Ghana is set to commence payment of the new US$400 cocoa Living Income Differential tariff in October when the 2020/2021 crop season begins.
The LID tariff agreed in 2019 between the governments of Ghana and Ivory Coast and international cocoa traders and manufacturers is a measure hoped to help alleviate poverty among cocoa farmers.
Under the scheme, an amount of US$400 is to be levied on a metric tonne of cocoa exported from the top-two producer nations of the commodity.
However, although payment is set to begin from October 2020, modalities for the disbursement are yet to be announced.
In view of this, the Federal Association of the German Confectionery Industry (BDSI) has suggested that measures be adopted to ensure proceeds from the LID tariff are paid directly to farmers.
According to Confectionery Production, BDSI’s chocolate chairman Aldo Cristiano said: “The BDSI carries out the objectives of governments of the Ivory Coast and Ghana to improve farmers’ incomes with this special levy on cocoa. However, it is imperative to ensure that the markups actually arrive only directly with the cocoa farmers”.
Mr. Cristiano added: “This minimum price concept must not be viewed in isolation. In the long run a holistic approach alone is useful, including following agricultural policies and good administrative practice in these growing countries. Otherwise, there is a threat of more overproduction on the world market that could lead further to falling cocoa prices”.
Reuters news agency had earlier reported some major cocoa processors and chocolate manufacturers – including Barry Callebaut, Nestle, Olam cocoa and Cargill – have agreed purchase contracts prior to the 2020/2021 harvest.
For BDSI, despite the LID tariff being good for the industry, it is “imperative that cocoa farmers and their families benefit” from the policy as part of wider transformations occurring across the cocoa sector.
Along with the Living Income Differential, Ghana and Ivory Coast made history last year when the West African duo got global cocoa partners to accept a US$2,600 floor price for their cocoa.
The floor price is to serve as a cushion for producers against the falling world market price for the US$100billion global chocolate industry’s most prized raw material – cocoa beans.