Cocoa Barometer 2022: governance policies and purchasing practices are key for systemic change in the cocoa sector

Cocoa Barometer 2022: governance policies and purchasing practices are key for systemic change in the cocoa sector

in News
Heleen Verlinden
Heleen Verlinden
International Communications

The VOICE network, a broad coalition of civil society organisations, has just launched the Cocoa Barometer 2022, renewing its plea for a systemic change by taking simultaneous action on three separate dimensions: good agricultural practices; good governance policies; and good purchasing practices. In this article, we unpack how these actions look in our programme.

The Cocoa Barometer 2022 paints a dire picture of the cocoa sector, from rising deforestation rates to persistent gender inequality, human rights violations and structural poverty ignored by all too many companies. For the first time, it addresses the elephant in the room when it comes to any ‘tropical’ commodity: the fact that the decision-making power lies in Europe and the USA, far from where cocoa is grown. And adds to the long list of persistent issues is the fact that, at a time when the world is going through economic hardship and cocoa farmers grapple with skyrocketing costs of living and production, the price they receive for their cocoa remains stable while chocolate and cocoa companies are thriving.

The Barometer, a biennial publication in which a broad coalition of civil society organisations who are members of the VOICE Network (including Rikolto, Oxfam, Solidaridad, etc.) assess the sustainability performance of the cocoa sector, acknowledges the feeling of despair anyone reading the barometer will undoubtedly share. How can it be that, after two decades of debating sustainability in the cocoa sector, so little has changed in terms of farmer income? It also renews its position that a living income for cocoa farmers will only become a reality through a systemic approach and systemic change.

The path to a living income

“The sector change that is needed cannot just come through better farming; a key approach needs to be to look at the enabling environment of the cocoa sector. Systemic changes and improvement are necessary in governance policies and in purchasing practices. Only when these are in place is there a business case for thriving farmers.”

Cocoa Barometer 2022

The Cocoa Barometer makes it clear that the three separate dimensions must be tackled simultaneously by any effort aimed at making a living income a reality for cocoa farmers: good agricultural practices, good governance policies and good purchasing practices. Project-based approaches will not suffice: “Achieving a living income will require a systemic approach, a systemic change.”

But what does this mean exactly? Higher productivity and diversification are often presented as the most important solutions towards a higher income for farmers. Yet the Cocoa Barometer’s research argues that the impact of these elements is limited, and will only bear fruit if companies engage in Good Purchasing Practices, and governments develop and implement Good Governance Policies. The only way to bridge income gaps is by paying higher prices – in combination with good agricultural practices and diversification through agroforestry, gender equality, etc.

“Research from this Barometer shows that the favoured approaches so far to raising farmer poverty are not going to bridge the income gap; higher yields do not necessarily lead to increased net income but do lead to greater risks for farmers. Without significantly higher farm gate prices, sustainability in the cocoa sector is a pipe dream.”

Cocoa Barometer 2022

Policy measures that are being developed in the EU, including mandatory ‘due diligence’ obligations and other measures to tackle issues such as child labour, deforestation and sector platforms, are hopeful. Yet, many are developed top-down, based on the needs of the chocolate industry.

“Strategies for an enabling environment must be developed and defined collaboratively at a national or sometimes even local level, with local ownership helping to ensure actions are fully integrated into socio-political and economic contexts.”

Cocoa Barometer 2022

Partnerships to bring about upward spirals of change

Cocoa and chocolate companies need to find ways to redistribute value across the chain so that farmers can earn a guaranteed living income. Rikolto supports companies, farmer organisations and government actors that want to do better.

“A commitment to those who grow cocoa for a living is needed if we are to ensure that the relationship we have with this product and those who grow it is one that is reciprocal, just, healthy and sustainable."

Abdulahi Aliyu Global Cocoa and Coffee Programme Director

Across our Sustainable Cocoa and Coffee programme, we focus on three aspects, very much in line with the recommendations of the Cocoa Barometer 2022: sustainable production, inclusive markets and enabling environment. A living income for cocoa and coffee farmers, as well as affordable and nutritious food for all, forms the core of our work. Below, we unpack how this translates into our programmes worldwide in five different cases.

In Côte d’Ivoire, we joined forces with Colruyt Group, Entreprise Cooperative de Saint Paul (ECSP), Puratos, Access Agriculture, Agro Insight and Fairtrade Belgium. With the funding of IDH – as part of the Beyond Chocolate initiative – we jointly develop an integrated approach towards a living income. We consider six parameters – productivity and quality improvements, income diversification, access to finance, agroforestry and a decent price for cocoa – and test which ones are crucial to achieving a viable living income model for farmers. The 102 cocoa farmers involved in this project, whose cocoa is transformed into chocolate bars for Colruyt Group, receive premiums on top of the farm gate price fixed by the Conseil Cacao Café in Côte d’Ivoire: a fair trade premium and Cocoa Trace premiums. Additionally, Colruyt Group has committed to paying a premium to farmers on top of that, to ensure they earn enough to afford a decent standard of living. This premium is closing the gap between the official farm gate price and the living income reference price. An analysis showed that farmers participating in the project earned about 30% more than the farm gate price for cocoa in Côte d’Ivoire in the 2020-2021 season. The Cocoa Barometer is referring to this intervention as an example of how good purchasing practices can lead to better prices for cocoa farmers.

In Peru, we have helped facilitate access to markets and provided training on cocoa quality for cocoa producer cooperative CAC Pangoa. The results can be seen in their relationship with Óbolo. We strategically accompanied the relationship between Óbolo and CAC Pangoa, jointly developing the first quality process manual for fine flavour cocoa and training cocoa farmers in biodynamic farm management. Thanks to the quality CAC Pangoa offers, they have managed to agree on a price with Óbolo that is more than double that quoted on the stock exchange, i.e. US$ 5 compared to US$ 2.3 per kilo of cocoa beans. This is only possible if buyers, in this case Óbolo, put their words into action. For Óbolo, their commitment was grounded on the belief that market prices do not necessarily reflect whether a deal is fair to the community or any negative environmental consequences of production.

"Óbolo is a customer with a differentiated price, and that contributes to improving the income of our producers. Since we started working (with a group of high-level chocolatiers, including Óbolo), our partners have increased their income by 15% due to the quality of the product."

Albino Nuñez Commercial Manager of CAC Pangoa

In the Democratic Republic of Congo, we joined forces with Zoto, Silva Cacao and cooperatives UPPCO and Cacao Okapi, again within the framework of the Beyond Chocolate Initiative. Ituri province in Congo has a fairly recent history of cocoa production but it has taken off impressively in recent years. With the varieties found in the fields, the potential to create cocoa with added value, obtaining quality premiums, is very high. Unfortunately, today the majority of these cocoa beans are sold through intermediaries for conventional markets, and the share of the value of the product that returns to the farmers is very limited. The theory of change for this project is to create direct commercial relationships, which will allow farmers to recover a larger share of the price paid for the product, together with an improvement in quality, which will be further enhanced by a quality premium. With this strategy, farmers' income from cocoa can substantially increase and contribute significantly to closing the gap in the living income of cocoa-growing families. One year after the start of the programme, increases in farm gate prices of USD 0.20/kg and USD 0.50/kg were documented, depending on the type of cocoa. This project will collaborate hand in hand with a UN and WCS project, which is addressing the drivers of deforestation, within the framework of REDD+ (Reduced Emission from Deforestation and forest Degradation) and forest conservation. The synergies between the partners' approaches to quality, certification, price increases and forest conservation will be documented to then be shared within the Beyond Chocolate platform.

In Central America, the Central American and Dominican Republic Ministers of Agriculture approved a Strategy for the region’s cocoa sector in December 2021, which is particularly aimed at increasing youth participation and tackling climate change. Since 2016, through the project "Knowledge Management in the Cocoa Value Chain" funded by the Swiss Agency for Development Cooperation (COSUDE), Rikolto has been bringing together actors in the chain to facilitate the development of a common vision that promotes sustainability and competitiveness of the Central American cocoa sector. This led to the foundation of the Cocoa Committee of Central America and the Dominican Republic (SICACAO) in 2019. SICACAO is made up of representatives of seven countries in the region. The Committee contributes to strengthening the cocoa sector through advocacy on public policies, knowledge and information management and the creation of alliances for the sustainable development of the cocoa value chain in Central America.

“Our role is to share, collect situations and information and present them for discussion. Then stakeholders come to mutual agreements, make decisions and commit to concrete actions. Rikolto and the Executive Secretariat of the Central American Agricultural Council (SECAC) coordinated the development of the strategy together with all stakeholders that are part of SICACAO.”

Ninoska Hurtado Regional Cocoa Project Coordinator, Rikolto
“The recommendation to subsidise fertiliser formulated specifically for cocoa was approved by the government. As a result, in 2021 production costs decreased and cocoa productivity increased.”
Peni Agustijanto Cocoa Programme Manager in Indonesia, Rikolto

Lastly, in Indonesia, Rikolto facilitates inclusive trade relationships between cooperatives and buyers, such as Valrhona, Rainforest Alliance and Kalimajari. In partnership, we are working towards sustainable markets for Indonesian cocoa that reward improvements of cocoa bean quality. In 2021, we trained 685 farmers on climate-smart agriculture, post-harvest practices and farming as a business. Two demo plots covering a total of 1.25 ha have been installed, in which climate-smart agricultural practices are applied. We also elevate this to the enabling environment through our involvement in the Cocoa Sustainability Platform (CSP), which reaches over 200,000 cocoa farmers. It established, with Rikolto’s support, a national cocoa curriculum for farmers so as to give standardised technical recommendations concerning cocoa cultivation and subsidies for fertiliser at a national level.

There is work to be done

The Cocoa Barometer stipulates further recommendations that give direction to any kind of stakeholder involved in the cocoa sector, including but not limited to companies and governments.

“There is work to be done. We must scale up our efforts even more, in line with the urgency and magnitude of the issues in the cocoa sector. To achieve a living income, projects are not enough: we must do all we can to work towards a sector-wide commitment. It is part of our role to ensure that the enabling environment of purchasing practices and governance policies are on the table in any conversation that we have with cocoa companies.”

Abdulahi Aliyu Global Cocoa and Coffee Programme Director

We also rally behind the recommendations for companies, to develop a time-bound living income action plan that includes purchasing practices, to commit to a living income reference price and to engage farmers in long-term asymmetrical contracts.

If you are looking to do better, we are available to strategically collaborate to bring lasting solutions to the sector. Do not hesitate to reach out to us.

Abdulahi Aliyu
Abdulahi Aliyu
Cocoa and coffee programme director

Dive deeper into the cases mentioned above