The Living Income Differential (LID) is a $400 per ton premium aimed at helping farmers achieve a minimum living standard according to government guidelines.
As reported here, the pandemic negatively impacted demand, depressing the market price. Hershey’s swooped in on the Futures market and purchased a large quantity of cocoa at a discount, effectively avoiding the LID premium.
Now COCOBOD’s CEO, Joseph Aidoo has condemned the actions of chocolate companies as thwarting the attempts of their government to combat farmer poverty. As a result of this they have threatened to suspend the ‘sustainability scheme’ awarded to any company that it deems is not fully committed to the program.
The (cocoa/chocolate) brands (have) openly announced their commitment to the LID (but) our intelligence indicates there is a ploy by some to derail (it). – COCOBOD CEO, Joseph Aidoo
The sustainability schemes are used by major cocoa and chocolate companies to assure consumers the beans they use are ethically and sustainably sourced.
The worlds two largest cocoa producers, Ghana and neighbouring Côte d’Ivoire together produces two-thirds of the world’s cocoa, as reported previously, they joined forces and introduced a living income differential (LID) or premium last year on all 2020/21 cocoa sales and said the proceeds would be used to raise cocoa farmers income, who earn on average around $1 a day.
Aidoo made a strong statement,
“The cocoa / chocolate brands have openly announced their commitment to the LID but our intelligence indicates there is a ploy by some to derail it.
Any brand that is seen not to be serious in accepting the LID by mid-December 2020 must consider all its cocoa beans from Ghana and Côte d’Ivoire as conventional. We are prepared to name and shame these brands.
The countries have struggled to sell their 2020/21 cocoa crop since introducing the LID due to the COVID-19 pandemic driving global demand down.
Large cocoa and chocolate companies such as, Barry Callebaut, Nestlé, Hershey’s and Mars has stated their support and financial commitment efforts to combat farmer poverty.
Nestlé said it is paying the LID when buying its “normal volume of cocoa purchases” from Côte d’Ivoire and Ghana, adding it was one of the first to pay the surcharge when it was introduced.
Barry Callebaut and Mars also said they were paying the surcharge, but did not specify volumes. Hershey’s said it pays the LID when buying 2020/21 cocoa “based on the needs of our business”.
Mars told Reuters,
While some in the industry are accelerating progress toward a modern, sustainable cocoa supply chain, others are not doing enough and must go further and faster.