Ivory Coast and Ghana have withdrawn membership of a U.S. Cocoa industry association, Cocoa Merchants Association of America (CMAA). They accused the body of helping U.S. chocolate companies like Hershey avoid paying a cocoa premium aimed at tackling farmer poverty. The world’s top cocoa producers are also reviewing their membership of the Federation of Cocoa Commerce (FCC), a UK-based international organisation that aims to promote, protect and regulate the cocoa trade.
In a news captured by Agriculture in Africa Media, the two countries are cancelling all cocoa sustainability schemes that U.S.-based Hershey runs in their countries, accusing the chocolate-maker of trying to avoid paying a cocoa premium aimed at combating farmer poverty.
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 regulators also accuse Fuji Oil Holdings’ Blommer subsidiary of aiding Hershey.
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 - meaning its production is free of environmental and human rights abuses, such as using child labour or being grown in a protected forest. This allows companies to market their chocolate as ethical and charge a premium for it.
Hershey, makers of such popular candy items as Hershey chocolate bars, Hershey’s Kisses and Kit Kat, said it is fully participating in the LID and will continue to do so. It sources substantial volumes of supply from West Africa, it added.
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.
Ivory Coast and Ghana last year introduced a US$400 a tonne LID on cocoa sales for the 2020/21 season, but have since struggled to sell their beans as chocolate demand has been hit by the coronavirus-induced recession.
News Source: Agriculture in Africa Media | Editor@agricinafrica.com
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