Faced with the facts, representatives of the Ivorian coffee and cocoa regulatory body, the Conseil Café Cacao (CCC), and the Ghana Cocoa Board (Cocobod), who gathered in Accra from 6 to 9 July in Accra (AI, 12/07/22) for a meeting hosted by the secretariat of the Initiative cacao Côte d'Ivoire Ghana (ICCIG) along with the 16 largest private stakeholders in the west African cocoa trade, were forced to acknowledge that Abidjan and Accra's Living Income Differential (LID) - their flagship initiative introduced in early 2020 to guarantee cocoa farmers a minimum price - has been a failure. The situation illustrates the difficulties faced by the general secretariat of the ICCIG, a body which presidents Alassane Ouattara and Nana Akufo-Addo had hoped would become an "OPEC" of cocoa. The idea to create such a body was first mooted in 2018 and it was finally launched in early 2021.
Ghana and Ivory Coast account for 70% of the world trade in the beans used to make chocolate. But the LID has not had as great an impact on the revenues of the 1.7 million west African cocoa farmers (900,000 in Ivory Coast and 800,000 in Ghana) as was hoped for.
Set at $400 per tonne of west African cocoa, the LID was intended as a premium on top of world prices to ensure a minimum decent return for farmers. Its introduction was intended to guarantee them at least 70% of the sale price of cocoa on the international market (currently about $1700 per tonne). But in reality, the premium has been virtually wiped out by commodity traders, who responded to the measure with negative Country Differentials (CD) on the London and New York Cocoa Futures markets of up to -$260 per tonne for Ghana and Ivory Coast. The traders say that without this correction, cocoa from these two countries would not have found a buyer. Bad timing (the LID was launched just before the Covid-19 crisis hit leading to a drop in consumption), however, is not the only reason for the measure's failure, which cocoa professionals also blame on the lack of dialogue between west African public bodies and Western companies.
One aspect on which the sector's otherwise distant actors appear to agree is the appointment of the ICCIG's secretary-general Alex Pierre-Arnaud Assanvo in January 2021. For once, regulators, cocoa cooperatives, local and international traders, manufacturers and subcontractors all seem to approve of the choice of the Ivorian professional, who previously worked in purchasing and public relations for the UK confectioners Cadbury (owned by Mondelez) and then for US company Mars Wrigley, and has extensive experience working with the sector's public and private players, both in West Africa and in Europe and the United States. The ICCIG secretariat opened an office in Accra in September 2021, close to Kotoka international airport, and has since then been gradually growing, taking on staff and expanding.
In order to lend more weight to the organisation, Assanvo intends to develop his secretariat's partnership with cocoa trading giants - primarily with Cargill (US), Olam (Singapore) and Touton and Sucden (France) - and the world's chocolate manufacturing heavyweights (Mars, Barry-Callebaut, Mondelez, Hershey, Nestlé and Cémoi), which dominate the west African industry.
In order to increase the income of west African cocoa farmers, ensure production traceability, and combat deforestation and the use of child labour on plantations, the ICCIG's secretary-general is hoping to convince the heads of the major international private players to be more closely involved. This has not been the case until now, with the leaders of these companies regarding the organisation's meetings mainly as PR opportunities. Until now, the ICCIG secretariat, it is true, has given pride of place to official representatives from the two countries through a system of Ivorian-Ghanaian pairs. The chairmanship of the ICCIG's board of directors rotates between their respective ministers of agriculture and is currently held by Ghana's Owusu Afriyie Akoto, who will be replaced in October by his Ivorian counterpart Kobenan Kouassi Adjoumani. The ministers, both political heavyweights who have the ear of their respective presidents, are not shy of standing up to powerful multinationals and defending the national interest.
The first two projects launched by the ICCIG are being headed by representatives of Cocobod and the CCC. Bamba Kadoko, the CCC sales manager, is leading a marketing and traceability project while the deputy director of Cocobod, Emmanuel Agyemang Dwomoh, is supervising a project on agronomic research and production monitoring.
Assanvo's righthand woman is the Ghanaian Tawiah Agyarko-Kwarteng, who was appointed technical director of the ICCIG secretariat in February. Like Assanvo, she also comes from the private sector and was previously responsible for the development of "sustainable" cocoa supplies for US company Hershey in West Africa (AI, 27/07/22).
To boost the ICCIG's relationship with the private sector, Assanvo and Agyarko-Kwarteng told their sixteen private partners at the 6-9 July meeting in Accra that they intend to involve them in three long-term projects, led by experts currently being hired by the body. These projects will respectively focus on price-setting mechanisms, on monitoring the social and environmental performance of the sector, and on developing local processing processing capacities and an African market for cocoa-based products (chocolate and other agri-food and pharmaceutical products).
While many cocoa traders and businesses aren't convinced by the latter project, a number have said they are preparing proposals relating to the other two. One such stakeholder is US heavyweight Cargill, which exports more than 300,000 tonnes of cocoa annually from the two countries out of the more than 2 million tonnes sold by Ivory Coast and the million tonnes produced by Ghana. Cargill's regional office has been studying the possibilities under the leadership of Frenchman Lionel Soulard, who has been the company's Africa cocoa and chocolate director since 2014 and been based in Abidjan since 1996.
Some international cocoa traders believe the LID could be directly added onto the price of futures contracts traded in London and New York. This would allow them to financially cover their risks on the whole transaction and not just on the part corresponding to the price of the raw material as is currently the case.
Traders and chocolate makers are also aware that there is an urgent need to move forward on the issue of traceability and sustainability. Pushed by Western consumers, who account for two-thirds of sales of west African cocoa, the European Commission and the US Department of Agriculture (USDA) are planning to implement regulations from 2025 onwards banning imports of cocoa whose traceability and sustainability are not vouchsafed. As of yet, neither Ivory Coast nor Ghana have systems in place to monitor the cocoa chain from the field to the export cargo ship, although the sector's major players (Cargill, Olam and Barry-Callebaut) and startups (such as the Franco-Senegalese fintech Wizall Money) have developed their own tracking systems, based on apps installed on the smartphones of cocoa farmers and bean collectors.
Assanvo regularly discusses such issues with the European Union's representative in Abidjan, the Frenchman Stéphane Brossard, and with Michel Arrion, the Belgian secretary-general of the International Cocoa Organization (ICCO) and former EU ambassador in Abuja. Based in the Ivorian capital since 2017, ICCO boasts members from 22 cocoa exporting countries (including Ghana and Ivory Coast, but also Nigeria and Cameroon) and 29 importing countries (the 27 EU member states, Russia and Switzerland).
The ICCIG hopes their support will help to mobilise the influential and politically driven CCC head Yves Brahima Koné and Cocobod director Joseph Boahen Aidoo. Until now, both have focused mostly on global prices, which they believe to be partly manipulated by multinationals, and the allocation of export licences to local groups, to the detriment of issues relating to plantation sustainability and improving the control of cocoa production (which has been rising steadily since 2016 in both countries) through better agricultural diversification policies.
Accra and Abidjan powerlessImplementing a "cocoa OPEC" to coordinate an agricultural sector in West Africa with enough sway to impose its views on the multinationals is proving much harder for ICCIG than for the real OPEC of the oil industry. Abidjan and Accra monitor, rather than regulate, the cocoa they sell on international markets, unlike oil exporting countries, which can turn the oil tap on and off as they please. Cocoa harvests depend on the weather, the age of the plantations (which take at least four years to produce their first sellable beans), and above all on the decisions of Ivorian and Ghanaian farmers, for whom this activity makes up the bulk of their income.
