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Consumers and chocolate makers are increasingly demanding transparency in the cocoa supply chain. They want to know where the chocolate comes from, the stories behind the cocoa beans, and who earns what in the supply chain. Transparency comes with improved traceability, which is easier to manage in certified supply chains and in direct trade relations.
West Africa supplies 70% of the cocoa beans. Ghana is the second largest cocoa exporter in the world behind Côte d’Ivoire (Ivory Coast). Exports of raw cocoa beans are a key source of foreign exchange for Ghana’s central bank. Ghana’s cocoa sector is regulated by the state-owned Ghana Cocoa Board (COCOBOD). Cocobod has a monopoly, through its subsidiary Cocoa Marketing Company, over the marketing of Ghanaian cocoa beans.
Cocobod, via its marketing company, obtains cheap U.S. dollar loans on international markets, using cocoa contracts as collateral. With few exceptions, only contracts with multinational buyers qualify as collateral since domestic buyers tend to have poor credit ratings and small balance sheets. The crop generates about $2 billion in foreign exchange annually and is a major contributor to the country’s Gross Domestic Product (GPD).
Chocolate production for the domestic consumer market is discouraged by an extreme tax rate of nearly 60% on domestic sales of chocolate and semi-finished cocoa products.
Kuapa Kokoo Cooperative Cocoa Farmers and Marketing Union Limited (KKFU) formerly known as Kuapa Kokoo Farmers Union is Ghana’s pioneer and the leading producer of ethical cocoa beans. Cocoa Organic Farmers Association (COFA) in Akwadum-Brong Densuso received support from the Dutch Rabobank Foundation to go organic.
U.S. buyers and foreign exporters must have a DUNS Number and U.S. FDA Registration Number.
Living Income Differential (LID) in Ghana & Côte d’Ivoire (Ivory Coast)
Ivory Coast and Ghana have stepped up their efforts to reform the industry, imposing a fixed “living income differential” of $400.00 per metric ton on all cocoa contracts sold by either country.
The premium replaces an earlier proposal for a floor price for cocoa contracts, which is part of a wider plan to combat poverty among farmers in Ivory Coast and Ghana.
The commitment of both Ivorian and Ghanaian governments is to pass 70% on to farmers. Will they?
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