new low for cocoa
A new low for cocoa
On 1st October, the government of Ivory Coast announced its new cocoa farmgate price has decreased to $1,457/mt in 21/22 from $1788/mt in 20/21 – a devastating drop of 18.5%.
This means farmers, who are already living way below the poverty line, will earn 18.5% less for the cocoa they sell this season. That’s the difference between feeding your family and going hungry, between children going to school or doing dangerous work on cocoa farms.
When the cocoa price fell by 30-40% in mid-2017 it is estimated that Big Choco made an additional USD$4.7 billion in profit compared to the previous year.1 The savings were not passed on to choco lovers. Big chocolate companies benefited while 2.5 million farmers and their families earned even less. It will be the same for this cocoa season – Big Choco will pay 18.5% less than last year, while they should be paying about 50% more than this new cocoa price. We also estimate that if big chocolate companies were to pay the Living Income Reference Price for all cocoa purchased, it would cost an estimated $1 billion which is only 0.7% of global chocolate revenues.2 Cocoa farmers in poverty while Big Choco makes way more profit.. not fair right?
So why is the price dropping?
This price drop comes after government bodies in Ghana and Ivory Coast attempted to ensure a fairer price for cocoa farmers by introducing the Living Income Differential (LID) of $400 extra per tonne of cocoa (Yay!). But.. this meant Big Choco had to pay more, and that eats into profits. So, what did they do? Some of the large chocolate companies responded by avoiding buying cocoa from these regions and bargaining down the overall cocoa price (boo!). This resulted in a 25% price drop for mid-crop beans in April 2021 and now an 18.5% drop for the 21/22 season. Back to square 1..
And now for some good news.. the power to change the chocolate industry is in our hands!
Tony's leads the way: enabling a living income for farmers
At Tony’s we already ensure we pay the Living Income Reference Price (LIRP) for all cocoa we buy. This is a price aligned with Fairtrade and is a crucial element to enable farmers to earn a living income. More about that here. The farmgate price has decreased by $331 so we will increase the Tony’s premium to from $462 to $743 per mt plus the additional co-op fee of $50. But that only helps the farmers we buy from.. what can we do to help all the other farmers who will suffer because of this price drop?
Let’s make our voices heard!
Let’s shout loudly and put pressure on Big Choco to pay more. We want them to price match what we pay for cocoa – the Fairtrade Living Income Reference Price. They could ALL pay this price for cocoa and still make a massive profit – there is no excuse for prioritizing profit over people.
What can you do?
COMMENT on the posts and tag your favorite Big Choco – ask them to price match the Living Income Reference Price
ENJOY a bar of Tony’s knowing we already pay the LIRP and enable farmers to earn a living income as one of our 5 sourcing principles
- Cocoa Barometer 2018, Page 13 - Where is the money going?
- USD$1 billion is calculated as the amount it would cost big chocolate companies to pay the LIRP for cocoa from Ivory Coast. Cocoa volumes*LIRP – Cocoa volumes*Farmgate price. Numbers taken from publicly available sources:
- Cocoa volumes: Cocoa Barometer 2020
- LIRP: Fairtrade’s explanatory note on LIRP
- Farmgate price: CCC & Cocobod
- Global chocolate market worth: Global Newswire, May 2021
- Cocoa Barometer 2020, Page 41 - outline of Ferrero profit sharing calculation
- Explanation of the Living Income Reference Price for cocoa developed with Fairtrade
- Explanation of Tony’s Chocolonely Living Income model
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