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Does Nestlé support a living income for cocoa farmers?

cocoa farmers

We strongly believe cocoa farmers should earn an income that allows them to maintain a decent and adequate standard of living for them and their families.

In January 2022, we announced a new plan to tackle child labor risks in cocoa production. At the center of this effort is an innovative income accelerator program, which aims to improve the livelihoods of cocoa-farming families, while also advancing regenerative agriculture practices and gender equality. A cash incentive will be paid directly to cocoa-farming households for certain activities such as enrollment of children in school and pruning, among several others.

The incentives will encourage behaviors and agricultural practices that are designed to steadily build social and economic resilience over time. With our new approach, cocoa-farming families will now be rewarded not only for the quantity and quality of cocoa beans they produce but also for the benefits they provide to the environment and local communities. These incentives are on top of the premium introduced by the governments of Côte d’Ivoire and Ghana that Nestlé pays, and the premiums we offer for certified cocoa.

The program builds on our longstanding efforts to tackle child labor risks in cocoa production. We have invested in sustainability through the Nestlé Cocoa Plan since 2009. We report annually (pdf, 2Mb) on our progress and challenges. To date 46% of our total cocoa purchases were made through the the Nestlé Cocoa Plan. By 2025, we aim to be able to be able to trace all our cocoa back to a specific group of farms and ensure 100% of the cocoa we use is sourced within our cocoa sustainability program.

Do you pay the Living Income Differential (LID) set by the governments of Côte d'Ivoire and Ghana?

We were one of the first companies to buy 2020/2021 cocoa with the LID and continue to buy cocoa with the LID premium.

We support efforts by the governments of Côte d'Ivoire and Ghana to improve the standards of living for cocoa farmers, including the introduction of the Living Income Differential (LID). We believe it can be a useful tool to complement our efforts to improve the lives of farmers and their communities through the Nestlé Cocoa Plan, as well as play a positive role for the sustainability of the cocoa sector and for our business.

Have you reduced your purchases of cocoa from Côte d'Ivoire and Ghana because of the LID?

Our past buying of directly sourced cocoa shows that we haven't reduced our buying during 2020/21:

  Direct* purchasing
as % of total cocoa
Côte d'Ivoire
direct* purchasing 
Ghana
direct* purchasing
2017-2018 season 43% 129,978 14,000
2018-2019 season 49% 140,261 15,000
2019-2020 season 44% 133,035 15,000
2020-2021 season 46% 146,910 15,900
 

* Direct purchasing is cocoa purchased through the Nestlé Cocoa Plan. It is traceable to group of farmers and certified by Rainforest Alliance/UTZ in the case of African origins and Ecuador.

For the 2021-2022 season, we will be buying a further 40,000 tons of sustainable cocoa from Côte d’Ivoire, adding a further 2.4 million USD premium for farmers, on top of the exiting 9 million USD premium and the LID. Our forecast is for these volumes to increase steadily up to 2025 when all our cocoa should be sourced through the Nestlé Cocoa Plan.

We also support supply chain transparency, visit our disclosure page for more information.

What is the LID and how this could help improve farmers' income?

To help improve farmers' income, the Côte d'Ivoire and Ghana governments the USD 400 LID on top of the normal price of cocoa from these origins. It is applicable to all cocoa whether traceable and certified or not since the 2020/2021 season.

While it worked well at first and helped boost the farmer price in Côte d'Ivoire, it has become difficult for Côte d'Ivoire to sell all the crop at the full price, including the LID, for various reasons, including as a result of a world supply and demand surplus for the 2020/21 crop year.

Addressing the challenges around the implementation of the LID will require further concerted action by the Côte d'Ivoire and Ghana governments, industry, and others to find a solution to maintain the differential during periods of surplus.

We will continue to work with all relevant stakeholders, including governments, to find a solution maintaining the differential during periods of surplus and, more broadly, to strengthen the long-term sustainability of the cocoa sector and the livelihoods of farming communities.


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