Ghana, Ivory Coast set measures to tackle erosion of fair cocoa pay under premium differentials, LID

Ghana based Cocoa Processing Company to get financing

WEST AFRICA – The world’s leading producers and exporters of cocoa, Ghana and Côte d’Ivoire, have threatened to out the buyers of the commodity who do not pay the country origin differentials.

The move is aimed to tackle the discounting of country origin differentials (premium differentials) on cocoa from the two-leading cocoa-producing countries and ramp up efforts for fair treatment and pay, further eliminating adverse industry practices for good.

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Chief Executive of Ghana Cocoa Board (COCOBOD), Hon Joseph Boahen Aidoo, highlighted that the challenge of discounting premium differentials came in response to the introduction of the Living Income Differential (LID) which was instituted by the two Western African cocoa giants to help improve the remuneration of cocoa farmers.

Some buyers are reported to discounting the country origin differentials by as much as US$270 to US$300 per ton of cocoa.

This creates a market distortion where cocoa prices are moderately low but prices of chocolate in the consumer market is going up.

“We all know that we introduced the Living Income Differential with the hope to improve the remuneration of our farmers.

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“But what we’ve also noticed is that, whereas the industry actors are paying the Living Income Differential, they are discounting the country origin differentials, which is very, very, damaging to us because once the country origin differentials are discounted, it weakens the price and for that matter the income which eventually ends up in the hands of cocoa farmers in Ghana and Côte d’Ivoire,” he bemoaned.

The cocoa regulatory authorities also claim that since the COVID-19 pandemic began, some companies have been bypassing payments of a LID of US$400 per metric ton of cocoa beans which came into effect in 2020.

“We ought to change this narrative to ensure that the consumer gets better chocolate with a high content of chocolate and while the consumer is paying, the money gets to the producers,” Hon Aidoo said in his statement.

“We want to sound this to all the industry players to take note that from the end of May, we are going to publish all companies that buy cocoa from Ghana and Côte d’Ivoire, who pay or do not pay premium differentials for both countries,” he emphasised.

The Ivory Coast and Ghana partnership on the joint cocoa pricing mechanism has gathered interest among other cocoa nations like Nigeria and Cameroon.

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In a statement Dr. Ernest Umakhihe, the Permanent Secretary of FMARD, said Nigeria is gearing up to partner with the two highest cocoa-producing countries through the Côte d’Ivoire-Ghana Cocoa Initiative to create a stronger bloc to advocate for decent incomes for cocoa farmers.

According to him, Nigeria is in the process of joining the LID system, a situation that will help boost the share (income) of the country’s smallholder cocoa farmers.

“Cocoa is the highest non-oil contributor to Nigeria’s GDP and the country is ranked number four amongst cocoa producing countries in the world,” he noted.

He is optimistic that Nigeria will meet the requirements outlined in the Ivory Coast-Ghana Cocoa Initiative Charter in the country’s quest to become a member.

The two countries coming to join Ghana and Côte d’Ivoire will create an alliance of countries, whose total production constitutes 75 per cent of the world’s cocoa supply.

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