Ghana and Ivory Coast, the world’s leading producers of cocoa have threatened to cancel all cocoa sustainability schemes that U.S.-based Hershey runs in these countries.
Both countries according to Reuters have accused the chocolate maker of trying to avoid paying the cocoa premium known as the Living Income Differential (LID) which is aimed at combating farmer poverty.
Reuters reported that, in a letter addressed to Hershey, the Ivorian and Ghanaian cocoa regulators accused the company, of sourcing unusually large volumes of physical cocoa on the ICE futures exchange in order to avoid paying the Living Income Differential (LID).
Ghana and Ivory Coast, which produce two-thirds of the world’s cocoa, in July of this year announced a US$400 per tonne (Living Income Differential) to be paid to cocoa farmers, as part of a set of measures to cushion farmers.
The sustainability schemes undertaken by Hershey’s, including the ViVi School Feeding and Child Labour Monitoring Program in Ghana, certify their cocoa as sustainably sourced, thereby allowing them to market their chocolate as ethical and charge a premium for it.
The cancellation of the schemes is expected to prevent Hershey, the makers of Hershey’s chocolate bars and Kit Kat from marketing its produce with the sustainability tag.
Attempt to reach COCOBOD for a response on this development were unsuccessful.
Reuters also reported that Hershey, said it is fully participating in the LID and will continue to do so.
“Our concern is that by cutting off industry sustainability programs, cocoa farmers will no longer receive the benefits provided by our programs… (like) the price premium for certified cocoa,” the company said in a statement.