Dutch chocolate maker Tony’s Chocolonely has announced that it will increase the premium it pays to Cocoa farmers in Ghana and Côte d’Ivoire. The move comes at a time when the West African Cocoa sector is suffering from falling commodity prices, a more than 50% increase in fertiliser costs and a rise in the cost of living as the Ghanaian cedi has depreciated sharply against the dollar.
Tony’s aims to achieve a living wage for Cocoa communities in its supply chain, and the increased premium can be seen as a step towards this goal.
The company confirmed that it would increase the price it pays for Cocoa by 82% in Côte d’Ivoire and 77% in Ghana to keep pace with inflation. They also called on other companies to go beyond the Fairtrade premium and take the initiative to pay even higher prices to cushion the cost of living crisis and keep farmers out of poverty.
The increased cost of fertiliser is a major problem for Cocoa farmers, despite efforts to replace imported nitrogen-based fertiliser with natural local alternatives. Ghana’s COCOBOD has reported that prices have tripled since 2019. Some communities have received fertiliser donations to support their production, but without a comprehensive solution, many farmers should expect lower yields.
Much of the Cocoa from these countries is produced by small, family-run farms that survive on less than $1 a day, so cost increases on this scale, combined with lower global prices, are unsustainable.
To keep up with the rising cost of living and fertiliser prices, Fairtrade changed the Living Income Reference Price (LIRP) on 1 October, prompting Tony’s to follow suit and raise its own premium.
The increased LIRP for Cocoa is $2,390 per tonne, compared to $2,200 for Côte d’Ivoire and $2,120 compared to $2,100 for Ghana. A major problem arises when you compare these figures with the farm gate prices paid by the government to farmers – $1,344 for Côte d’Ivoire and $1,225 for Ghana. From these figures, it is clear that the gap between the living income and the amount paid to farmers for their Cocoa is widening.
A number of companies have since committed to paying farmers more for their Cocoa by becoming ‘Mission Allies’ of Tony’s Open Chain – an initiative that seeks to enable fairer sourcing of chocolate by following Tony’s 5 sourcing principles. Companies that have joined the initiative include Ben & Jerry’s, ALDI, Albert Heijn (a Dutch supermarket chain) and FMCG brands Jokolade, Vly Foods and The Flower Farm.
The company’s Open Chain lead, Joke Aerts, is confident in the impact that would result from the latest initiative.Joke Aerts, Open Chain Lead, Tony’s
Cocoa farmers have the right to sustain a decent standard of living for all members of their households. But the industry has been slow to catch up. More and more big players agree that a living income should be the standard everywhere. But income diversification and productivity improvement projects fail to address the necessity of a living income. Paying the Living Income Reference Price for cocoa is a core driver for getting cocoa households out of poverty. That’s why we are inviting all chocolate brands to join us in our mission, by joining Tony’s Open Chain.