The terminal market for cocoa is currently trending at around $10,000 a tonne. This is way higher than the low trending prices of the past decades. Why is the price so high? Are farmers earning from this? What should happen?

We try to answer a few of these questions with this non-paper, which the VOICE secretariat drafted for our membership. If you are a cocoa expert and believe data is missing, feel that points need to be challenged, etc, please reach out to us. We like to be a learning organisation, and our opinions change based on new information, so please do reach out to us. This document is a work in progress, and will likely be amended regularly in the coming months.

The Cocoa Coalition has consistently supported the proposed EU Directive on Corporate Sustainability Due Diligence. We believe that it represents an important step forward in driving the necessary transformation of the cocoa and chocolate sector and in making human rights and environmental due diligence the norm in global value chains. We called for EU-wide due diligence legislation in the first position paper we published, in 2019.

Accordingly, we urge support for finalising the text of the Directive as soon as possible and before the end of the current EU legislative term. Failure to do so would undermine the position of those companies aiming to put in place systems that protect human and labour rights and the environment. It would risk the emergence of a patchwork of national legislation in EU member states, increasing compliance costs without any benefit to the sector or consumers. This would be a major setback to sustainability in global supply chains.

The Cocoa Coalition comprises companies (Ferrero, The Hershey Company, Mars Wrigley, Mondelēz International, Nestlé, Tony’s Chocolonely, Unilever), NGOs (Fairtrade International, Fair Trade Advocacy Office, Rainforest Alliance, Solidaridad, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative).

The full statement with logo’s can be downloaded here.

On 19 February 2024, Italian company Ferrero, jointly with industry peers like Mars and Mondelēz, urged the Italian Government to support the adoption of the Corporate Sustainability Due Diligence Directive (CSDDD) at EU level. The call was joined by leading civil society actors active in the cocoa sector and on deforestation.

The statement welcomes the carefully negotiated text and recalls that over the last years many voices from business have “called for the introduction of pragmatic, consistent and uniform legislation at the EU level and therefore welcome the text of the directive provisionally approved by the Council and the European Parliament.

The new agreement, reached by the EU institutions in December 2023, reflects a careful and pragmatic balance between countries’ resolute commitment to protecting human rights and sustainability and the need for caution in imposing new obligations on a sector that is already facing uncertainty and complexity in the global marketplace.

The obligations in the directive ensure a high level of alignment with the internationally recognised standards on due diligence. The harmonisation proposal will provide common standards, instead of regulatory fragmentation that would only bring uncertainty and complexity, including for Italian companies.” [unofficial translation from Italian]

The full statement in Italian including signatory logos can be found here.

Join us as we gather for a day of building knowledge, strategy, and relationships with civil society and farmers from across the globe.

Are you attending Amsterdam Cocoa Week (or happen to be in the neighbourhood) and working for an NGO or union in the cocoa sector, or are you (representing) a cocoa farmer?

The VOICE Network is happy to invite you to a global Civil Society and Farmer Based Organisation meeting in Amsterdam on the 5th of February, ahead of the World Cocoa Foundation WCF partnership meetings and Chocoa (6-10 Feb). This  in-person gathering during Amsterdam Cocoa Week is aimed to bring together representatives around the world to discuss key issues in cocoa. Coffee and lunch will be provided and we will foresee interpretation in the three main cocoa languages, English, French and Spanish.

Register here.

The Cocoa Coalition of companies, NGOs, certification organisations and multi-stakeholder organisations welcomes the conclusion of a political agreement on the EU Corporate Sustainability Due Diligence Directive (CSDDD). We believe that it represents an important step forward in driving the necessary transformation of the cocoa and chocolate sector, and in making due diligence the norm in global value chains.

As this Coalition has previously stated, it is crucial that the Directive is supported by guidance, including on what companies are accountable for, and accompanying measures, especially to support upstream economic actors and vulnerable stakeholders in global value chains. We call on the European Commission to start this work without further delay and engage with relevant stakeholders throughout the process.

[Note: the Cocoa Coalition comprises companies (Ferrero, The Hershey Company, Mars Wrigley, Mondelēz International, Nestle, Tony’s Chocolonely), certification organisations (Fairtrade International, Rainforest Alliance), NGOs (Fair Trade Advocacy Office, Solidaridad, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative).]

launch webinar december 5th 14:00 cet

What are principles and steps that cocoa and chocolate companies should take to ensure the way they do their core business is sustainable? The Cocoa Barometer Consortium is publishing a consultation paper to outline what good purchasing practices could and should look like in cocoa.

Join us for an online launch webinar, including a presentation of the key findings and a panel discussion, on December 5th, from 14:00-16:00 CET. This webinar will be in English and French with simultaneous interpretation.

Register for the webinar here.

The world market price for cocoa is at an all-time high due to poor harvests. Over the past weeks, reports have surfaced in the media of large companies actively trying to reduce the world market price. Ivorian and Ghanaian farmer-based and civil society organisations have responded in this joint statement last week. Attached (also in French) and below are the thoughts of the members of the VOICE network.

Over recent years, chocolate manufacturers have enjoyed record profits, whilst the vast majority of the farmers at the base of their cocoa supply chains have been unable to meet the basic needs of their families due to low cocoa prices and unfair contract terms. During recent weeks, supply shortages caused by a low harvest have seen cocoa prices climb steadily upwards, offering some hope that small-scale growers in West Africa, where most of the world’s cocoa originates, could begin to reap greater rewards for their labour.

Instead, the companies supplying major chocolate brands have refused to buy cocoa at the increased market prices, claiming that doing so would “create too much risk” for them, if the chocolate companies refuse to pay the asking price down the line.

Clearly, there is a double standard at play. When prices are low, cocoa companies claim “you can’t interfere with the market”. But suddenly, when prices are high, they want intervention in the market. This position is untenable.

Though higher farm gate prices are only part of what’s required to ensure cocoa growers earn a living income, they are a key prerequisite. There is not a business case for higher productivity if prices for farmers are too low and their risks too high. But that has been the stark reality for a very long time now. Farmers cannot simply grow their way out of poverty. But that has been the industry’s flawed approach to poverty alleviation.

Smallholder cocoa farmers do not have the capacity to avoid risk – risks of prices falling due to windfall harvests, or risks of crops failing due to weather or pests and diseases. They absorb the full brunt when prices are low.^[1] And even when prices are high, they hardly benefit, as prices are only high when harvests are bad.

Furthermore, in the two major cocoa producing countries of Ghana and Côte d’Ivoire, the forward sales system means that farmers are not receiving the currently high market prices in any case. Most of the cocoa harvested at the start of the new season on 1 October 2023 was sold already last winter/spring when prices were much lower.

Meanwhile, the large cocoa and chocolate companies continue to make hundreds of millions in profits every year. Companies can do so precisely because they can push risk further upwards in the supply chain – basically saying that the risk is not their problem, but the problem of their supplier – and because they can hedge their risks on the terminal markets.

It is clear who ‘can’t afford’ low prices: cocoa farming households, the vast majority of which live far below a living income line. The same families bear almost all of the risk in the sector.

This current market dynamic should be a wake-up call to everyone about the current system of ‘price discovery’, which benefits the most powerful actors in the supply chain and makes the weakest actors compete with each other.

Farmers cannot win in the current situation.

Virtually all large cocoa and chocolate companies either individually or collectively^[2] have committed to ensuring the farmers in their supply chain earn a living income. Yet just when the price is getting closer to what would be necessary for this to be possible, these same companies turn around and try to push the prices back down again.

These companies are not just the traders – who are directly engaged in the present standoff – but also the chocolate manufacturers and supermarkets, who make the vast majority of the profits in the supply chain and who are also refusing to buy cocoa unless the price is discounted.

Companies engaging in this behaviour are guilty of hypocrisy of the highest order.

As the VOICE Network, we call on companies to:

• In the short term, buy their usual volumes of cocoa at the current market price instead of trying to force the origin governments to lower the price by delaying their purchases or by reducing country differentials (as they are currently doing)
• In the medium term, adopt purchasing practices that enable farmers to earn a living income, including paying a Living Income Reference Price and negotiating long-term asymmetric contracts with small farmer suppliers where the companies start to assume a more equitable portion of the risk.

We call on producer governments to

• Provide transparency on current sales prices – including country differentials and
• Provide transparency about management of the Living Income Differential

We also call to the European Union To ensure that the implementation of the Deforestation Regulation (EUDR) and Corporate Sustainability Due Diligence Directive (CSDDD) ensures a living income for producers and requires companies to adjust their purchasing practices accordingly.

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^[1] The 2022 Cocoa Barometer, as well as the Living Income Compendium of September last year, clearly argue that the business case for Good Agricultural Practices builds upon a conducive enabling environment, which requires governments to ensure good policies are in place, and which requires companies to ensure they are conducting Good Purchasing Practices. A more detailed perspective on these purchasing practices will be available in our forthcoming consultation paper, to be released early December.

^[2] All of the five national Initiatives for Sustainable Cocoa (ISCOs) in Europe, of which all the major cocoa and chocolate multinationals are members, have commitments to achieve a living income. Furthermore, all major cocoa and chocolate companies have signed the Economic Pact with Côte d’Ivoire and Ghana, committing to paying the Living Income Differential.

The Cocoa Coalition welcomes key improvements proposed by the Committee on Legal Affairs of the European Parliament in its vote to define the position of the Parliament on the proposed Corporate Sustainability Due Diligence Directive. We urge the Members of the European Parliament to uphold these improvements in the upcoming vote in plenary.

We have consistently expressed our support for an ambitious Corporate Sustainability Due Diligence Directive (CSDDD), as a steppingstone to make cocoa value chains more sustainable. However, as expressed in our position paper of September 2022, the European Commission’s proposal needed to be improved to ensure it benefits people and nature worldwide. The European Parliament has an important role to play to fill in these gaps, and the vote today in the Committee on Legal Affairs (JURI) is a key step in that direction.

We commend the rapporteur, MEP Lara Wolters, and the shadow rapporteurs, for their efforts to reach ambitious compromises. The compromise package adopted today goes a long way toward aligning the CSDDD with the international due diligence standards, as laid out in the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises. It also reflects some of our key recommendations to improve the proposed Directive in a number of important aspects, namely:

• –  the inclusion of living income as a key element for companies to look into when conducting due diligence;
• –  the obligation for companies to address the impact of their purchasing practices as part of the due diligence process;
• –  the obligation to engage meaningfully with stakeholders – with a specific focus on vulnerable stakeholders – throughout the whole due diligence process;
• –  the precision that disengagement must take place as a last resort, taking into account the potential adverse impacts of such disengagement.

[Note: the Cocoa Coalition comprises companies (Ferrero, Hershey, Mars Wrigley, Mondelēz International, Nestlé, Tony’s Chocolonely, Unilever), certification organisations (Fairtrade International, Rainforest Alliance), NGOs (Fair Trade Advocacy Office, Solidaridad, VOICE Network) and multi-stakeholder organisations (International Cocoa Initiative). For our position paper on the CSDDD see here.]

A wide range of problems are facing families in cocoa communities, including child labour; gender inequality; (infant) malnutrition; lack of access to education; insufficient health care facilities and sanitation; and a variety of labour rights violations for smallholders, workers, and tenants. Environmental issues such as deforestation and climate change remain a growing concern.

Driving all of these problems is the key issue of farmer poverty. Current approaches to tackle this problem are failing, because they are not taking into account a key issue; prices at farm gate are simply far too low. Colonial-era dynamics in cocoa supply chains, which saw vast wealth extracted from cocoa producing regions, continue to influence corporate and political attitudes to the problem.

In order for living income to become a reality for cocoa farmers, action is needed on three separate fronts: good governance policies by public bodies; good purchasing practices by the private sector; and good agricultural practices by farmers. For the past two decades, however, almost all of the cocoa sector efforts have been focused on farmers themselves, sidestepping the necessary changes in government policy and purchasing practices needed to tackle sustainability issues.

It is high time the focus shifted to the necessary changes at the level of good governance and purchasing practices.

The 2022 Cocoa Barometer is a biennial state-of-sustainability overview of the cocoa sector, diving deep into the issues discussed above, and much more. Visit www.cocoabarometer.org to download the full report and read the executive summary.

Over the past weeks, the Cocoa Barometer Consortium – hosted by the VOICE Network – has published three consultation papers ahead of the release of the 2022 Cocoa Barometer (planned for an early/mid-December release). A baseline Barometer for cocoa in Latin America, a Living Income Compendium, and a consultation paper on Transparency & Accountability.

Latin America Baseline Cocoa Barometer
Latin America is the second largest cocoa growing region in the world, and Ecuador has overtaken all but Ghana and Cote d’Ivoire in cocoa production volumes. However, Latin America cocoa is often overlooked in the broader sustainability conversations. This is why, together with a range of Latin American civil society organisations, we released the first Latin America Baseline Cocoa Barometer. This document outlines the major structures and challenges of cocoa in Latin America as a whole, and also dives deeper into the specifics of the major producing, processing and consuming nations there. 
Available in English and Spanish. 

Living Income Compendium
This is an attempt to bring facts to the conversation around living income as well as debunking stubborn myths (and lazy excuses). The Compendium also offers a framework of how the sector should tackle farmer poverty; there is a real place for Good Agricultural Practices in achieving a living income, but this is only feasible if the enabling environment of Good Governance and Purchasing Practices are in place. In that light, we argue, the cocoa sector has been attempting to solve the issue of farmer poverty in exactly the wrong order; after two decades of focussing on agricultural practices, perhaps we need to address the enabling environment first.
Available in English and French

Transparency & Accountability
Transparency and accountability are essential to make sustainability efforts both credible and effective. They also provide a level playing field for all supply chain actors, enable improved market access, and help increase farmer income. However, there’s a lot of confusion about what we’re talking about – and often not so much action to be transparent, let alone accountable. Today, together with several key expert organisations in this field (EFI, UCLouvain/Trase, IIASA, the Hamburger Stiftung für Wirtschaftsethik, and Fairfood) the Cocoa Barometer Consortium is pleased to release deep dive Consultation Paper on this key topic. 
Available here