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EU Regulation: Big Chocolate Revenge On Ghana And Côte d’Ivoire Cocoa LID?

The ambience of chitchats fills an Accra hotel seminar hall as attendees exchange pleasantries while networking. Others make their way out for the cocoa break.

It’s the end of the opening session of the COCOBOD AfCFTA Committee’s meeting with local cocoa processors and value addition artisans.

Chief Executive of Ghana Cocoa Board (COCOBOD), Joseph Boahen Aidoo, had earlier addressed the session as the special guest touching on domestic consumption promotion and the potential of Ghana’s cocoa on the African market, all as a means of maximising returns from the country’s star agricultural produce.

EU THREAT TO BAN GHANA COCOA

But immediately after, he is the subject of a barrage of questions by newsmen, primarily on the unsettling news of the European Union’s threat to ban the importation of Ghana cocoa over environmental and child labour concerns.

“[The] EU is very determined to legislate, that there’s no two ways about it. And they are doing what is called due diligence. They are engaging us to make an input into whatever law/regulation that will come“, Aidoo said in a preamble to his answer on the subject.

“They are complaining about deforestation. I will say that when you talk about deforestation issues in Ghana it is not the cocoa, else all the forest in Ghana would have disappeared…Because cocoa as a forested crop needs the deliberate cultivation of shade trees to do well, hence a perfect crop to reforest our savannah. But EU will not take anything out of that”, the COCOBOD boss emphasised.

Joseph Boahen Aidoo is a worried man. And rightly so, as stakeholders in the sector, including the thousands of Ghana’s smallholder cocoa farmers, are all concerned.

Uncontrolled illegal mining (galamsey) is devastating Ghana’s forest cover, pulling down thousands of cocoa trees, and polluting major water bodies. Already, hundreds of communities are facing acute water shortage and health problems as a result.

Although acknowledging the challenge with the depleting forest resources, Mr Aidoo vehemently disagrees that cocoa production, anywhere in Ghana, is to blame.

A recent stakeholders dialogue on the issue, under the auspices of Ghana’s Minister for Lands and Natural Resources, agreed to immediate action against what is now classified ‘a national emergency.’

And the COCOBOD chief executive fully endorses any action to halt illegal mining having repeatedly called for a security campaign against the menace.

“Should they ban us it will be very very difficult for us to sell our cocoa“, Aidoo admitted.

PRICE MANIPULATION AGENDA?

About 80% of Ghana’s cocoa is purchased by the European Union. Thus the effect of any such action is bound to ripple across the length and breadth of the world’s second-largest cocoa producer nation.

Cocoa is the backbone of the West African country’s economy, bringing in about US$2 billion annually in forex receipts, employs millions across the value chain and a source of livelihood for thousands of families.

For COCOBOD the EU’s insistence on Cocoa being responsible for deforestation is steeped in a well-thought-out campaign “to manipulate the price of cocoa, including the LID“, Aidoo feared.

In June 2019, Ghana and Côte d’Ivoire, the top two cocoa producers in the world, achieved success by getting buyers and manufacturers to agree an additional US$400 per tonne on the price of their cocoa to help alleviate poverty among its farmers.

The amount, termed the Living Income Differential (LID), would be paid directly to cocoa farmers on top of the country’s farmgate or producer price at the point of sale.

Implementation of the LID took off with the commencement of the 2020/21 crop season, 1 October 2020.

However, proponents of the LID seem to suspect Big Chocolate may be exacting revenge intended to ultimately lead to the failure of the cocoa farmer poverty alleviation premium.

“…Immediately LID came, all of a sudden hell broke loose and everybody is talking about child labour, everybody is talking about deforestation, and it appears that Ghana and Cote d’Ivoire have been targeted”, Joseph Boahen Aidoo recounted.

The European Union has been engaging Ghana cocoa stakeholders via its Sustainable Cocoa Dialogue Ghana series. The last session on April 15 was dubbed Roundtable On Traceability, Transparency and Accountability with Regards To Child Labour.

He insists, child labour and deforestation issues, although central, must be decoupled from discussions regarding payment of decent cocoa prices to West Africa’s cocoa farmers who live on a daily income of approximately Forty to forty-five American cents (US$0.40 – US$0.45).

EU REGULATION: THE GENESIS

Hours after the LID’s adoption, when it seemed West Africa’s cocoa farmers would have something to smile about, some key partners among the buyers mobilised into a coalition to counter the move.

In 6 months the coalition had succeeded in formulating a position paper. The group lobbied the EU to enact legislation to enforce mandatory human rights and environmental due diligence requirements on companies.

“We, a group of companies (Barry Callebaut AG, Mars Wrigley and Mondelēz International), The VOICE Network*, Rainforest Alliance and Fairtrade, call on the European Union, by far the largest importer and consumer of cocoa in the world, to strengthen human rights and environmental due diligence requirements of companies in global cocoa supply chains, aligned with the United Nations Guiding Principles on Business and Human Rights (UNGPs)”, opened the position paper.

Others like Nestlé, Tony Chocolonely and Unilever signed up later.

The LID for West Africa’s cocoa farmers kicked in as planned, but in barely 3 months Ghana and Côte d’Ivoire red-flagged some activities they deemed suspicious.

The duo took action and announced the cancellation of the sustainability program of American chocolate maker Hershey, and others, within their jurisdiction for alleged attempts at circumventing payment of the cocoa LID.

According to The Africa Report, Joseph Boahen Aidoo, the chief executive of COCOBOD, called out the major cocoa companies for not “playing fair” by reneging on their commitments. Yves Brahima Koné, the Ivorian boss of Conseil Cacao Cafe (CCC), spoke of a “conspiracy to undermine farmers”.

Multinational corporations don’t want to pay the LID and are trying to shield themselves behind the country differential. If they were actually encountering financial difficulties, they would stop buying cocoa altogether,” says Koné.

EXPLORING NEW MARKETS

Many commentators on the issue view the prevailing situation as purely symptomatic of putting all your eggs in one basket.

This has given rise to calls for an urgent review of the COCOBOD law to support more local utilisation and value addition to the country’s cocoa beans.

We urge the amendment of the COCOBOD law to recognise the artisanal cocoa value addition industry into the country’s cocoa value chain“, says Dela Kuekey Austine, vice president of Cocoa Value Addition Artisans Association of Ghana (COVAAAGH).

COVAAAGH wants Cocobod to speed up a policy that allows artisanal processors to buy beans in smaller quantities, away from the prevailing 50-tonne minimum limit that has prevented Ghanaian small and medium scale enterprises (SME) from participating in cocoa value addition.

Source: Ministry of Trade & Industry, Ghana

With the imminent threat of an EU ban looming on the horizon, Ghana Cocoa Board is mulling what perhaps must have been done decades ago – market diversification.

The Ghanaian cocoa regulator is looking to increasing local processing past the 50% target as it aggressively explores the possibility of exporting more semi-processed and tertiary cocoa products to new markets, particularly Africa.

For this, a special team – the COCOBOD AfCFTA Committee – has been tasked to assess the capacity of local processors and cocoa value addition startups for possible support to access the US$1.3 trillion Africa Continental Free Trade Area market created by the Africa Union with headquarters in Ghana’s capital, Accra.

But will Ghana and Côte d’Ivoire back out from the LID as pressure mounts? Or will solidarity and cooperation fuel a collective resolve of the two cocoa-producing giants to push for a decent living income for farmers of their respective countries?

Source Cocoa Post
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