Ivory Coast’s cocoa regulator, Conseil Cafe Cacao (CCC), has named the chocolate makers, who it says continues to refuse to pay the Living Income Differential (LID), which is a premium of $400 a tonne set up by the world’s biggest cocoa producer and second-biggest producer, Ghana in 2019.
Implementing the LID was an important step toward alleviating the poverty of the millions of small cocoa farmers who may live on as little as $0.45 a day. Although chocolate companies agreed to comply, some have resisted, and point to weak demand and difficult trading conditions.
Reuters News reports that the CCC was pointing the finger at some companies, including Mondelēz International, whom they say is avoiding the LID by the backdoor.
According to the report, the CCC believes that the chocolate companies are discounting the country premium against the LID. The quality of the cocoa normally attracts a premium of ($99-$212) a tonne, but this has now turned into a discount.
This negative differential, claims the CCC, is just another way to avoid paying the Living Income premium, but the chocolate companies disagree, saying the price reflects current market conditions.
In recent weeks, when we have seen an upturn in economic activity and therefore in demand, the major groups have refused to pay the LID – A statement from the CCC according to Reuters
Mondelēz issued a rebuttal, saying it was paying the LID in full and told Reuters that it:
Does not offer or have any influence over negative country differentials.
The CCC retorted:
(We will) stop all the sustainability and certification programs of Mondelēz that are ongoing with Cargill, and all the other exporters – a CCC official who wanted to remain anonymous
Although both parties need each other, the acrimony looks set to continue, at least until market conditions improve.