CHOCOLATE COMPANIES – THE CCC AND COCOBOD TRY TO RESOLVE DIFFERENCES

Last Updated on January 1, 2021 by Nick Baskett

The bitter dispute between cocoa producers and chocolate manufacturers which had escalated last week, took another turn as the Ivorian Cocoa Council (CCC) re-instated the sustainability programme that was briefly suspended.

We reported previously that Ghana and Côte d’Ivoire cocoa boards claimed US chocolate companies were dodging the cocoa price premium.

The big chocolate companies, including Hershey’s and Mars, were extremely concerned by these accusations they claimed were false.

The companies had agreed to pay the West African nations a so-called Living Income Differential (LID) introduced earlier this year, effectively a premium of $400 a tonne on top of the listed price of cocoa.

In a leaked letter addressed to Hershey’s (which has been seen by several media outlets), the cocoa regulators accuse Hershey’s of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid the premium. The letter also accuses Fuji Oil Holdings’ Blommer subsidiary of aiding Hershey’s.

The regulators also claimed Hershey and Mars clearly indicate intentions to avoid paying the living income differential.

As a result, sustainability programs Hershey’s is involved in directly or indirectly were suspended by both Ghana and Côte d’Ivoire. However, after only a few days, the CCC changed its mind and re-instated the programme, following a video conference between the CCC and Hershey’s, in which the company restated their commitment to the programme.

It is unclear whether COCOBOD will follow suit, or what the position is with Mars.

The West African cocoa regulators had also claimed Mars also changed its buying patterns for the same reasons as Hershey’s.

Mars also denied the charges and has tried to distance itself from its rivals.

Michelle O’Neill, VP Global Corporate Affairs, Cocoa Mars

In a letter Michelle O’Neill, Global Vice President of Corporate Affairs for Cocoa at Mars said,

We remain extremely concerned by these false accusations which, while may be true for other players in the industry, are in no way reflective of Mars.

In fact, Mars was one of the first chocolate companies to publicly support the premium, announcing more than a year ago that it had started purchases for the 2020-21 season.

According to the letter, Mars said the recent cocoa butter it bought was part of regular, repeat purchases consistent with its supplies and cocoa-bean origins it has used in the past three years.

In a separate statement, Mars said,

We were the first chocolate company to publicly support the LID, and are disappointed that others in the industry have recently chosen different purchasing routes.

For cocoa farmers to thrive, all chocolate manufacturers and suppliers should be following our lead by supporting the LID, investing in sustainability programs to protect children and forests and purchasing responsible and sustainable cocoa.

As the cocoa wars continue, cocoa farmers are going to stage simultaneous protest marches in both African countries on Thursday to add further pressure on the sector.

Overall, there are multiple claims from chocolate companies about their sustainability programs and support towards the LID, but how much is really done is still to be questioned.

On the other hand, should chocolate companies follow Ben & Jerry’s suit? It was reported recently that Ben & Jerry’s are paying a premium on top of the Fairtrade Living Income Price Differential.

The company have done a fantastic job in being transparent on their current goals and what they have achieved to date in supporting cocoa farmers.

If companies like Ben & Jerry’s can pay a premium, then so can others. Perhaps corporate pay structures need to take into account the damage from short-term pay incentives and move towards longer term reputation and Corporate Social Responsibility goals.

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