecessors. Moreover, the new policy isdoomed to fail if the government bodies donot provide a high level of transparency.
We call on the producer governments todisclose how much revenue they receivefrom cocoa and for the national marketingboards (both CCC and Cocobod) to disclose
to ensure transparency and good
governance.
5) Need to protect forests and farmers goes
hand in hand:
If there are inadequate controls in place,these reforms will lead to deforestation.

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Higher commodity prices are almost
alwayscorrelated
withincreased
deforestation rates. Now is the time to setup the long-awaited “joint monitoringmechanisms” promised in 2017 in theCocoa & Forests Initiative, signed by both
Ghana and Côte d’Ivoire. All parties mustensure the new reforms are good forfarmers and forests at the same time. Ameasure that will limit cocoa production, isthe ban on cocoa production from parks; aswell as stepped up vigilance for protectedareas. The VOICE network calls on all
stakeholders to ensure that any recovery ofprotected areas should always take placewith respect for human rights.
6) Need to address human rights and childlabour:Fighting poverty alone does not solve childlabour. The Ivorian and Ghanaian pricereforms are promising but child labourmonitoring and remediation systems arealso needed, as is community-based
development,
accesstoeducation,
women’s economic empowerment as ameans to reduce child labour, birthcertificates, and more. Extra revenue thenew reforms will generate should go atleast in part to financing the long-promised
investments in human rights in cocoa anderadicating child labour.
7) Need for agricultural reform and supply
management:
Higher prices will lead to oversupply if they
are not accompanied by policies that aim atdiversification of crops, agroforestry,reforestation,protection
offorests,investment in infrastructure, and othermeasures that limit cocoa production. At
the same time, farmers should be able toimprove his/her existing trees. Côte d’Ivoire
has announced it will maintain its ban on
new planting material and the rejuvenationof cocoa plantations, measures taken after

the oversupply in the 2016-17 crop. Not
allowing farmers to rejuvenate and invest in
their plantations is equivalent to making it
impossible for them to improve theirfarming business and to achieving a livingincome.
8) Need for more countries to step up rapidly:
We are supportive of the principle and thepractice of paying the farmers more – andthis should be done globally. Farmers
should be protected not just in West Africa
but around the world. We call on othercocoa producing countries like Indonesia,Ecuador, Brazil, Nigeria, and Cameroon toprotect their farmers as well and not tosabotage this Ivorian-Ghanaian effort.
9) Need for certifiers to match and surpass:
The key governments are now being more
ambitious than the certifiers. Fairtrade only
has a USD 2,400 minimum price; Rainforest
does not have one at all. It is time for thecertifiers to match and surpass thethresholds set by producer countries.ii
Many companies have already come out withstatements supporting a higher price for cocoa,
debunking the the notion that industry will notsupport a price increase iii . We hope this willencourage other producer countries to set a
price floor as well.
We call on all chocolate and cocoa companies
to support the initiative by the Ivorian andGhanaian governments as well as the points
outlined above. Most importantly, we ask all ofthem to commit to ensuring all cocoa farmers
earn a living income, worldwide. These efforts
must not be limited to supporting the initiative
for a floor price in Côte d’Ivoire and Ghana but
must aim at ensuring a living income acrossthe globe. Though many other interventions
are also needed, significantly higher prices
must be part of a holistic solution.

iThe VOICE Network is an association of NGOs and Trade Unions, bringing bring together many of the civil society
organisations in the cocoa sector, functioning as a watchdog and catalyst for a reformed cocoa sector. Our members
are ABVV/FGTB-Horval, EFFAT, FERN, FNV, Green America, Inkota Netzwerk, International Labor Rights Forum,Mighty Earth, Oxfam Novib, Oxfam Wereldwinkels, Public Eye, Stop The Traffik, Solidaridad, and Südwind Institut.
ii See also our recent paper on certification: http://tiny.cc/VOICECertificationPaperiii
Voice member Mighty Earth has compiled a collection of industry responses and statements supporting a higher
price for cocoa; http://tiny.cc/MightyCompanyPriceSupport, as well as statements of support from many civil society
organisations in producing countries http://tiny.cc/MightyCSOFloorPriceSuppor)
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