Say West Africa, Say Cocoa
Cocoa is the biggest trade flow between The Netherlands and West Africa. Côte d'Ivoire and Ghana together account for 65% of global cocoa production with 95% of cocoa exports going to the EU. The fast majority of that through Amsterdam. In March the agricultural team West Africa together with colleagues from The Hague took a deep dive into the sector to inform current and future interventions.
Developments in EU, NL and West Africa
Forthcoming EU Corporate Sustainability Due Diligence (CSDD) and Deforestation Directive have triggered renewed and new discussions about sustainable cocoa and are pushing national cocoa agendas. In the Netherlands a public-private partnership became active in the Dutch cocoa and chocolate sector, working to sustainably improve the livelihoods of current and future cocoa farming families. Signatories of this Dutch Initiative on Sustainable Cocoa (DISCO) are jointly responsible for reaching the shared vision for a sustainable cocoa sector. Although there are institutional differences between Ghana and Côte d'Ivoire, the two countries see the need for a joint agenda in order to influence the international price of cocoa. Cote d'Ivoire Ghana Cocoa Initiative (CIGHCI) has been established with one clear mandate: redesign pricing structure for cocoa with revised margins to renegotiate the international market price for cocoa.
Cocoa Sector Characteristics
There are 3 overarching issues that are widely acknowledged as important:
- Living income for farming families with cocoa as their main livelihood activity. DISCO signatories commit to achieve that by 2030
- Cocoa-related deforestation and forest degradation. Dutch cocoa industry and their trade partners will no longer source from regions that contribute to this by 2025.
- Child labor: Effective measures and necessary actions contributing to ending all forms of child labor by 2025 are taken.
Everyone however acknowledges the complexity of the root causes behind the critical social, economic, and environmental sustainability issues in the cocoa sector. By working in partnership DISCO signatories are better able to coordinate and initiate efforts and interventions with stakeholders in the cocoa sector outside the Netherlands. This should lead to more efficiency and effectiveness in the national and international efforts aimed at making the cocoa sector more sustainable. In partnership, we can achieve more than the sum of our individual efforts.
"Everyone acknowledges the complexity of the root causes behind the critical social, economic, and environmental sustainability issues in the cocoa sector"
Ghana and Cote d’Ivoire
The CIGHCI has been established by both governments of Ghana and Cote d'Ivoire (jointly responsible for 65% of global cocoa production) in order to better implement the Living Income Differential that both governments have introduced in 2019 in order to reach a better price for cocoa beans for the cocoa farmers. On 3 July 2019 both authorities announced that all cocoa sales contracts from 2020/21 would include a 'Living Income Differential' (LID) of $400 per tonne of cocoa on top of the world market price. The $400 should be paid by companies that purchase cocoa; however, in reality this ‘premium’ has not been successfully implemented yet and is often not paid due to price setting on the international market undermining the LID.
"The CIGHCI has been established by both governments of Ghana and Cote d'Ivoire to better implement the Living Income Differential"
Differences between Ghana and Côte d'Ivoire
Overall it stands out that the forthcoming CSDD and Deforestation Directive have triggered renewed and new discussions about sustainable cocoa and are pushing national cocoa agendas. Both governments of Ghana and Côte d'Ivoire understand that more needs to be done if they don’t want to be confronted with export problems to Europe when the CSDD and Deforestation Directive are implemented. Nevertheless, a common understanding about the scope of the problems on the ground and what needs to be done to tackle these problems has not been reached yet. Moreover, due to different institutional structures, Ghana and Côte d'Ivoire cannot be taken together for a one-size fits all solution. Both countries are dealing with their own complexities that require different interventions to make the sector more sustainable.
In Ghana the COCOBOD is still the main player to control the cocoa sector, managing the whole cocoa buying process starting from implementation of ‘good agricultural practices’ on the farm to quality control of the exported beans. In Côte d'Ivoire the Conseil Café Cacao has a similar but different role and the cocoa market is managed in a less centralized way. These institutional differences have an impact on the key stakeholders the NL government needs to work with for its future interventions to influence the level of sustainability of the cocoa sector.
Role of The Netherlands
Currently the Dutch government works on a new cocoa strategy to really contribute to the overall DISCO objectives from the public side. This strategy will therefore combine classic interventions, like increasing productivity and quality in production countries, with alternative interventions, such as capacity building of (farmer's) organizations and cooperation with all stakeholders in the value chain. We also have to acknowledge that The Netherlands cannot do this alone.
The EU is very committed, but more can be done to harmonize efforts and improve dialogue with production countries. We are putting effort in further strengthening this dialogue whilst at the same time persuading other main EU consumption countries (GER, FRA, BEL, SWI) to harmonize sustainability efforts and to support Ghana and Cote d’Ivoire in its agenda with a final goal to come to a living income for farmers. Support to production countries, in terms of finance (EU), technical assistance, investments (private sector) or political, should also contribute to multi-stakeholder sector planning. In other words, the governments in Ghana and Cote d’Ivoire should open up the dialogue and even guidance of the sector to NGO’s, private sector and knowledge institutes. Something that is very common in The Netherlands but very novel to the local sector.
Do you want to learn more? Reach the agricultural team in West Africa by sending e-mail to acc-lnv@minbuza.nl