VOICE Statement on LID Payments

Wednesday, 16 December 2020

In the past weeks, the governments of Ghana and Cote d’Ivoire have accused three companies – Hershey, Olam and Mars – of trying to avoid the payment of the LID (a premium on top of the world market price for cocoa, aimed to increase the income of cocoa farmers, announced a year ago). Though details are unclear, there are three principles in this discussion that the VOICE Network would like to underline.

First, in order to achieve a Living Income – which is a human right – the payment of higher prices to farmers is going to be essential. The prices that farmers receive for their cocoa should be going up, not down, and the LID has been a crucial first step. Any company that claims to pursue sustainable cocoa should be demonstrably involved in processes to raise the farm gate price, with the goal to achieve a living income. Any company attempting to lower prices is not pursuing sustainability.

That farm gate prices (i.e. the price farmers get) need to go up has been true for the last two decades, but is even more important now because of the impacts of COVID-19 on the cocoa market, with farmers losing income and seeing costs of living rise.

Second, the discussion shows the need for much more transparency and accountability for the cocoa sector, especially around supply chains and prices. It raises serious questions about the untraceable nature of cocoa bought and sold at the terminal markets, and brings new urgency to the need to make such markets fully traceable. Worldwide, it should always be clear where cocoa is sourced from, whether fair prices are paid to farmers, and whether environmental and social concerns are being addressed in this sourcing. Without traceability, it is simply not possible to ensure cocoa is free of deforestation, child labor, or other abuses. Without transparency it is impossible to hold actors accountable for their actions.

Third, we are concerned that farmers have been made the bargaining chips in this conflict. When the Ivorian and Ghanaian governments suspended Hershey’s sustainability programmes, necessary support to farmers and farmer organisations was put at risk – including child labour intervention systems, the payments of premiums, and input support from certification systems. There must be ways to challenge multinationals without further putting pressure on the already vulnerable position of farmers. Furthermore, farmers and local civil society should be consulted in an inclusive and deliberative manner prior to the introduction of measures that significantly affect farmers. 

The bottom line must be: governments and industry should maintain farmer’s rights and wellbeing as a top priority in all considerations of cocoa prices. Companies should stop shortchanging farmers, locking them into dire poverty, and authorities should not punish companies in a way that jeopardizes farmers. At minimum the chocolate industry should pay the LID price to farmers, and in fact should be paying each and every cocoa farmer a living income price for West African cocoa of $3,166 or more.