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Cocoa Superpowers Ghana and Ivory Coast Go Hard With American Chocolate Giant Hershey

West African duo cancel Hershey's cocoa sustainability schemes

Ghana and Ivory Coast are said to cancel all cocoa sustainability schemes run by American chocolate manufacturing giant – Hershey – within their jurisdictions, according to reports by Reuters News Agency.

The chocolate maker is allegedly accused of attempts at avoiding the payment of the Living Income Differential (LID), a $400 per tonne poverty alleviation fee imposed by Ghana and Ivory Coast on their produce in 2019 and paid directly to millions of poverty-stricken cocoa producers.

“In a letter addressed to Hershey and seen by Reuters, the Ivorian and Ghanaian cocoa regulators accuse Hershey of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid the premium, known as a living income differential (LID),” the Reuters report said.

The report further noted, the letter verified as authentic by spokespersons for the Ghanaian and Ivorian cocoa regulators, also accused Fuji Oil Holdings’ Blommer subsidiary of aiding Hershey.

In cracking the whip on the Hershey’s attempt to undermine the LID policy, “Ivory Coast and Ghana, which produce two-thirds of the world’s cocoa, said they are also barring third party companies from running sustainability schemes in the West African nations on behalf of Hershey.”

The schemes certify cocoa as sustainably sourced, allowing companies to market their chocolate as ethical and charge a premium for it.

It is the stance of Ghana and Ivory Coast that, although sustainability schemes maybe targeted at poverty alleviation in cocoa communities, they are limited in coverage as not all cocoa farmers benefit. However, the LID which is applied to the farmgate price of cocoa reaches every single cocoa farmers in Ghana and Ivory Coast.

The cocoa superpower duo of Ghana and Ivory Coast paid the LID realised from the sale of their produce on the markets to their farmers in a historic first, where in Ghana for instance, the cocoa producer price saw a record 28% hike from GHS515 per 64kg bag to GHS660.

Following up the Monday action by the West Africans Reuters reported, “Hershey and Blommer had no immediate comment.”

“Hershey said last week it was committed to paying the LID, and that the majority of cocoa it bought would continue to come from West Africa and would include the LID for the 2020-21 crop and beyond.”

The news agency however said, “several market sources said Hershey had recently struck a deal with the ICE exchange to take physical delivery of a large amount of cocoa, allowing it to buy less from Ivory Coast and Ghana and so avoid the premium.”

In October 2019, as chocolate makers dragged their feet at buying Ivorian and Ghanaian cocoa plus the new $400-LID, the duo threatened a total cancellation of all sustainability schemes in a run-up to the World Cocoa Foundation Partnership Meeting in Berlin but backtracked on firm assurances buyers would comply.

Stay of Action

“After very difficult engagement with industry, we have come to a clear understanding that industry now generally supports the living-income differential,” Ghana Cocoa Board Chief Executive Officer Joseph Boahen Aidoo said at a conference in Berlin, which he addressed jointly with Yves Brahima Kone, the managing director of Ivory Coast’s cocoa regulator.

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