The world's top producers of cocoa are shaking things up.
Ghana and Ivory Coast, which together account for more than 60 percent of global cocoa production, have teamed up to demand a fixedliving income differential on all sale contracts for the 2020-2021 season.
It's part of a plan to reduce child labor and poverty among West African cocoa farmers.
Although the global chocolate industry takes in an estimated 100 billion U.S. dollars annually, many of the hundreds of thousands of West Africancocoa farmers who provide most of chocolate's key ingredient live in poverty.
Samuel Komlorn owns a four-acre cocoa farm in eastern Ghana that’s been passed down from one generation in his family to the next.
He explains, If you buy all the insecticides and all the things you need and labor too, it's very costly. So the little that you get, you put it into labor cost. The remainder is very meager.
The fixed living income differential would amount to 400 dollars a ton and replaces an earlier proposal for a floor price for cocoa contracts.
Overproduction fears
Manager of Ghana Cocobod Fiifi Boafo is one of the stakeholders who attended meetings between government officials, traders, processors and chocolate managers.
What we consider as the floor price is 2,600, Boafosaid. What was agreed or what we understoodas the system of trading going forward is to have what we refer to as living income differential. The living income differential is 400 dollars which we place on every tonne of cocoa.
Some analysts warn that while the new pricing mechanism may be a win for West African cocoa farmers in the short term, it could also lead to overproduction.
Ghana and Ivory Coast last month suspended forward sales of cocoa for the 2020/21 season to give themselves time to adjust to the new rates.
Like many West African cocoa farmers, Komlorn says he is concerned that with the higher price, buyers will look for cocoa elsewhere. It's a two-way affair. Yes, you can suspend, but it’s also going to affect our economy. They must do it in a very cautious way.
(CGTN)