Cocoa: the « subsistence income differential » finally on track

First mentioned in early July, at the technical meeting that brought together the Ivorian and Afghan authorities and cocoa sector industrialists, the « subsistence income differential » came into effect on the first export contracts of the 2020/21 season.

When questioned by the Reuters news agency, several sources reported the signing of the first cocoa contracts incorporating a premium of $400 per tonne for the 2020/21 season. As a reminder, the Ivorian Coffee and Cocoa Council and its Ghanaian counterpart, Cocobod, announced at the beginning of the summer that they would include a « subsistence income differential » clause in export contracts in the order of $400/t, automatically coming into effect « if the world price were to fall below $2,600 ». A way of offering a minimum remuneration to growers. The latest Cocoa Barometer, an annual sector study funded by a consortium of NGOs (Oxfam, Südwind Institute, Public Eye…), points out that cocoa farmers would receive on average only… 6.6% of the income generated throughout the value chain, while a recent World Bank report on Côte d’Ivoire, published in July, estimates that more than half of all producers would live below the poverty line.

For the time being, only the French chocolate maker Cemoi has confirmed that it has purchased cocoa from Côte d’Ivoire under this new mechanism, but the above-mentioned sources have indicated that Sucden, Barry Callebaut, Cargill and Olam have also concluded similar agreements. However, the volumes concerned are downside: Côte d’Ivoire and Ghana have so far only sold between 20,000 and 25,000 tonnes with the attached premium; a very paltry figure if we put it in perspective with the 2.5 million tonnes forecast for 2020/21. However, the campaign has only just begun….

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