GHANA – The battle between Hershey and West African cocoa producing countries has escalated with Ghana and Ivory Coast cancelling all cocoa sustainability schemes that the U.S.-based chocolate maker runs in their countries.
This according to Reuters follows the alleged refusal of the chocolate company to pay the premium amount tagged on cocoa sourced from the two countries, aimed at combating farmers poverty.
The West African nations introduced a US$400 a tonne Living Income Differential (LID) fee on cocoa sales for the 2020/21 season.
In a letter addressed to Hershey, the cocoa regulators for Ivory Coast and Ghana accuse the chocolate manufacturing giant of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid the payment of the LID fee.
Among other things, the two countries also accused Blommer, a subsidiary of Fuji Oil Holdings of aiding Hershey in the under-hand dealings.
The two West African nations who together produce more than 60% of the world’s cocoa have also barred all third-party companies from running sustainability schemes in their territories on behalf of Hershey.
The schemes certify cocoa as sustainably sourced – meaning its production is free of environmental and human rights abuses, such as using child labour or being grown in a protected forest.
“Our concern is that by cutting off industry sustainability programs, cocoa farmers will no longer receive the benefits provided by our programs, (like) the price premium for certified cocoa.”Hershey
This is of paramount importance as the region is still plague with child labour practices with a recent report by a research group from the University of Chicago know as NORC, revealing that 38 percent of children in Côte d’Ivoire and 55 percent of children in Ghana living in agricultural households are still engaged in the act.
Matters of transparency through-out the supply chain strongly resonate with consumers as 60% of them are interested in learning more about where their foods come from, according to Innova Market Insights.
Replying to the accusations, the makers of Kit Kat, said it sources substantial volumes of cocoa from West Africa and is fully participating in the LID and will continue to do so.
“Our concern is that by cutting off industry sustainability programs, cocoa farmers will no longer receive the benefits provided by our programs, (like) the price premium for certified cocoa,” the company said in a statement.
In a separate document seen by Reuters, the world’s top cocoa producers said they had withdrawn from membership of a U.S. cocoa industry association, accusing the body of helping companies avoid paying the LID.
“The Cocoa Merchants Association of America (CMAA) is condoning and conniving with American companies against poor West African cocoa farmers,” indicates the document verified as authentic by the Ivorian and Ghanaian regulators.
Ivory Coast and Ghana also said they are reviewing their membership of the Federation of Cocoa Commerce (FCC), a UK-based international organisation that aims to promote, protect and regulate the cocoa trade.
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