18 Nov 2020

Cocoa farmers don't earn a living income. Where can government play a role?

ECOJAD-cocoa-Côte d'Ivoire.
Fairtrade certified cooperative ECOJAD, member of Ecookim, in Dalao, Côte d'Ivoire.
Eric St-Pierre

By Jon Walker, Senior Advisor- Cocoa, Fairtrade International

Cocoa farmers in West Africa are now in the middle of the main harvest season. However, even with a good harvest and strong sales, the majority of households won’t earn a living income, meaning they can’t afford decent housing, food, education for children, and other basic expenses.

A decent standard of living is a human right. Without this being fulfilled, many other rights are also in jeopardy. Problems like child labour and environmental degradation are connected to poverty and the struggle to survive.

The governments of Côte d’Ivoire and Ghana, where two-thirds of the world’s cocoa is produced, have clear laws but limited resources for monitoring and enforcement. When it comes to the companies that make and sell chocolate, different solutions have been proposed, and even put in place. The problem is, they are voluntary, based on an individual company’s willingness to assume additional costs to, for instance, pay farmers a higher price for their cocoa, or invest additional funds in child labour monitoring and remediation.

Whether or not investment in human rights in the cocoa supply chain remains voluntary is at the center of discussion by the European Commission and Parliament, as they consider Human Rights Environment Due Diligence (HREDD) regulation. HREDD would require companies to assess and act on any human rights violations found in their supply chains.

Such regulation could be incredibly powerful in harnessing the power of all brands, retailers and consumers across the EU, in partnership with governments in the countries of production, and with farmers themselves, to reduce poverty and the human rights risks associated with it.

However, to truly make a difference in eliminating poverty in the West
African cocoa sector, any due diligence regulation will need to include
requirements on living incomes.

Where governments in chocolate consuming countries can play a role

A new Fairtrade-commissioned report, Promoting living incomes in the cocoa sector: Policy options for consuming countries, looks at the specific policy options in cocoa producing countries as well as – most importantly – cocoa consuming countries that can make the biggest impact in putting living incomes within reach for farmers.

We believe these are the options that may have the best chance to succeed – if the relevant politicians and other actors collectively take them forward.

  • Using development assistance programmes Providing funding, for example, to kickstart well-researched diversification programmes and meeting the costs of much-needed rural infrastructure are areas that might be explored. These are areas that we see farmers and their organizations often invest in with their own Fairtrade Premiums.

Development programmes should be built from the ground upwards, involving the impacted stakeholders. Once the process of consultation is completed it seems highly likely to Fairtrade, based on our experience, that targeting investment in this way is likely to fit within the priorities of farmers and their communities.

  • Reaching bilateral agreements with producer countries – Consuming countries can work in partnership with producing countries by striking agreements to support the production of sustainable cocoa.

A great potential start to defining such bilateral agreements could be the launch of the initiative for sustainable cocoa by the European Commission, which specifically states in its concept note that the EU, in its role as a policy and global standard setter, has an objective in the dialogue to support ensuring a living income for cocoa farmers among others. This dialogue aims to complement the Ghanaian and Ivorian governments joint initiative on a ‘living income differential’ payment for farmers to be made on all cocoa sales, now in effect as of last month.

Living incomes should be explicitly stated in the criteria included in the regulation, and not left to the interpretation of general phrases like ‘human rights’. This may require sectoral guidance for the cocoa sector.

But let’s be clear: if after implementing due diligence regulation, we still have cocoa farming households in poverty, but have built a state-of-the-art traceability system, we will have failed farmers – again.

Building on the foundation and learnings in cocoa producing countries

We have seen Fairtrade farmers benefit from being paid higher Fairtrade prices, plus having additional funds available to invest as they see fit to improve their businesses and communities through the Fairtrade Premium. Fairtrade certification provides independent third-party validation that certain practices are followed all through the supply chain. Purchases of Fairtrade products fund support services to farmers and cooperatives, including tailored guidance on income diversification efforts, good agricultural practices, climate change adaptation, women’s empowerment, child rights, and more. Farmers themselves, and the organizations that support them in tackling these issues, have much to share about best practices and where the greatest needs are. At Fairtrade, we are also committed to evaluating the impact of the steps we have taken so far towards ensuring living incomes for cocoa farmers, including our voluntary Living Income Reference Prices and projects being implemented by some commercial partners.

But the basic benefits of decent incomes and sustainable communities must not be seen as additional cost, only for those who care about farmers’ rights, but rather as the normal cost of business.

By building on the initiatives of the Ghanaian and Ivorian governments for transparent transfer of higher prices to farmers, focusing development funds through consultation with farmers and their communities, agreeing on supportive bilateral agreements between consuming and producing countries, and requiring effective due diligence regulation that recognizes living incomes as a human right, we can create the enabling environment for farmers to reach a living income.

Living incomes for cocoa farmers can be achieved, if we, as a society, collectively demand and support it.