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VOICE NETWORK WELCOMES FLOOR PRICE BUT RAISES CONCERNS

VOICE NETWORK WELCOMES FLOOR PRICE BUT RAISES CONCERNS



The VOICE Network says it welcomes recent action by the Ivorian and Ghanaian governments to support cocoa prices paid to farmers, but questions remain.

“The announcement that the Ivorian and Ghanaian governments will raise the floor price for cocoa farmers, as well as levy an extra fee to cocoa buyers, is an important and necessary step in order to make the cocoa sector more sustainable and should be supported by the cocoa industry,” said the network.

“The VOICE Network welcomes this historic initiative by the governments of Ghana and Côte d’Ivoire to improve the income situation for farmers, although questions remain on its implementation.”

VOICE Network described the plan as “an important and necessary step to make the cocoa sector more sustainable” and said it should be supported by the cocoa industry.

As of 2020-2021, the Conseil du Café Cacao (CCC) and the Ghana Cocoa Board (Cocobod) will charge an extra fee of US$400/tonne of cocoa on top of the FOB-price, which they call a living income differential (LID). This would allow both states to set up a stabilization fund and guarantee a fixed price of US$1,820/tonne to farmers. That is about US$675 higher than the price that Ivorian farmers received during the 2018-2019 harvest, and about the same price level they received prior to the 2016 cocoa price crash, when prices collapsed by almost 40 per cent.

However, the VOICE Network has concerns which origin governments must address for the proposed measure to be effective. These include the need for a coherent overall strategy beyond price interventions; and the need for a higher floor price. It described efforts by Ghana and Côte d’Ivoire to increase prices as “a necessary first step,” but one that “is simply not enough” because US$1,820/tonne is much lower than the price farmers need in order to make a living income.

It also highlighted the need to make sure that the money really does go to farmers, and the need for financial transparency from CCC and Cocobod and said the need to protect forests and farmers ‘goes hand in hand.’ “If there are inadequate controls in place, these reforms will lead to deforestation,” it said.

The VOICE Network also highlighted the urgent need to address human rights and child labour in the cocoa sector, and the need for agricultural reform and supply management. It said more countries also need to step up rapidly. “We are supportive of the principle and the practice of paying the farmers more – this should be done globally. Farmers should be protected not just in West Africa but around the world,” it said. “We call on other cocoa producing countries like Indonesia, Ecuador, Brazil, Nigeria, and Cameroon to protect their farmers as well and not to sabotage this Ivorian-Ghanaian effort.”

There is also a need for certifiers to be more ambitious, said the network, which recently questioned the effectiveness of voluntary certification schemes. As it noted, governments are now being more ambitious than the certifiers. Fairtrade only has a US$2,400 minimum price; Rainforest does not have one at all. “It is time for the certifiers to match and surpass the thresholds set by producer countries,” it said.

“Many companies have already come out with statements supporting a higher price for cocoa, debunking the notion that industry will not support a price increase. We hope this will encourage other producer countries to set a price floor as well,” the VOICE Network concluded.

“We call on all chocolate and cocoa companies to support the initiative by the Ivorian and Ghanaian governments as well as the points outlined above. Most importantly, we ask all of them to commit to ensuring all cocoa farmers earn a living income, worldwide. These efforts must not be limited to supporting the initiative for a floor price in Côte d’Ivoire and Ghana but must aim at ensuring a living income across the globe. Though many other interventions are also needed, significantly higher prices must be part of a holistic solution.”

For more information about this issue see the November 2019 issue of Coffee & Cocoa International.

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