ABIDJAN -- To help out cacao farmers plagued with poverty in Cote d'Ivoire and Ghana, major producers of cacao beans who together account for about 60% of the world's output, local industry groups in the West African neighbors are set to introduce a premium system on chocolate's main ingredient.
Under the new system to be applied to cacao sales from October this year, buyers pay a premium of 400 dollars (about 44,000 yen) per ton of cacao beans. The introduction, however, may push chocolate products price higher in conjunction with an increase in cacao prices.
Low-income cacao farmers
N'Guessan Marie's cacao farm can be reached from Abidjan -- the largest city in Cote d'Ivoire -- by driving north about two hours, then switching a motorbike on a narrow, bumpy road through woods for another 30 minutes. Marie, 55, who has nine children, manages the four-hectare farm by herself.
After harvesting cacao pods about 20 centimeters long, she removes the beans with a machete and dries them. Although she works nonstop for 12 hours from 6 a.m. everyday, her annual income totals only about 1.5 million CFA francs (about 280,000 yen).
As the income is not enough to cover her children's schooling, she is indebted to a local agricultural cooperative. "Despite the heavy labor, my income is very low," Marie lamented. "I just hope buyers pay more for my cacao beans."
According to Kohi Aime, 48, who heads the Agboville agricultural cooperative that Marie belongs to, dried cacao beans are sold to buyers at 875,000 CFA francs (about 160,000 yen) per ton, but accompanying expenses including pesticides cost a lot. "An increasing number of young people are turning to rubber from cacao because they can't see any bright future in cacao. Some try to leave for Europe," Aime said.
12 trillion yen industry
Under such circumstances, industry groups in Cote d'Ivoire and Ghana in July 2019 decided to introduce the premium system.
Many cacao beans are exported to Japan, Europe and elsewhere to be processed into chocolate and put into market by confectionery makers as a variety of chocolate sweets.
"Business of the chocolate industry is as big as 110 billion dollars [about 12 trillion yen], but only 4% to 5% of that goes to farmers, leaving them stuck in poverty," said a senior official of the Coffee and Cocoa Council in Cote d'Ivoire, explaining the reason for introducing the premium system. The premiums are slated for being allocated mainly to farmers.
Chocolate price hike?
According to the Japan External Trade Organization's office in Abidjan, some cacao beans futures for harvest from October 2020 onward have already been traded in line with the premium payments.
In November last year, major Swiss chocolate maker Barry Callebaut AG announced that it would increase sales prices of its products by as much as the hike in ingredients prices, and some other confectionery manufacturers have admitted they will follow suit.
Major confectionery maker Lotte Co. has expressed concern over the ramifications spurred by the new system. "We will carefully consider how to respond while closely watching market reactions," said a public relations official of the company.
Some point out that imposing the premium may trigger price fluctuations, inviting an oversupply of cacao beans due to an increase in production or a decrease in demand. Tedd George, an agricultural economist said: "The introduction of the premium system may encourage deforestation, illegal activities that have long been rampant. The introduction of such a system requires thorough consideration."
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