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Global sales of chocolate are estimated at 130 billion US dollars. 60% of this is generated by the Big 5 of the chocolate industry: Mars, Mondelēz, Nestlé, Ferrero and Hersheys. Retailers also play a decisive role in the market with their own brands.
This concentrated market power is opposed by approximately 5.5 million smallholder farmers, for whom in many cases cocoa cultivation is the most important source of income. However, only 6-7% of the price we pay for a bar of chocolate reaches the cocoa farmer. The majority, almost 80%, is shared by manufacturers and retailers. The farmer has hardly any influence on the price. Cocoa is traded on the stock exchange, turning the livelihood of 5.5 million families into an object of speculation.
For a long time, the cultivation of cocoa in West Africa was considered a guarantee for a secure income. But since 1980, the price of cocoa has fallen by almost half, adjusted for inflation. Strong price fluctuations lead to low planning and income security for cocoa farmers. From mid-2015 to the end of 2017 alone, the cocoa price fell by 40%. The falling cocoa price had dramatic consequences in the growing countries. Farmers suffered massive income losses.
A fair price for cocoa
It is quite simple: A price is fair if it guarantees a living wage for cocoa farmers. A living income must cover the basic needs of cocoa farming families. These include adequate housing, healthy and sufficient nutrition, clean drinking water, adequate health care, education, mobility, and the ability to build up savings for crop failure or illness. But investment costs in the cocoa plantation must also be covered.
The Fairtrade certification organization calculates that a cocoa farming family in Côte d’Ivoire producing adequate yields on sufficient land should receive an ex-farm price of $2,200 per ton of cocoa. In fact, however, the farm-gate price for a ton of cocoa in April 2021 was only $1,350.
A typical cocoa farming family in Ghana with six members and up to four hectares of land earns the equivalent of $191 per month on average. By contrast, an income of around $395 – i.e. slightly more than twice as much – would be enough to secure a livelihood.