Major chocolate traders in Ivory Coast are failing to pay a $400-per-tonne premium on beans aimed at curbing farmer poverty, the country’s cocoa regulator said in a draft letter seen by Reuters on Friday.
The Coffee and Cocoa Council (CCC) said companies including Mondelz International Inc were offsetting the Living Income Differential (LID) by offering a negative country differential – normally a premium of 70 to 150 pounds ($99-$212) per tonne to reflect the quality of Ivory Coast’s beans.
Mondelz said it was paying the full LID. “(Mondelz) does not offer or have any influence over negative country differentials,” the company said in a statement to Reuters.
Buyers have been pressing for the country differential to be turned into a country discount, so farmers receive the extra cash but prices stay globally competitive.
“In recent weeks, when we have seen an upturn in economic activity and therefore in demand, the major groups have refused to pay the LID,” CCC said.
The world’s top cocoa producer has been locked in talks with exporters over the price of its beans as a bumper crop and weak global demand caused by the coronavirus pandemic, coupled with the introduction of the LID, pushed down sales.
“(We will) stop all the sustainability and certification programs of Mondelez that are ongoing with Cargill, and all the other exporters,” said an official at CCC who asked not to be identified.
In November, Ivory Coast and Ghana suspended Hershey Co’s cocoa sustainability schemes in their countries for six days, accusing the U.S.-based chocolate maker of trying to avoid paying the LID.
“Unlike Hershey, this time we are going to be tough on chocolate makers who want to bypass the LID. For us this is unacceptable,” the CCC official said.