$400 per MT bonus for cocoa farmers begins October 2020 – Bawumia
Vice President Dr Mahamudu Bawumia has said that farmers will be paid bonuses of $400 metric tonne (MT) of production starting from the 2020/2021 cocoa season.
Termed as the Living Income Differential (LID), it has been captured
under the Ghana-Cote d’Ivoire Co-Operation, to help alleviate poor economic conditions of cocoa growers.
It was part of a raft of negotiations and resolutions by the two West African countries who produced nearly 60% of the world’s cocoa.
“Call it what bonus or Living Income Differential of $400 per MT to every cocoa farmer,” Dr Bawumia said in an interview on Peace FM, adding, “I think it is starting in October, this coming cocoa season”.
He is hoping that the move will inject energy into the cocoa sector to boost production of Ghana’s major cash crop export.
It forms part of plans by the countries to address plans to combat poverty after proposals for a floor price for cocoa purchases.
In clarifying a report by Bloomberg, CEO of Cocobod, Joseph Boahen Aidoo, said via a press released in July 2019 that in line with trading practice, “CMC [Cocoa Marketing Company] on 19th July 2019, decided to do a market sounding after the introduction of a Living Income Differential (LID) and weigh the market reaction and its dynamics.”
“We will like to correct the misrepresentation of the LID to mean a surcharge. The LID is part of the price component of the trading mechanism and not a surcharge as was reported by the Bloomberg”.
Fairtrade International, a multi-stakeholder product certification company based in Germany with a focus promoting the lives of farmers and workers through trade, have revised their policies to reflect the new LID.
The governments of the Netherlands and Germany have supported the introduction of the bonuses expressing commitments to integrate this into their policies on sustainable trade and development.
Some chocolate companies also showed support, including Dutch chocolate brand Tony’s Chocolonely and the Belgian brand Belvas.
Reuters reported in September 2019 that French chocolatier Cemoi had confirmed paying the $400 a tonne LID for cocoa purchased from Cote d’Ivoire.
The news outlet also reported that trade sources have revealed that brands such as Sucden, Barry Callebaut, Cargill and Olam had also flowed suit by making the additional payments.
Most chocolate companies pledged support for the new pricing regime at a Living Income conference held in the Netherlands in November 2019.
However, some traders believe it may present some disincentive to buyers resulting in surpluses. They hold a strong view that consequently, buyers may explore other sources of supply.