A new analysis conducted by Oxfam reveals that the world’s four largest chocolate corporations – Hershey, Lindt, Mondelēz, and Nestlé – have together made almost $15 billion in profits from their confectionery divisions alone since the onset of the pandemic. Despite this staggering profit margin, up by an average of 16% since 2020, the vast majority of Ghanaian cocoa farmers are not earning a living income. In fact, up to 90% of cocoa farmers in Ghana cannot afford basic necessities such as food, medical care, clothing, and housing.
The sustainability programmes of the top ten chocolate manufacturers and traders operating in Ghana, all of which prioritize helping farmers produce more cocoa, have failed to achieve their stated goal of increasing cocoa production and, therefore, boosting farmer income. Oxfam’s survey demonstrates that nine out of ten cocoa farmers report being worse off since the pandemic, while the crop yields of farmers in the corporations’ supply chains declined by 25% between 2020 and 2022.
Oxfam’s research argues that corporations’ payment of premiums, an extra sum paid directly to farmers on top of the selling price, has failed to significantly increase farmers’ incomes. Farmers are being paid a premium of $35 to $40 per ton of cocoa. An average cocoa farmer in Ghana produces approximately one ton of cocoa annually and needs to earn $2,600 more per year to achieve a living income.
Lindt & Sprüngli, Hershey, and Nestlé all expressed intent to address poverty and improve the livelihoods of cocoa farmers. Lindt & Sprüngli invested CHF 18.6 million ($20.7m) in cocoa sustainability programmes in 2021, while Hershey implemented various initiatives such as cash transfers, sustainable farm management practices, and creating greater access to education in cocoa growing communities. Nestlé pays a premium for certified cocoa and the Living Income Differential (LID). The company has also implemented an income accelerator programme, which has already reached over 10,000 farming households in Côte d’Ivoire and will be extended to Ghana in 2024.
However, Oxfam emphasizes that without fair pricing and living incomes, it is impossible to achieve an ‘exploitation-free’ chocolate industry. Sadly, many cocoa farmers are selling their land to illegal miners or turning to polluting ‘galamsey’ (artisanal mining) to supplement or replace their incomes. Behar, the interim executive director of Oxfam International, emphasized the need for chocolate giants to close the living income gap for farmers, increase farmgate prices, and mitigate the impact of inflation on the rising costs of farming inputs and equipment.
Behar stated, “There’s big money in chocolate – but definitely not for farmers. They must rid themselves of their colonial legacy of extracting raw materials and keeping farmers in poverty while making astronomical profits for their rich shareholders. Chocolate corporations need to put their money where their mouth is.”
In conclusion, a sustainable and ethical chocolate industry requires fair pricing and living incomes for farmers. While initiatives and programmes implemented by corporations are steps in the right direction, they have so far failed to achieve their intended goals. Transparency on corporations’ prices and premiums is also required, as well as a concerted effort from all stakeholders to address poverty and improve the livelihoods of cocoa farmers.
