Ghana and Côte d’Ivoire took a bold step in June 2019, to start an initiative that was later seen by many as a masterstroke that would bring some relief to cocoa farmers in the cocoa processing value chain.
Even though the two countries produce close to 60 percent of the global cocoa beans, farmers in these regions are among the poorest in the world. For decades, the two countries have worked had to produce millions of tonnes of cocoa beans to feed multinational confectionary and chocolate factories in Europe and Asia. More refreshing, cocoa beans from the two West African regions are seen to be of high quality, particularly, Ghana’s cocoa—which is ranked as having a premium rate.
Led by the two presidents of both countries, Ghana and Côte d’Ivoire were able to push for a $400 a tonne Living Income Differential (LID) on cocoa sales for the 2020/21 crop season. This move was met with great joy and excitement as the Chief Executive of COCOBOD, Joseph Boahen Aidoo was singled out by industry players to have expeditiously pushed the initiative.
Just like every new move, it wasn’t surprising when some companies operating in the cocoa value chain resisted the LID, citing high cost in the purchase price of the commodity. Shortly after, Ghana and Côte d’Ivoire were reported to have announced a cancellation of all cocoa sustainability schemes that U.S.-based Hershey runs in their countries, accusing the chocolate maker of trying to avoid paying a cocoa premium aimed at combating farmer poverty.
According to Reuters, the Ivorian and Ghanaian cocoa regulators accuse Hershey of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid the LID.
With the intervention of different stakeholders, the two countries have been able to sustain the move as the industry awaits another achievement today to establish the first ever regional Cocoa secretariate in Accra, Ghana.
The Ghana-Côte d’Ivoire Initiative Secretariate
Comparing to the success associated with Ghana hosting the African Continental Free Trade Area (AfCFTA) secretariate in Accra, some people have equally described Ghana’s decision to host the Ghana-Côte d’Ivoire Initiative Secretariat also in Accra as a huge achievement. Ghana’s capital—Accra is gradually becoming a congregating point for advancing the continent’s major economic activities.
Almost two years after the LID was announced, cocoa farmers have yet another reason to jubilate as the two countries come together to establish the Ghana-Côte d’Ivoire Initiative Secretariat to properly observe the implementations of various decisions taken in the interest of farmers.
Even though the move contained many initiatives, it is however interesting that the LID got a lot of mention due to its direct and almost immediate benefit to cocoa farmers. In addition, it appears the LID is the pivot upon which all the other equally good initiatives will spin. It was therefore not surprising that the LID took all the shine even though there are equally good initiatives that are contained in the communique issued by the countries to improve the livelihood of farmers.
Mandate of the secretariate
Among others, the secretariate will be coordinating the implementation activities of the initiative in member countries in collaboration with the coordinator as well as compiling and submitting to the Steering Committee the five-year strategic plan and annual work programme of the technical committees for considerations and adoption.
Also, the secretariate shall submit an Annual Report to the Steering Committee at its February meeting for consideration.
Furthermore, the secretariate shall submit an annual report on its activities to the Technical Committees for evaluation in November each year.
It is also mandated to submit an annual budget to the Steering Committee for consideration and approval at its meeting in August for the ensuing year.
Demands from Europe
For an industry that is worth over a 100 billion dollars in value, all players will jealously guard their interest to sustain the wheels to continue spinning. In the Mid 2000s, strong pressure from public opinion and European consumers, echoed by the European Parliament and civil society oragnisations pushed for more sustainable cocoa products in all dimensions to protect the industry.
In their demands, the European cocoa and chocolate industry players argue that the payment of the LID should not be the ultimate goal—-as there are more pressing issues threatening the survival of the industry.
According to them, price increase is not a sufficient condition for sustainability, hence must be linked to clear commitment on fighting deforestation and child labour. They argued that as price increase might lead to unsustainable overproduction, Europe needs cocoa producing countries to rather focus on policies and regulatory framework that will encourage sustainable production and penalise deforestation and child labour.
In addition, Europe is seeking a level playing field within the private sector and a clear division of responsibilities with producing countries calling for EU policy and legal action.
One advantage associated with the establishment of the secretariate is that it will help resolve some the issues that have been raised by Europe. It is important to point out that COCOBOD had reasons to dispute and challenges some the issues raised by Europe in the past concerning work ethics. The issue of child labour is one classical example. With the establishment of the secretariate, it is expected that guidelines will be properly defined to protect the interest of all stakeholders.
It all about the farmer
Cocoa, has been a major foreign earner for Ghana’s economy— contributing billions of dollars over the decades. In every year, COCOBOD signs a loan with a consortium of banks—injecting not less than one billion dollars into the economy. Sadly, the cocoa farmer who is the initiator is the poorest along the food chain.
From its onset, the government of Ghana has made it clear that every move it will take in the agriculture sector must inure to the benefit of the farmer. It was therefore not surprising that the Nana Addo government moved COCOBOD from the ambit of the Ministry of Finance to the Ministry of Agriculture to take care of cocoa farmers. With the establishment of the secretariat, it is expected that the cocoa farmer’s position will further be strengthened and protected.