Chocolate Giants Rake in Profits as Promises to Improve Farmers’ Incomes in Ghana Fall Short
In a survey conducted by Oxfam, more than 400 cocoa farmers in Ghana revealed that their net incomes dropped by an average of 16 percent since 2020, with women experiencing a staggering income decline of nearly 22 percent.
Amidst soaring profits, the world’s largest chocolate corporations are failing to provide fair prices to cocoa farmers in Ghana, undermining efforts to improve their livelihoods, according to a new analysis by Oxfam. The report, released ahead of World Fair Trade Day on May 13th, reveals that while chocolate giants Hershey, Lindt, Mondelēz, and Nestlé witnessed a remarkable average profit increase of 16 percent since 2020, Ghanaian cocoa farmers experienced a corresponding average income decline of 16 percent during the same period.
The combined profits of the four publicly traded chocolate corporations alone reached nearly $15 billion from their confectionary divisions since the beginning of the pandemic, with a substantial average profit increase of 16 percent.
Between 2020 and 2022, these corporations paid out an average of more than their total net profits (113 percent) to shareholders. Simultaneously, the Mars and Ferrero families, who own the two largest private chocolate corporations, saw their combined fortunes rise by $39 billion since 2020, resulting in a combined net worth of approximately $157 billion.
In a survey conducted by Oxfam, more than 400 cocoa farmers in Ghana revealed that their net incomes dropped by an average of 16 percent since 2020, with women experiencing a staggering income decline of nearly 22 percent. The study highlighted that nine out of ten farmers reported being worse off since the pandemic. Shockingly, up to 90 percent of Ghanaian cocoa farmers do not earn a living income, struggling to afford basic necessities like food, clothing, housing, and medical care. Many of these farmers survive on a meager $2 per day.
Oxfam’s analysis of sustainability programs implemented by ten top chocolate manufacturers and traders operating in Ghana revealed that these programs, primarily focused on increasing cocoa production, failed to achieve their stated goal and subsequently improve farmers’ incomes. In fact, crop yields among farmers in the supply chains of these corporations declined by 25 percent between 2020 and 2022. Similarly, the premiums paid by these corporations, which are additional sums meant to directly benefit farmers on top of the selling price, did not significantly increase farmers’ incomes.
According to Oxfam, cocoa farmers reported receiving a premium of only $35 to $40 per ton of cocoa. Given that the average cocoa farmer in Ghana produces approximately one ton of cocoa per year, they would need to earn an additional $2,600 per year to reach a living income.
The failure of chocolate corporations to pay fair prices that ensure a living income for farmers exacerbates issues related to child labor, poverty, and deforestation in the industry.
Increasingly, cocoa farmers are forced to sell their land to illegal miners or resort to environmentally damaging artisanal mining practices known as ‘galamsey’ to supplement or replace their income.
Oxfam’s interim Executive Director, Amitabh Behar, emphasized the need for action from chocolate giants, stating, “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. Without fair pricing and living incomes, there will never be such a thing as ‘sustainable’ or ‘exploitation-free’ chocolate.”
Ghana, the world’s second-largest producer of cocoa beans, contributes around 15 percent of the global cocoa supply. However, the country receives only about 1.5 percent ($2 billion) of the chocolate industry’s estimated annual worth of $130 billion. Europe, which imports around 60 percent of the world’s cocoa, remains a major destination for cocoa exports.
Behar called on chocolate corporations to close the living income gap for farmers and significantly increase farm-gate prices paid to cocoa farmers. Behar emphasized the importance of mitigating the impact of inflation on the rising costs of farming inputs and equipment, while also stressing the need for transparency regarding prices and premiums.
In April 2023, the European Parliament took a step towards addressing the issue by approving a new law that requires suppliers to issue a “due diligence” statement confirming that cocoa and other commodities are not sourced from deforested land or have contributed to forest degradation. This legislation aims to promote more responsible and sustainable practices within the cocoa industry.
The dire situation faced by Ghanaian cocoa farmers reflects a larger challenge within the global chocolate industry. Despite numerous commitments and initiatives to eradicate child labor, poverty, and deforestation from their supply chains, chocolate corporations have fallen short in delivering on their promises. The failure to provide fair prices and ensure a living income for farmers undermines efforts to achieve sustainability and ethical practices throughout the industry.
While Ghana produces 15 percent of the world’s cocoa beans, it receives only a fraction of the chocolate industry’s enormous annual worth. Out of the $130 billion global chocolate industry, less than $2 billion goes to Ghana. The stark income disparity between cocoa farmers and chocolate corporations highlights the urgent need for change and reform.
Oxfam’s report, titled “Towards a Living Income for Cocoa Farmers in Ghana,” provides detailed insights into the challenges faced by cocoa farmers and presents a methodology note outlining how the statistics were calculated. The organization calls on consumers, civil society, and policymakers to support and demand fair pricing, living incomes, and transparency within the chocolate industry.
Efforts to address the systemic issues in the cocoa supply chain require collaboration and commitment from all stakeholders. Governments, chocolate corporations, and consumers must work together to create an environment where cocoa farmers receive fair compensation for their labor, allowing them to sustain their families and communities.
As the world’s largest importer of cocoa, the European Union has a significant role to play in driving positive change within the industry.
The recent legislation requiring due diligence statements for cocoa and other commodities reflects the EU’s commitment to promoting sustainable and responsible practices.
Ultimately, the transformation of the chocolate industry must prioritize the well-being and livelihoods of cocoa farmers. It is only through fair pricing, living incomes, and sustainable practices that the industry can truly be considered ethical, sustainable, and exploitation-free. The time has come for chocolate giants to align their actions with their rhetoric and support the very farmers who contribute to their success.
