This price drop could be devastating for cocoa farmers

    Tony's Chocolonely Ghana farmer Easy Food

    Tony’s Chocolonely, the chocolate makers on a mission to make 100% slave-free the norm in chocolate, has launched an urgent appeal to all chocolate companies in Ireland to match the price Tony’s pay cocoa farmers following a devastating drop in farmgate pricing just announced on 1st October.

    This price drop in Ivory Coast, the world’s largest cocoa producer, will lead to increased poverty associated with modern slavery and illegal child labour, despite big chocolate companies having pledged for decades to eradicate these labour abuses from their supply chain.

    It is very likely that this reduction in the price of cocoa means chocolate companies will enjoy significantly increased profits, instead of paying the Living Income Reference Price to the farmers producing the cocoa in their bars. When the farmgate price of cocoa dropped in mid-2017, big chocolate companies also made an increased profit.

    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. Some of the large chocolate companies responded by avoiding buying cocoa from these regions and bargaining down the overall cocoa price. This resulted in the mid-crop farmgate price being dropped by 25% in April 2021, and now the main crop price has also been dropped by 18.5%.

    About 75% of the world’s cocoa comes from West Africa. The NORC Report, published in October 2020, estimates that 1.56 million children currently work illegally on these cocoa farms. The Global Slavery Index from 20185 confirms there are a minimum of 30,000 victims of modern slavery on cocoa farms there. The root cause of both illegal child labour and modern slavery is poverty, as cocoa farmers are paid too little for their cocoa.

    It is predicted that small holder farmers will lose on average 18.5% of their earnings for the 2021/22 cocoa season, while 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. They will pay 18.5% less, while they should be paying 50% more than this new cocoa price to enable farmers to earn a living income.

    Tony's Chocolonely Cocoa Pods Easy Food

    Tony’s Chocolonely is a chocolate company on a mission to make 100% slave-free the norm in chocolate, changing the industry from within by raising awareness of the issue, leading by example and inspiring key industry stakeholders to act. Tony’s is asking consumers to call out this cocoa price drop and asking chocolate companies to pay more, not less, for cocoa: the Living Income Reference Price.

    Tony’s Chocolonely voluntarily pays a higher price for their cocoa, paying an additional premium and a co-op fee on top of the Fairtrade premium to bridge the gap between farmgate price and Living Income Reference Price. The total Tony’s premium paid on top of the farmgate price will increase from $462 (26% over the farmgate price) in 2020/21 to $793 (54% over the farmgate price) per tonne of cocoa in 2021/22 to ensure farmers are not impacted by this significant price drop. Tony’s mission allies — including Aldi, Albert Heijn in The Netherlands and Jokolade in Germany — also pay the Living Income Reference Price for their cocoa.

    Head of Impact at Tony’s Chocolonely Paul Schoenmakers said, “In 2001 a pledge was made by the world’s biggest chocolate producers to end illegal child labour in the cocoa industry. Yet 20 years later, child labour and modern slavery are still systemic in cocoa. Poverty is the root cause of this.”

    “Low cocoa prices, which support the profits of large chocolate companies over the livelihoods of small holder farmers, is a step in the wrong direction.”